AZ Atheist Group Plans Legal Fight Over Tax-Free Housing for Religious Leaders July 19, 2019

AZ Atheist Group Plans Legal Fight Over Tax-Free Housing for Religious Leaders

One of the greatest perks our government gives to religious organizations is the “Parsonage Exemption.” That’s the loophole in the IRS code that allows 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 approximately $20,000-$38,000 on top of their base salary.)

But the perk doesn’t extend to all non-profit groups. Just ones that promote religious beliefs. So even Joel Osteen gets the money despite living in a mansion.

What about the leaders of groups that promote atheism instead of religion?

The IRS says the perk doesn’t apply to them.

That claim, which many atheists say is discriminatory, was the basis of a years-long lawsuit filed by the Freedom From Religion Foundation. FFRF’s co-presidents asked the government to give them the same benefit it gives Christian pastors, but they were rejected. So they sued. And they eventually won! The decision could have ended parsonage exemptions everywhere… but this past March, the Seventh Circuit Court of Appeals overturned the ruling.

Had the earlier ruling remained in place, it would’ve been an arrow through the heart of religious privilege. (Given the makeup of the Supreme Court, FFRF decided not to appeal the ruling.)

But now another atheist group wants to challenge the law in a different part of the country.


Luke Douglas is the Executive Director of the Humanist Society of Greater Phoenix — one of the few regional non-theistic groups in the country to have a paid leader. When he files his taxes next year, he plans to make use of the Parsonage Exemption. The question will be whether the IRS comes back and says he’s not allowed to do that. If that happens, the group plans to sue.

“We perform a lot of the same functions that churches do,” [Douglas] told Arizona Mirror. “This case is about starting a conversation.”

“Our end goal is equality, and it’s less about whether religion is good or bad,” Douglas said, adding that he feels groups who do similar work as churches in the non-profit sector should be entitled to some of the same benefits as traditional religious organizations.

The key difference between HSGP and FFRF, besides their sizes, is that HSGP is an explicitly Humanistic group, not an atheistic one. And the courts have said in the past that Secular Humanism can be treated like a religion for the purposes of the law. They’ve technically said the same thing about atheism, too, but Humanism is less contentious.

So while the IRS said the exemption didn’t need to be expanded to include atheists, Douglas plans on applying for the exemption as is. That also means that if he’s successful, the exemption will remain in place for everyone including him. This would not be a challenge to get rid of the exemption altogether.

In that sense, it’s less of an existential threat to churches. But it’s also more winnable.

(Incidentally, readers may be aware that The Satanic Temple is now considered a church by the IRS, too, which means their director could be eligible for the exemption if they apply for one… Just saying.)

It’s worth pointing out that FFRF hit a snafu the first time they challenged this law because they didn’t apply for the exemption first; it was only after they did, and got rejected, that the courts ruled purely on the merits. HSGP is learning from that by asking for the exemption first and seeing what happens.

Douglas told me his group approved this decision to change how he’s paid earlier this month.

He also told me about some of the nuts and bolts of the decision:

As the executive director of HSGP, I’m an ordained celebrant who does everything a minister does, from weddings and funerals to invocations at city hall, just without a God being involved. We also have an advantage that’s rare in the secular movement: my activism is full-time.

So to continue our movement’s challenge against the parsonage exemption, HSGP voted to cut my salary and instead give me a housing allowance pursuant to Section 107. On the plus side, it means a small tax benefit to my family and our nonprofit, activist lifestyle. On the minus side, it means I’m personally on the hook if the IRS takes us to court and we lose

… Either all nonprofit employees should be eligible for this benefit or none should, without reference to faith. This move is a step in that direction, and any lawsuit that may come out of it and into the Ninth Circuit and beyond may be Humanism’s next strategic move toward equality.

The Ninth Circuit Court of Appeals is generally considered the most liberal one in the country. Given the rightward shift in the judiciary, maybe that’s not saying much. Still, it’s the same Circuit Court whose judges ruled against recitation of the Pledge of Allegiance in 2002, leading to a nationwide controversy over the words “Under God.”

Douglas and the HSGP are right to challenge this law. There’s no reason our government should be rewarding religious leaders while excluding people who promote reality instead. But announcing the plan is just step one. There’s a long way to go before anything else happens.

(Image via Shutterstock. Portions of this article were published earlier)

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