The following information was provided by Heather E. Kimmel, United Church of Christ General Counsel
In a much-anticipated decision, the Seventh Circuit Court of Appeals delivered welcome news to clergy: the clergy housing allowance is constitutional. The decision reversed the ruling of the U.S. District Court for the Western District of Wisconsin, which ruled in 2016 the clergy housing violated the Establishment Clause of the First Amendment.
In a 3-0 decision, the Seventh Circuit agreed with the Treasury Department’s arguments that the clergy housing allowance is constitutional because it puts ministers on equal footing with secular employees receiving the same benefits; it eliminates discrimination between ministers of different denominations, which may be smaller or poorer and thus less able to provide employer-owned housing; and it avoids excessive entanglement with religion by avoiding the need for the IRS to determine what activities are the business of the church. The court further found that the tax exemption did not have an effect of advancing religion, because under Supreme Court precedent, a tax exemption does not “’connote sponsorship, financial support, and active involvement of the [government] in religious activity.’” Finally, the Seventh Circuit concluded that the housing allowance fell within a long historical tradition of tax exemptions for religion. The court concluded that all of these factors demonstrate that the housing allowance does not violate the Establishment Clause.
“This is terrific news for clergy of the United Church of Christ and other denominations. This is likely not the last time that we will see a challenge to the housing allowance—it may come in an appeal to this ruling or in a new action brought in a different Circuit. For now, the clergy housing allowance continues,” said Heather E. Kimmel, General Counsel for the United Church of Christ.
The decision is available to read here.
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