Ruling Could Impact Religious Leaders if Upheld
A federal judge in Wisconsin has again ruled that an Internal Revenue Code provision establishing tax-free housing allowances for clergy is unconstitutional. U.S. District Judge Barbara Crabb had decided similarly back in 2013, but the 7th U.S. Circuit Court of Appeals overturned the decision on standing grounds. The action was essentially reinitiated with the same plaintiffs after they applied to the IRS for the tax exemption and were denied, allowing them to cure the prior standing defect. This time around the 7th Circuit will be positioned to rule on the merits – the constitutionality of the IRC Section 107(2).
If upheld on appeal, this ruling could drastically impact religious leaders who avail themselves of an estimated $800 million annually in housing allowances.