Clergy housing allowance tax exemption prevails—for now

Last year, in response to a suit filed by the Freedom From Religion Foundation (FFRF), the Federal District Court for the Western District of Wisconsin declared unconstitutional the tax exemption currently permitted for clergy housing allowances. Judge Barbara Crabb immediately stayed her decision pending an appeal to the Seventh Circuit Court of Appeals.

On Thursday, Nov. 13, 2014, the three-judge appeals panel struck down the lower court’s ruling, citing the FFRF’s lack of standing, thereby allowing the clergy housing allowance tax benefit to remain in effect.

This ruling marks the second time this case has been defeated because the plaintiff has not established that they are being directly harmed by this statute. The appeals court did not address the main issue of whether or not the clergy housing allowance benefit is constitutional. The justices did outline possible steps the FFRF could take in order to gain standing in this case. Therefore, many experts believe that this case will reappear.

The Arkansas Conference Office of Administrative Services is following developments in this area and will keep clergy and churches apprised of how any developments affect United Methodist clergy and churches.