The Office of the General Assembly (“OGA”) has been receiving inquiries and questions regarding the November 21, 2013 decision of a federal district court (Western District of Wisconsin) judge in Madison, Wisconsin which held that a portion of Section 107 of the Internal Revenue Code is unconstitutional.  Section 107 is the provision dealing with tax-favored housing benefits for “ministers of the gospel.”  Specifically, the court held that Section 107(2), which permits ministers to receive tax-free cash “housing allowance,” is unconstitutional because it violates the Establishment Clause of the First Amendment of the U.S. Constitution.  Section 107(1), which allows ministers to reside tax-free in a church-provided manse, was not affected by the court’s decision.

In the case, Freedom From Religion Foundation, et al. v. Lew, et al., the United States government was the party which defended the constitutionality of Section 107, a federal law enacted by Congress many decades ago.  As the losing party, the government must now decide whether it wants to appeal this decision to the next level of the federal court system, the Seventh Circuit Court of Appeals in Chicago.  Based on available information, an appeal is likely.

The court in Wisconsin delayed the implementation of its decision until any appeals which may be filed by the government are concluded or until the deadline for filing an appeal has passed whichever is later.  OGA understands the government will have sixty (60) days to file an appeal, and so the district court’s decision will have no effect until sometime in 2014 at the earliest.  Therefore, this ruling should not affect a minister’s 2013 income tax return filing or the employer’s designation for 2014.  If an appeal is filed, this case could take several more years to be finally decided.  Further, should the ruling of this court stand without appeal, the ruling of this court has limited impact in that its decisions apply only to its geographic district.

 It is too early to fully understand the impact of this case or to predict the chances for this decision to be reversed.  OGA will continue to actively monitor the case and be in conversation with ecumenical partners as it develops. 

Addendum January, 2014:

A number of persons have asked about any advocacy by the Stated Clerk or PC(U.S.A.) General Assembly entities on this issue.  The Stated Clerk is not able to advocate for the constitutionality of the housing allowance within the courts in this particular case because of a policy statement adopted in 1988 by the General Assembly.   In the statement titled, “God Alone is Lord of the Conscience”, the 200th General Assembly adopted the following social policy affirmations:

“6. Particular taxes or exclusions from taxes should treat religious organizations equally with charitable and nonprofit organizations; religious organizations should not be singled out for either penalty or privilege except for the exemption of property essential to the core functions of religion.

7.  Special tax exemptions or burdens for the property and income of ministers or other church employees are inappropriate.  They should be phased out over a period long enough to accommodate the reliance of many churches on existing exemptions.”

200th General Assembly (1988), God Alone is Lord of the Conscience, “D. Taxation and Religious Organizations, Affirmations 6 and 7”, p. 39.

The General Assembly does not claim to speak for all Presbyterians, nor are its decisions and policies binding on the membership of the Presbyterian Church (U.S.A.), however, the General Assembly is the highest legislative and interpretive body of the denomination and the final point of decision in all disputes.  As such, its statements are considered worthy of respect and prayerful consideration of all the denomination’s members.  The General Assembly social policy does direct the mission of the employees of the entities and the officers of the General Assembly including the Stated Clerk who is the highest ecclesiastical officer of the General Assembly.

Email inquiries to Kathie Lyvers at