Sunday, March 17, 2019

7th Circuit: Parsonage Allowance Exclusion Is Constitutional

In Gaylor v. Mnuchin, (7th Cir., March 15, 2019), the U.S. 7th Circuit Court of Appeals rejected an Establishment Clause challenge to Internal Revenue Code Sec. 107(2) which excludes from taxable income housing allowances paid to members of the clergy. The court noted that the Treasury Department asserted that "the survival of many congregations hangs in the balance." Applying the Lemon test, as well as the historical significance test, the court said part:
§107(2) is simply one of many per se rules that provide a tax exemption to employees with work-related housing requirements.... Congress’s policy choice to ease the administration of the convenience-of-the-employer doctrine by applying a categorical exclusion is a secular purpose, not “motivated wholly by religious considerations.”
....  The government argues Congress passed § 107(2) because providing the tax exemption only to ministers given in-kind housing tended to exclude ministers of smaller or poorer denominations....  [W]e take the government at its word, which resolves this question. “The clearest command of the Establishment Clause is that one religious denomination cannot be officially preferred over another.”
The third secular legislative purpose cited by the Treasury Department is to avoid excessive entanglement with religion. To the government, Congress’s decision to exempt ministers from the proof requirements of § 119(a)(2) prevents the IRS from conducting intrusive inquiries into how religious organizations use their facilities....
[T]he primary effect of § 107(2) is not to advance religion on behalf of the government, but to “allow[] churches to advance religion, which is their very purpose.” ...
FFRF claims § 107(2) renders unto God that which is Caesar’s. But this tax provision falls into the play between the joints of the Free Exercise Clause and the Establishment Clause: neither commanded by the former, nor proscribed by the latter. We conclude § 107(2) is constitutional.
Milwaukee Journal Sentinel reports on the decision.