The clergy housing allowance is safe for now. Last week, the Seventh Circuit Court of Appeals reversed a Wisconsin federal district court, which struck down the venerable clergy housing allowance. As a result of the Seventh Circuit’s decision, clergypersons who serve churches, synagogues, mosques, and other worshipping groups, may continue to exempt certain parts of their compensation from federal income tax.
The news comes as welcome relief to worshipping groups and clergypersons. Last November, for the first time, a federal district court held the federal exemption from income tax for clergy housing allowances unconstitutional. See Freedom from Religion Found., Inc. v. Lew, 11-CV-626-BBC, 2013 WL 6139723 (W.D. Wis. Nov. 22, 2013). The Department of Justice appealed to the Seventh Circuit. On appeal, the case brought together diverse religious groups, who filed three amicus curiae (friend of the court) briefs in support of the government’s appeal. These briefs represented more than ninety American religious groups, including Jewish, Protestant, Islamic, and Catholic groups. The groups all understood the fundamental importance of the district court’s path-breaking decision: had it been upheld, the financial implications to these worshipping groups and their clergy would have been severe., The Seventh Circuit’s decision upholding the housing allowance has thus provided a reprieve.