Housing Allowance Declared Unconstitutional

On Friday, October 6th, Judge Crabb of the Federal District Court of the Western District of Wisconsin issued a declaratory ruling in Gaylor et al (Freedom From Religion Foundation) v. Mnuchin. The court held that the cash clergy housing allowance under Internal Revenue Code Section 107(2) is unconstitutional, as an impermissible preferential treatment of religion under the Establishment Clause of the Constitution. Judge Crabb appears to have given the parties a few weeks to brief the question of the appropriate remedies before rendering final judgment.

Currently, there is no immediate effect on ministers who are eligible for the housing exclusion under the current law.  The court has issued its ruling simply declaring the housing allowance unconstitutional without any damages or other remedies awarded, although those could be awarded going forward from this case.  It is likely that this decision will be appealed and a higher court will have to determine whether the Freedom from Religion Foundation has standing on the facts of this case. If there is standing, then the higher courts will have to determine whether it agrees with the lower court that the housing allowance is unconstitutional.

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