Friday, October 16, 2009

Group Challenges Constitutionality of IRS Parsonage Allowance Provisions

The Freedom from Religion Foundation and 21 of its members, represented by Michael Newdow, filed a federal lawsuit today challenging the constitutionality of two provisions of the Internal Revenue Code that give special tax deductions to "ministers of the gospel." the complaint (full text) in Freedom from Religion Foundation v. Geithner, (ED CA, filed 10/16/ 2009) alleges that Sections 107 and 265(a)(6) of the Revenue Code violate the Establishment Clause by discriminating against secular organizations and excessively entangling the government with religion because determinations whether the sections apply turn on religious criteria and inquiries.

Section 107 exempts from income the rental value of a parsonage, or the amount of a parsonage allowance, furnished to a "minister of the gospel." Section 265(a)(6) allows a minister of the gospel to claim deductions interest and property taxes, even though the money used to pay such amounts was received from a church in the form of a tax-exempt §107 allowance. The concern is not a literal interpretation of "minister of the gospel"-- courts have not limited application of these IRS regulations to Christian denominations. (Background). Instead the objection is to the requirement that to be deductible, the parsonage allowance must be received as compensation for service performed in the exercise of a religious ministry. This requires an examination of whether the clergy person is performing religious worship or conducting the activities of a religious organization.

The lawsuit also challenges Sections 17131.6 and 17280(d)(2) of the California Revenue and Taxation Code which track the federal provisions being challenged. ABC News 10 reported on the lawsuit.