Tax-Free Housing for Religious Leaders Is Officially Illegal (Pending Appeal) December 14, 2017

Tax-Free Housing for Religious Leaders Is Officially Illegal (Pending Appeal)

Back in October, the Freedom From Religion Foundation won a major court decision when U.S. District Judge Barbara B. Crabb agreed that the “Parsonage Exemption” was illegal.

That’s the loophole allowing ministers to deduct the cost of rent of their church-owned houses from their taxable income. (Christianity Today says 84% of senior pastors receive this exemption and it’s worth $20,000-$38,000 on top of their base salary.) It’s a major perk (that also benefits megachurch pastors who live in mansions), but the problem was that atheist leaders couldn’t get access to the same benefits.

Rather than expanding the definition of “minister of the gospel” in the law to include atheists, which would make no sense, Crabb ruled that the law itself was unconstitutional because of the preferential treatment it gave to religious leaders.


When Crabb made her ruling, it didn’t suddenly go into effect. (You would’ve heard the whining if it did.) Crabb said she wanted to hear back from all sides as to how they wanted to proceed, knowing full well that the government would file an appeal. She finally heard back from everyone and issued another ruling on the matter earlier today.

Crabb did two seemingly contradictory things, though they’re technically within her rights to do.

She said her ruling would now go into effect and the IRS could no longer give religious leaders a housing tax break… but added that she was putting a halt on her own ruling until 180 days after any possible decision has been made regarding an appeal.

If the government does nothing and the window to file an appeal expires, then the ruling would go into effect in six months. If the government appeals and FFRF wins again, then the ruling would go into effect six months after that. But the wheels are in motion.

“This is a decision ultimately affecting all clergy and retired clergy nationwide who’ve received this unconstitutional tax privilege,” notes FFRF Co-President Dan Barker, one of the plaintiffs.

In the same order, U.S. District Judge Barbara B Crabb then immediately stayed her injunction pending an expected appeal. If Crabb’s decision is upheld, her order mandates that her injunction will become effective 180 days after the appeal process is completed in order to allow an orderly transition.

Crabb added that “the additional time will allow Congress, the IRS and affected individuals and organizations to adjust to the substantial change.”

This would be an arrow through the heart of religious privilege if and when it goes into effect, and that’s why the government will undoubtedly challenge it. But for now, religious leaders have officially lost the perk of writing off their houses on their taxes.

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