Here are five things you need to know about the Seventh U.S. Circuit Court’s ruling:
1. The ruling relates to what is commonly known as the clergy housing allowance as described in the Internal Revenue Code Section §107(2). This code section excludes the value of clergy-owned housing from income taxation.
2. The ruling overturned a lower court’s 2017 ruling that the clergy housing allowance violates the First Amendment. This case was brought before the court by the Freedom From Religion Foundation (FFRF). The Seventh Circuit Court ruled that the housing allowance exemption “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.” You can read the entire ruling here.
3. This is not the first time the FFRF has challenged the constitutionality of the clergy housing allowance. You can reference this chart to see their legal efforts over the past decade.
4. This may not be the last we hear of the issue. The FFRF may ask the Supreme Court to take up the case, but it seems unlikely that the case will proceed further since the Supreme Court hears less than 1% of all cases submitted. If the Supreme Court refuses to hear the case, the Seventh Circuit Court’s ruling will stand.
5. PCA Retirement and Benefits, Inc. is part of a larger association of ecclesiastical bodies advocating on behalf of policies and litigation pertaining to church employee benefits.
We praise God for this favorable ruling and will keep you updated as any further legal efforts pertaining to it unfold.
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We guide PCA pastors and ministry workers through the complexities of financial planning and employee benefits, so they and their families are able to live generously in every season of ministry.