983 F. Supp. 2d 1051
W.D. Wis.2013Background
- Freedom from Religion Foundation (FFRF) and co-presidents Annie Laurie Gaylor and Dan Barker sued under the Administrative Procedure Act challenging 26 U.S.C. § 107 housing tax exclusions for ministers, initially contesting § 107(1) and § 107(2); they later limited the challenge to § 107(2).
- § 107(2) excludes from gross income a minister’s rental/housing allowance; plaintiffs allege this single‑religion benefit violates the Establishment Clause and Fifth Amendment equal protection principles.
- Defendants (Treasury/IRS officials) moved for summary judgment; plaintiffs opposed and sought judgment in their favor; court treated the record as fully developed and entered judgment sua sponte for plaintiffs on § 107(2).
- The court found plaintiffs have standing to bring a facial challenge to § 107(2) because the statute, on its face, grants an exemption to ministers that plaintiffs cannot obtain and an injunction eliminating the exemption would redress their injury.
- On the merits the court held § 107(2) violates the Establishment Clause: it grants a tax benefit exclusively to religious ministers (a class defined by religious function) without a secular justification or a need to alleviate a state‑imposed burden on religious exercise.
- The court enjoined enforcement of § 107(2) (effective after appeal deadlines) and dismissed the challenge to § 107(1) for lack of standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring facial challenge to § 107(2) | Gaylor/Barker are injured because statute grants an exemption to "ministers" that they cannot obtain; injunctive relief would redress | Defendants: plaintiffs must first claim the exemption and be denied; possible that atheists could qualify as ministers so plaintiffs lack a facial injury | Plaintiffs have standing: statute’s text shows plaintiffs are excluded; requiring a futile claim would be pointless |
| Whether § 107(2) violates Establishment Clause (purpose/effect) | The exclusion confers a benefit solely on religious ministers, endorses religion, and lacks an overarching secular purpose | Defendants: exemption is accommodation/eliminates discrimination vs. §107(1); parallels other secular housing exclusions; could be read to include non‑theists | §107(2) invalid: it preferentially benefits religious persons (ministers) without secular justification and thus violates the Establishment Clause |
| Accommodation/Free‑exercise defense | Plaintiffs: general tax treatment is not a special burden warranting preferential carve‑outs for religion | Defendants: exemptions can be permissible accommodations (e.g., Social Security exemptions) and some tax exclusions serve secular aims or remove prior discrimination against ministers | Court: accommodation doctrine does not justify §107(2); its purpose/effect are not to alleviate a significant, religion‑specific burden |
| Entanglement concerns and statutory construction (including whether statute can be construed to include atheists) | Plaintiffs: §107(2)’s focus on ministerial functions requires religious determinations and favors religion over secular actors | Defendants: regulations and precedent could allow non‑theistic claimants; courts should avoid constitutional doubts by construing statute broadly | Court: no reasonable construction makes §107(2) cover atheists or secular beneficiaries; entanglement concerns reinforce constitutional problem though decision rests on purpose/effect analysis |
Key Cases Cited
- Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989) (plurality and concurring opinions: tax exemption limited to religious publications violates Establishment Clause when it provides exclusive benefit without a free‑exercise necessity)
- Walz v. Tax Comm’n of City of New York, 397 U.S. 664 (1970) (property tax exemption for a broad class of nonprofit uses including religious institutions upheld where exemption is general, not limited to religion)
- Lemon v. Kurtzman, 403 U.S. 602 (1971) (established three‑prong test for Establishment Clause: purpose, effect, entanglement)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing: injury‑in‑fact, causation, and redressability requirements)
- Heckler v. Mathews, 465 U.S. 728 (1984) (discriminatory government programs can be remedied by ending preferential treatment for others)
- Hosanna‑Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171 (2012) (recognition of ministerial exception in employment law and deference to religious autonomy)
- McCreary County v. American Civil Liberties Union of Ky., 545 U.S. 844 (2005) (Establishment Clause requires neutrality between religion and nonreligion; endorsement test considerations)