Court Rules Favorably in Ministerial Housing Allowance Case

In a widely anticipated decision, the Seventh Circuit Court of Appeals in Chicago issued a ruling on Nov. 12, 2014 that brought an end to the suit where a lower federal court had declared the ministerial housing allowance unconstitutional. The appellate court dismissed the suit on grounds that the plaintiffs, two executives with the Freedom From Religion Foundation (FFRF) – a group of atheists and agnostics, did not have the legal authority, or “standing,” to bring the lawsuit. The appellate court was very clear that the suit was being dismissed on a technicality and therefore, the court did not reach the issue of the constitutionality of the parsonage exemption or the ministerial housing allowance found in Section 107 of the Tax Code.

The lawsuit was brought by the Freedom From Religion Foundation (FFRF), claiming that the ministerial housing allowance violated the 1st Amendment to the Constitution (Establishment Clause). In late November 2013, a District Court Judge in the Western District of Wisconsin held in favor of the FFRF – and declared the housing allowance unconstitutional. As a part of her ruling, the Judge acknowledged that the FFRF did not have “standing” to bring suit about the parsonage allowance but that they could sue on the housing allowance issue. So this lawsuit did not address parsonages – but only cash given or paid for ministerial housing. The appellate court ruled that the District Court judge should have held that the plaintiffs did not have standing to bring the housing allowance case also. In concluding the decision (that you can read in its entirety by clicking here), the Court made the following statement:

“To summarize, plaintiffs do not have standing to challenge the constitutionality of the parsonage exemption. A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise “similarly situated” to those who do receive the benefit. Only a person that has been denied such a benefit can be deemed to have suffered a cognizable injury. The plaintiffs here have never been denied the parsonage exemption because they have never requested it; therefore, they have suffered no injury.”

The court went on to state:

“Because the plaintiffs do not have standing to challenge the parsonage exemption, we VACATE the judgment of the district court and REMAND with instructions to dismiss the complaint for want of jurisdiction.”

Without a doubt, this is a substantial step in protecting the ministerial housing allowance for the future. The Church of God Benefits Board, as well as the Church of God denomination, have been closely following this case due to the impact that a negative ruling would have on both active and retired ministers. In addition, both the Benefits Board and the denomination joined some 30 other denominations and pension funds in filing a “friend of the court” brief in support of the ministerial housing allowance.

There is no doubt that the decision reached by the appellate court was the result of much prayer and hard work on behalf of the advocates of the housing allowance. While we anticipate that the Freedom From Religion Foundation will seek another route to attack the housing allowance and parsonage allowance, we rejoice in this great victory for our active and retired ministers. The ministerial housing allowance is safe for now.

About benefitsboard

Art Rhodes is the President and CEO of the Church of God Benefits Board, Inc. - the administrator of the Ministers' Retirement Plan and the Church Loan Fund, Inc. The corporate offices of the Benefits Board are in Cleveland, TN.
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