Case Information
*1 Before F LAUM , R OVNER , and H AMILTON , Circuit Judges . F LAUM , Circuit Judge
. Thе Freedom from Religion Foun- dation and its two co-presidents (collectively “the plaintiffs”) filed this suit to challenge the constitutionality of § 107 of the Internal Revenue Code, also known as the parsonage exemp- tion. The exemption excludes the value of employer- provided housing benefits from the gross income of any “minister of the gospel.” 26 U.S.C. § 107. The plaintiffs con- ceded in the district court that they did not have standing to challenge § 107(1), which applies to in-kind housing provid- ed to a minister, but argued that they did have standing to challenge § 107(2), which applies to rental allowances paid to ministers. The district court agreed that the plaintiffs had standing to challenge § 107(2), and held that the subsection is an unconstitutional establishment of religion under the First Amendment.
We conclude that the plaintiffs lack standing to challenge § 107(2). We therefore do not reach the issue of the constitu- tionality of the parsonage exemption. The judgment of the district court is vacated and the case remanded with instruс- tions to dismiss the complaint for want of jurisdiction.
I. Background
The parsonage exemption, codified at 26 U.S.C. § 107, al- lows a minister to receive tax-free housing from his church, whether the church provides it directly (by giving the minis- ter access to a church-owned residence) or indirectly (by giv- ing the minister a rental allowance to obtain housing). [1] Non- clergy must generally pay income tax on the value of their employer-provided housing unless they meet certain re- quirements, including that such housing be provided “for the cоnvenience of the employer.” . § 119(a).
Freedom from Religion Foundation (FFRF) is a Wiscon- sin-based organization of atheists and agnostics. Annie Gay- lor and Dan Barker, also plaintiffs in this case, are the co- presidents of FFRF; they receive a portion of their salaries from FFRF in the form of a housing allowance. Because Gay- lor and Barker are not ministers, they paid income tax on this portion of their salaries. Neither taxpayer sought to ex- clude this income on their federal income tax returns and neither has filed a claim for a refund after payment. The plaintiffs brought suit in the Western District of Wisconsin, claiming that § 107 violates the First Amendment because it conditions a tax benefit on religious affiliation.
In the district court, the government contended that the
court was without jurisdiction to decide the case because the
plaintiffs lacked standing. The plaintiffs conceded that they
did not have standing to challenge § 107(1)—the exemption
for housing provided in-kind by a church—because Gаylor
and Barker do not receive in-kind housing from FFRF. That
part of their challenge was dismissed, and the plaintiffs have
not appealed that determination. As to § 107(2)—the rental-
allowance exemption—however, the plaintiffs argued that
they did have standing; for reasons we discuss below, the
district court agreed. The court then proceeded to hold
§ 107(2) unconstitutional under the three-part test estab-
lished in
Lemon v. Kurtzman
,
II. Discussion
The jurisdiction of federal courts is limited by Article III
of the Constitution to “Cases” and “Controversies.” U.S.
Const. art. III, § 2. No “Case” or “Controversy” exists if the
plaintiff lacks standing to challenge the defendant’s alleged
misconduct.
Lujan v. Defenders of Wildlife
, 504 U.S. 555, 560
(1992). The plaintiff bears the burden of establishing the re-
quired elements of standing.
Kathrein v. City of Evanston, Ill.
,
The “irreducible constitutional minimum of standing” requires the plaintiff to show that he has suffered (or is im- minently threatened with) (1) a concrete and particularized “injury in fact” (2) that is fairly traceable to the challenged action of the defendant, and that is (3) likely to be redressed by a favorable judicial decision. Lujan , 504 U.S. at 560–61. Especially important here is the requirement that the plain- tiff’s injury be “concrete and particularized,” meaning that “the injury must affect the plaintiff in a personal and indi- vidual way.” Id . at 560 n.1. A “generally available grievance about government—claiming only harm to … every citizen’s interest in proper application of the Constitution and laws” is not considered an “injury” for standing purposes. . at 573–74.
“The concept of a ‘concrete’ injury is particularly elusive
in the Establishment Clause context … because the Estab-
lishment Clause is primarily aimed at protecting non-
economic interests of a spiritual, as opposed to a physical or
pecuniary, nature.”
Vasquez v. Los Angeles Cnty.
, 487 F.3d
1246, 1250 (9th Cir. 2007) (citation omitted). It is clear, how-
ever, that a plaintiff cannot establish standing based solely
on being offended by the government’s alleged violation of
the Establishment Clause.
See Valley Forge Christian Coll. v.
Ams. United for Separation of Church & State, Inc.
