In Freedom From Religion Foundation, Inc. v. Lew, (WD WI, Nov. 22, 2013), a Wisconsin federal district court held unconstitutional Internal Revenue Code Sec. 107(2) that excludes from gross income a minister's parsonage allowance. The court held that the exclusion "violates the establishment clause under the [U.S. Supreme Court's] holding in Texas Monthly, Inc. v. Bullock... because the exemption provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise."
An important issue in the case was plaintiffs' standing to bring the challenge. FFRF co-presidents who were plaintiffs ultimately were found to have standing because of the non-excludable housing allowance they received as part of their compensation from FFRF. The court rejected the argument that plaintiffs should be seen as being entitled to claim the parsonage allowance as atheist ministers. The complaint in the case originally also challenged Sec. 107(1) that allows ministers who are furnished a home instead of a housing allowance to exclude the rental value of the home from income. Plaintiffs essentially conceded they lacked standing to pursue that challenge, and the court dismissed that aspect of their complaint. [Thanks to several readers who alerted me to the decision.]
