Church leaders resist lawsuit aimed at ending housing tax exemption for clergy

Church leaders in Chicago are seeking an end to a lawsuit filed by an atheist group to dissolve the housing tax exemption for clergy members.

The Freedom From Religion Foundation filed the lawsuit against the IRS, arguing that the parsonage allowance, which provides tax exemptions for religious establishments such as churches, mosques and synagogues, violates the Establishment Clause of the First Amendment.

Religious leaders are expressing concern that removing the exemption could impose as much as $1 billion in taxes for churches across the U.S.

Chris Butler, pastor of the south-side Chicago Embassy Church, filed a request on April 19, asking a court to dismiss the lawsuit on discriminatory grounds, according to Catholic News Agency (CNA).

"For the majority of churches, the pastors are like me and experience at some level the same problems that we're trying to face in the community," Butler said in a statement released by the Becket Fund for Religious Liberty. "If you take away even a little bit, it can become a lot of trouble quickly," he added.

Butler ministers to at-risk youth and homeless people in his neighborhood and he is also participating in a program that aims to reduce local crime.

Joining Butler in fighting the lawsuit are leaders from other churches, such as the Russian Orthodox Church Outside of Russia's Diocese of Chicago and Mid-America and Holy Cross Anglican Church.

The Becket Fund argued that it would be discriminatory to end the parsonage allowance for religious leaders, since secular workers also receive similar exemptions.

"The same group of atheists claimed it was unconstitutional to put Mother Teresa on a postage stamp, so it's no surprise they're trying to sic the IRS on churches," said Luke Goodrich, deputy general counsel at Becket, according to CNA.

"Treating ministers like other professionals isn't an establishment of religion; it's fair tax treatment," he continued.

The IRS states that the parsonage exemption applies to ministers when their housing allowance is "excludable from gross income for income tax purposes but not for self-employment tax purposes."

Congress enacted the parsonage allowance 64 years ago to provide tax exemptions to religious leaders, similar to the exceptions enjoyed by teachers, business leaders and military service members. Both Congress and IRS hold that employees are allowed to exclude housing benefits from their income as long it contributes to the convenience of the employer.

Oral arguments on the case will be heard by the Seventh Circuit Court of Appeals later this year, according to CBN News.