,
Although psychic injury alone is insufficient, there are a variety of ways for plaintiffs to demonstrate standing in Es- tablishment Clause cases. For example, the Supreme Court has said that “plaintiffs may demonstrate standing based on the direct harm of what is claimed to be an establishment of religion, such as a mandatory prayer in a public school class- room.” Ariz. Christian Sch. Tuition Org. v. Winn , 131 S. Ct. 1436, 1440 (2011). Similarly, being exposed to religious sym- bols can constitute a direct harm. See Doe v. Cnty. of Mont- gomery, Ill. , 41 F.3d 1156, 1159 (7th Cir. 1994). The plaintiffs here, however, cannot rely on the direct harm doctrine, be- cause § 107(2) does not require them to see or do anything.
Another way that plaintiffs in Establishment Clause cases
often show standing is by relying on the special rule set forth
in
Flast v. Cohen
,
A third way for individuals to establish standing in an
Establishment Clause case, which plaintiffs rely on here, is to
demonstrate that “they have incurred a cost or been denied a
benefit on account of their religion. Those costs and benefits
can result from alleged discrimination in the tax code, such
7 as when the availability of a tax exemption is conditioned on
religious affiliation.”
Winn
,
The plaintiffs here argue that they have standing because they were denied a benefit (a tax exemption for their em- ployer-provided housing allowance) that is conditioned on religious affiliation. [2] This argument fails, however, for a simple reason: the plaintiffs were never denied the parsonage exemption because they never asked for it. [3] Without a re- quest, there can be no dеnial. And absent any personal deni- al of a benefit, the plaintiffs’ claim amounts to nothing more than a generalized grievance about § 107(2)’s unconstitution- ality, which does not support standing. Lujan , 504 U.S. at 573–74 (“[A] plaintiff raising only a generally available grievance about government … does not state an Article III case or controversy.”). In other words, the mere fact that the tax code conditions the availability of a tax exemption on re- ligious affiliation does not give a plaintiff standing to chal- lenge that provision of the code. A plaintiff cannot establish standing to challenge such a provision without having per- sonally claimed and been denied the exemption.
Though the Supreme Court has never squarely addressed the issue presented here, the Court’s precedent supports our conclusion. In Allen v. Wright , the plaintiffs sued the IRS for failing to deny tax-exempt status to racially discriminatory private schools. 468 U.S. 737, 745 (1984), abrogated on other grounds by Lexmark Int’l, Inc. v. Static Control Components, Inc ., 134 S. Ct. 1377 (2014). The рlaintiffs, parents of African- follows that FFRF lacks associational standing. FFRF has not advanced any argument suggesting that the organization might have standing in- dependent of that of its members. The plaintiffs could have sought the exemption by excluding their
housing allowances from their reported income on their tax returns and
then petitioning the Tax Court if the IRS were to disallow the exclusion.
26 U.S.C. § 6213(a). Alternatively, they could have adopted the approach
taken by the plaintiff in
Texas Monthly
,
see
American children attending public schools, attempted to
show standing by arguing that they were “harmed directly
by the mere fact of Government financial aid to discrimina-
tory private schools.”
[4]
Id
. at 752. The Court found that they
did not have standing.
Id
. at 766. Even if the plaintiffs’ as-
serted basis for standing was interpreted as a claim of “stig-
matic injury … suffered by all members of a racial group
when the Government discriminates on the basis of race,”
the Court held that such injury confers standing “only to
‘those persons who are personally denied equal treatment’
by the challenged discriminatory conduct.”
Id
. at 754–55
(quoting
Heckler v. Mathews
,
The Allen Court pointed to its holding in Moose Lodge No. 107 v. Irvis , 407 U.S. 163 (1972), as support for this conclu- sion. In that case, the Court determined that the plaintiff, an African-American, did not have standing to сhallenge a club’s racially discriminatory membership policies because he had never applied for membership, and therefore “was not injured by Moose Lodge’s membership policy.” Id . at 166–67. It apparently did not matter to the Court that such an application would have been futile because the club’s by- laws only allowed Caucasians to become members. Futile or not, a request for membership was necessary to establish standing because, without it, no injury had occurred. In con- trast, the Moose Lodge plaintiff did have standing to challenge the lodge’s refusal to serve him when he attended the club as a guest because, in that instance, he had requested and was denied a benefit. Id . at 165, 170.
Like the plaintiffs in
Allen
and
Moose Lodge
, the plaintiffs
here are members of a group (in this case, the non-religious)
that is allegedly suffering illegal discrimination. But the
mere fact that discrimination is occurring is not enough to
establish standing, absent being “personally denied equal
treatment.”
