Jump directly to the content

Still No Ruling in the Clergy Housing Allowance Case

After nearly six months, a decision still may be weeks—even months—away. Here’s why.

Still No Ruling in the Clergy Housing Allowance Case

FIRST UPDATE: The US Court of Appeals for the Seventh Circuit in Chicago issued its decision on March 16, 2019, ruling the clergy housing allowance to be constitutionally permissible. Read more here.

SECOND UPDATE: The Freedom From Religion Foundation (FFRF) announced it will not petition the US Supreme Court to review the Seventh Circuit’s decision.

Oral arguments were heard nearly six months ago in the appeal to the ruling determining the clergy housing allowance tax benefit was an unconstitutional preference for religion.

But no decision on that appeal has come yet.

Is that unusual?

The short answer is no, according to several attorneys who are not directly involved with the litigation, but either specialize in church legal issues or possess familiarity with the US Court of Appeals for the Seventh Circuit in Chicago (the court hearing the case), or both.

The primary reasons are the complexity and significance of the case, given the collective value of the benefit (roughly $1 billion annually), the longevity of the benefit (about 65 years), and the First Amendment issues the case raises.

The initial decision, delivered in 2017 by a federal district judge in Wisconsin, deemed the benefit unconstitutional. If affirmed upon appeal, the housing allowance would become invalid for churches and clergy members in Illinois, Indiana, and Wisconsin. Some anticipate nationwide fallout as well.

“The question of whether the housing allowance … favors certain religious activity in violation of the US Constitution raises complex legal issues,” said Stuart Lark, an attorney with Sherman & Howard in Colorado Springs and an editorial advisor for Church Law & Tax. “In addition, the housing allowance is a valuable part of the compensation package for many church and ministry leaders of all religious and political persuasions throughout the country. If the court strikes down the housing allowance, it would create significant financial difficulty for many ministers (and their church or ministry organization employers), including retired ministers whose retirement packages partially rely upon the housing allowance.”

Another explanation for the timing includes the inner workings of the judicial process.

“Written appellate decisions can be very slow in coming,” said Sally Wagenmaker, an attorney with Wagenmaker & Oberly in Chicago and president and chairperson of the Christian Legal Society.

Noel Sterett, an attorney at Dalton & Tomich in Chicago, said he wasn’t surprised by the timing, either. Sterett argued a religious land use case in early November before the Seventh Circuit, a week after the housing allowance case’s oral arguments took place—yet the Seventh Circuit issued its decision in the religious land use case in January. That could mean a housing allowance decision is imminent, he said. “[But] to give you another possible measure, the Seventh Circuit took a year to issue [its] recent ruling in the Chicago abortion buffer zone case, which was argued in February 2018 and decided in February 2019,” Sterett added.

Frank Sommerville, an attorney with Weycer, Kaplan, Pulaski & Zuber and a Church Law & Tax editorial advisor, similarly noted “controversial decisions may take up to one year to publish.”

The Supreme Court’s shadow

Another likely influence to this case’s timing is the US Supreme Court. Assuming the Seventh Circuit does not determine a procedural problem or a standing issue with the case exists (which derailed a previous housing allowance challenge), a decision based on the merits inevitably will prompt the losing side to petition the Supreme Court for “certiorari” (a review and possible decision).

All of the attorneys interviewed said it is difficult to predict whether the Supreme Court would grant certiorari in such a situation. “The odds … depend entirely on the winner [at the Seventh Circuit] and the basis for the decision,” Sommerville said.

Statistically speaking, the chances already are remote. Each year, 8,000 petitions are filed with the Supreme Court. About 80 are granted.

As remote of a possibility as certiorari may be, though, federal judges do not want their opinions overturned, much less by the Supreme Court. That means the thoroughness taken with the research, deliberation, and writing of the opinion becomes even more paramount, which naturally extends the amount of time invested.

Furthermore, the Seventh Circuit likely is watching other religious-related cases involving the Supreme Court to see what kind of posture the current members of the Court take—and how that might translate to the facts and arguments tied to the housing allowance case, Wagenmaker and Sterett said.

Developments in two such cases recently materialized.

One is a certiorari petition involving New Jersey’s denial of historic preservation funds for religious buildings. The Court last week opted not to review the New Jersey Supreme Court’s decision to affirm funding denials for religious groups, including churches. But newly appointed Justice Brett Kavanaugh, joined by Justice Samuel Alito and Justice Neil Gorsuch, still issued a statement calling the New Jersey Supreme Court’s decision into question, stating it was “in serious tension with this court’s religious equality precedents.”

The other is a case regarding the constitutionality of a 40-foot memorial cross located since 1925 on public land in Maryland. The Supreme Court granted certiorari late last year for the “Bladensburg Cross” case, then heard oral arguments last month. A final outcome is expected by late spring or early summer.

The statement issued by the three justices in the New Jersey case may “bode well for the housing allowance litigation” if it eventually goes before the Supreme Court, Wagenmaker said. Similarly, any decision delivered for the Bladensburg Cross case “could help clarify what is and is not an impermissible establishment of religion,” Sterett said.

Those outcomes will be noted by the three-judge panel considering the housing allowance case at the Seventh Circuit.

Whether that panel ultimately affirms the lower court’s decision or overrules it, Lark reiterated the need for churches and clergy to remain prepared during this period of uncertainty—and beyond.

“(I)f the pending decision strikes down the housing allowance, then I think the US Supreme Court will very likely agree to the review the case. However, if the decision upholds the housing allowance, then I would expect the Court not to review the case,” Lark said. “Of course, any prediction about what the US Supreme Court will do is not worth the paper on which it is written. The more important point for ministers and their employers is that they should have a contingency plan to follow in the event that the housing allowance is no longer available.”

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

Related Topics:
Posted:
  • March 12, 2019

Related ResourcesVisit Store

2020 Church & Clergy Tax Guide
2020 Church & Clergy Tax Guide
Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
12 Law & Tax Guidelines for New Ministers
12 Law & Tax Guidelines for New Ministers
Essential knowledge to ensure legal and financial clarity and integrity in ministry.
20 Finance Questions Churches Ask
20 Finance Questions Churches Ask
Richard Hammar answers relevant tax and finance questions for church leaders.
Essential Guide to Money for Church Boards
Essential Guide to Money for Church Boards
Church board members should have a basic understanding of these financial issues.