Ministers and the Parsonage Exemption

In Freedom From Religion Foundation, Inc. v. Lew, the plaintiffs (an organization of atheists and agnostics and its two co-presidents) challenged the constitutionality of the parsonage exemption. The parsonage exemption, in sum, allows a minister to receive tax-free housing from his/her church.  The plaintiffs in Freedom From Religion Foundation stated that the parsonage exemption violated the First Amendment by offering a tax benefit based on religious affiliation.  The co-presidents of the FFRF received a housing allowance from FFRF. However, the co-presidents did not ask for the parsonage exemption.  Thus, they were not denied the parsonage exemption.

The United States Court of Appeals for the Eleventh Circuit held that the plaintiffs did not have “standing” to challenge the constitutionality of the parsonage exemption.

The Court ruled that the plaintiffs lacked standing on the following grounds.  First, the plaintiffs did not suffer a direct harm, such as being required to do or see something.   Second, based on case law, the plaintiffs, as taxpayers alone, were prohibited from challenging the constitutionality of tax expenditures.  The parsonage exemption is a tax expenditure.  Third, the plaintiffs did not incur a cost and were not denied a benefit on account of religion because they never applied for the parsonage exemption.  A plaintiff cannot establish standing to challenge the parsonage expenditure without claiming and then being denied the expenditure.

Finally, the plaintiffs argued that they were similarly situated to the parties receiving the parsonage expenditure, and that the only reason they could not take advantage of it was because they were not “ministers of the gospel.”  The Court rejected this argument for four reasons: (1) the argument failed to address whether the plaintiffs actually had a judicially identifiable injury; (2) even if the plaintiffs were similarly situated, they were not denied the exemption, and therefore suffered no injury; (3) the plaintiffs offered no guidance regarding applying the “similarly situated” standard; and (4) the Court determined that it was important to allow the Internal Revenue Service and the Tax Court to interpret the parsonage exemption before its constitutionality could be addressed.

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