Wednesday, May 21, 2014

Court Rejects Atheists' Attack On Church Favoritism In Tax Code

In American Atheists, Inc. v. Shulman, (ED KY, May 19, 2014), a Kentucky federal district court dismissed claims by several atheist organizations that under the Internal Revenue Code and Regulations, churches and religious organizations are treated more favorably that other non-profits. The court identified five advantages enjoyed by churches, including fewer filings and tax advantages for clergy compensation. The court held that plaintiffs lack standing because they never applied for an exemption as a church or religious organization, pointing out that:
A review of case law establishes that the words “church,” “religious organization,” and “minister,” do not necessarily require a theistic or deity-centered meaning.... 
Thus, the Atheists’ assertion that they are subjected to unconstitutional discrimination and coercion due to their alleged inability to gain classification as religious organizations or churches under I.R.C. §501(c)(3) is mere speculation. At this point, the Atheists have no idea whether they could gain classification as a church or religious organization under I.R.C. §501(c)(3) because they have never sought such classification. Accordingly, the Atheists have not suffered a particularized injury which is fairly traceable to the actions of the Commissioner.
The court also held that plaintiffs had failed to state an equal protection claim.  In addition, the court rejected a novel argument by plaintiffs that IRS action violates the No Religious Test Clause of Art. VI, cl. 3 of the Constitution.  Plaintiffs had contended that modern-day 501(c)(3) organizations amount to "public trusts" as that term is used in Art. CI, cl. 3. (See prior related posting.) [Thanks to Steven H. Sholk for the lead.]