Earlier today, the United States Court of Appeals for the Seventh Circuit vacated the Western District of Wisconsin’s decision in Freedom From Religion Foundation v. Lew and ordered the case to be dismissed. This case was before the Seventh Circuit after Federal District Judge, Barbara Crabb, found that the parsonage exemption for “ministers of the gospel” – contained in Section 107(2) of the Internal Revenue Code – violated the Establishment Clause of the First Amendment. The ruling from Seventh Circuit alleviates any immediate concern that the parsonage exemption would be found unconstitutional and eliminated from the tax code.
As we previously reported, one of the main issues before the Seventh Circuit was whether the Plaintiffs had standing to bring the suit. Pursuant to Article III of the Constitution, the federal courts can only hear “cases” or “controversies” where the plaintiffs have standing. At a minimum, standing requires the plaintiffs to show a concrete “injury in fact” that is traceable to the challenged actions of the defendant and that can be redressed by a favorable judicial decision. The Plaintiffs in FFRF v. Lew attempted to meet the standing requirements by providing its past and present board members with housing allowances similar to parsonage, and then claiming that the tax coded treated them differently because they were not “ministers of the gospel” who could claim the exemption. The Seventh Circuit rejected the Plaintiffs’ argument on the basis that they never actually attempted to claim the parsonage exemption. The Court stated:
The plaintiffs here argue that they have standing because they were denied a benefit (a tax exemption for their employer-provided housing allowance) that is conditioned on religious affiliation. This argument fails, however, for a simple reason: the plaintiffs were never denied the parsonage exemption because they never asked for it. Without a request, there can be no denial. And absent any personal denial of a benefit, the plaintiffs’ claim amounts to nothing more than a generalized grievance about § 107(2)’s unconstitutionality, which does not support standing.
Because standing is a threshold issue for having a claim addressed in court, the Seventh Circuit did not address the constitutionality of §107(2). Thus, the door remains open to future constitutional challenges to the parsonage exemption. And, of course, the Plaintiffs have the right to appeal the Seventh Circuit’s decision. We will continue to monitor the case in the event of such an appeal.
The full text of the Seventh Circuit’s decision can be found here.