Allen
,
Plaintiffs, apparently recognizing the constitutional and practical problems of extending standing to anyone that is part of an allegedly discriminated-against group, suggest a limiting principle: only those discriminated-against taxpay- ers who are “similarly situated” to the taxpayers receiving the exemption have standing to sue. Here, Gaylor and Bark- er argue that they are similarly situated to the ministers re- ceiving the § 107(2) exemption because they too receive a housing allowance. The only reason, they argue, that they cannot take advantage of § 107(2) is that they are not “minis- ters of the gospel.”
We reject this proposal for multiple reasons. First, it fails to address the heart of our standing inquiry here—whether plaintiffs have suffered a constitutionally cognizable injury. Being part of a small group that suffers no injury is no dif- ferent from being part of a large group that suffers no injury; the size of the group makes no difference. See Lac Du Flam- beau Band of Lake Superior Chippewa Indians v. Norton , 422 F.3d 490, 496 (7th Cir. 2005). Second, there is, of course, a crucial difference, other than religious belief, between the plaintiffs and the ministers who take advantage of § 107(2)—the latter group has actually claimed the exemption. The Court in Heckler found that merely being “similarly situated” is not enough—the plaintiff there had standing because he “per- sonally ha[d] been denied benefits that similarly situated women receive[d].” 465 U.S. at 740 n.9. Third, the plaintiffs offer no guidance on how to apply a vague “similarly situat- ed” standard in the tax exemption context. When, exactly, is a plaintiff similar enough to the taxpayers who receive the allegedly illegal exemptiоn? In the case of the parsonage ex- emption, would it be enough that an employee receives a housing allowance? Or must the employee be some type of organizational leader, like Gaylor and Barker? Or perhaps an employee is not similar enough unless he is a leader who al- so provides guidance to a flock of followers? None of these distinctions is obviously correct and plaintiffs offer no guid- ance on how to draw a line. Finally, it is quite possible that the IRS or the Tax Court will interpret an exemption to apply to a party that is “similarly situated.” And a party who re- ceives an exemption has no standing to challenge it. We think it unlikely that § 107(2) will be interpreted to apply to the plaintiffs in this case, but there may be many closer cas- es. For example, the parsonage exemption applies on its face only to a “minister of the gospel.” One could easily imagine a “similarly situated” non-Christian clergyman challenging the constitutionаlity of this law prior to 1966, when the Tax Court of the United States interpreted the exemption to reach “the equivalent of ‘ministers’ in other religions.” Salkov v. Commissionr , 46 T.C. 190, 194 (1966) (interpreting § 107(2) to apply to a Jewish cantor). We thus think it important to allow the IRS and the Tax Court to interpret the boundaries of a tax provision before we assess its constitutionality.
The district court concluded that the plaintiffs in this case
do have standing for a number of reasons, none of which we
find persuasive. First, the district court worried that the gov-
ernment’s view might insulate § 107(2) from review entirely.
Indeed, some courts, including ours, have previously held
that a party cannot challenge an underinclusive tax exemp-
tion in a deficiency proceeding because the court would not
have the power to provide the plaintiff with the tax break.
See, e.g.
,
Templeton v. Commissioner
, 719 F.2d 1408, 1412 (7th
Cir. 1983). But this aspect of
Templeton
and the other cases
cited by the district court is no longer good law—the Su-
preme Court has squarely held that a plaintiff can have
standing to challenge an underinclusive tax exemptiоn even
if the only available remedy is removing the exemption ra-
ther than extending it to the plaintiff.
See Ark. Writers’ Project,
Inc. v. Ragland
, 481 U.S. 221, 227 (1987). In any case, “[t]he
assumption that if [the plaintiffs] have no standing to sue, no
one would have standing, is not a reason to find standing.”
Valley Forge
,
Second, the district court thought that it would “serve no
legitimate purpose to require plaintiffs to claim the exemp-
tion and wait for the inevitable denial of the claim” because
the “plaintiffs’ alleged injury is clear from the face of the
statute and … there is no plausible argument that the indi-
vidual plaintiffs could qualify for an exemption.”
Freedom
from Religion Found., Inc. v. Lew
,
The Fourth Circuit concluded that the plaintiffs had standing. The court basеd its holding largely on prudential grounds:
Realistically, if this court were to deny standing in this case, the appellants would simply pro- test the payment and collection of the State’s sales tax, and refile their suit. We do not be- lieve that this additional requirement would … contribute in any way to our ability to decide a question presented and contested by parties having a demonstrated interest and stake in its resolution.
Id at 1162. The court also believed that “it would be an un- tenable waste of judicial resources to deny the [plaintiffs] standing in this case given the patent unconstitutionality” of the challenged exemption. .
Insofar as the district court and the Fourth Circuit in
Fin-
lator
suggest that asking for and being denied a tax exemp-
tion should not be a requirement for establishing standing
because doing so would be a waste of time, we cannot agree.
Perhaps these courts are correct that requiring the plaintiffs
15 to request and be denied the parsonage exemption will be a
“futile exercise,”
[6]
Freedom from Religion Found.
, No. 11-cv-
0626, at 8–9, that will not improve the court’s ability to re-
solve thе constitutional challenge, but this is beside the
point. The Constitution does not allow federal courts to hear
suits filed by plaintiffs who lack standing, and standing is
absent here because the plaintiffs have not been personally
denied the parsonage exemption. Article III “is not merely a
troublesome hurdle to be overcome if possible so as to reach
the ‘merits’ of a lawsuit which a party desires to have adju-
dicated; it is a part of the basic charter promulgated by the
Framers.”
Valley Forge
,
The Finlator court, however, concluded that the plaintiffs in that case had standing for an additional reason: they “did suffer actual injury” because Bible purchasers automatically received a sales tax exemption, while purchasers of other texts could receive the exemption only by taking the extra step of protesting payment or filing a refund suit. 902 F.2d at 1162. “Simply stated,” the court said, “an injury is created by the very fact that the [government] imposes additional bur- dens on the [plaintiffs] not placed оn purchasers of ‘Holy Bi- bles.’” . In the case before us, neither party explains how a taxpayer actually goes about “claiming” the parsonage ex- emption, and the plaintiffs do not argue that they face any additional burden in claiming the exemption that ministers do not.
Finally, the district court observed that the Supreme Court has frequently reached the merits in cases where a plaintiff challenged a tax exemption under the Establishment Clause, even when it was not clear that the plaintiff had been personally denied the exemption before filing suit. For ex- ample, in Walz v. Tax Commission of the City of New York , 397 U.S. 664, 666–67 (1970), an owner of real estate challenged a New York property tax exemption for religious, educational, or charitable nonprofit organizations. Nothing in the Court’s opinion indicates that the plaintiff sought a property tax ex- emption prior to filing his suit which the Court rejected on the merits. . at 680. But the Walz Court never discussed standing. Thus, the case has no force in the standing context: “When a potential jurisdictional defect is neither noted nor discussed in a federal decision, the decision does not stand for the proposition that no defect existed.” Winn , 131 S. Ct. at 1448.
To summarize, plaintiffs do not have standing to chal- lenge the constitutionality of the parsonage exemption. A person suffers no judicially cognizable injury merely because others receive a tax benefit that is conditioned on allegedly unconstitutional criteria, even if that person is otherwise “similarly situated” to those who do receive the benefit. On- ly a person that has been denied such a benefit can be deemed to have suffered a cognizable injury. The plaintiffs here have never been denied the parsonage exemption be- cause they have never requested it; therefore, they have suf- fered no injury.
III. Conclusion
Because the plaintiffs do not have standing to challenge the parsonage exemption, we V ACATE the judgment of the district court and R EMAND with instructions to dismiss the complaint for want of jurisdiction.
Notes
[1] Section 107 provides: In the case of a minister of the gospel, gross income does not include—(1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allow- ance paid to him as part of his compensation, to the ex- tent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurte- nances such as a garage, plus the cost of utilities. 26 U.S.C. § 107.
[2] FFRF’s standing in this suit is bаsed on the doctrine of associational standing. [A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual mem- bers in the lawsuit. Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Brock , 477 U.S. 274, 282 (1986) (quoting Hunt v. Washington State Apple Advertising Com’n , 432 U.S. 333, 343 (1977)). Because we hold that the individual plaintiffs in this case (FFRF members) do not have standing, it
[4] The plaintiffs also argued that they had standing bеcause the tax ex-
emptions at issue “impair[ed] their ability to have their public schools
desegregated.”
Allen
,
[5] Our conclusion is also generally consistent with the Fifth Circuit case,
Apache Bend Apartments, Ltd. v. United States
,
[6] The government argues that requesting the exemption might not be
futile because there is a chance that the IRS would grant the plaintiffs a
rental allowance exemption on the theory that atheism can be treated as
a “religion” for Establishment Clause purposes. Whether or not this is
true, it is irrelevant: to establish standing, a plaintiff must request (and
be denied) a benefit, even if, practically speaking, the request has no
chance of success.
See, e.g.
,
Moose Lodge
,