Beliefs Institutions Politics

Feds offer atheists a clergy tax break that they don’t want

Annie Laurie Gaylor is co-president of the Wisconsin-based Freedom from Religion Foundation. RNS photo by Amber Arnold
(RNS4-SEP15) Annie Laurie Gaylor is co-president of the Wisconsin-based Freedom from Religion Foundation, one of the few atheist/freethought organization staffed by a majority of women. For use with RNS-ATHEIST-SEXISM, transmitted Sept. 15, 2011. RNS photo by  Amber Arnold.

Annie Laurie Gaylor is co-president of the Wisconsin-based Freedom from Religion Foundation, one of the few atheist/freethought organizations staffed by a majority of women. The federal government wants to give Gaylor a tax break for leading the atheist group. RNS photo by Amber Arnold

(RNS) The federal government wants to give Annie Laurie Gaylor a tax break for leading the Freedom from Religion Foundation.

But Gaylor, an outspoken atheist from Madison, Wisc., wants to stop them — and she’s asking a federal judge for help.

The standoff is the latest twist in a court battle over the parsonage exemption for clergy, a tax break that allows “ministers of the gospel” to claim part of their salary as a tax-free housing allowance.

Gaylor’s organization says the exemption gives religious groups an unfair advantage. That makes it unconstitutional, the foundation’s lawsuit claims.

But government lawyers say that atheist leaders can be ministers, too, since atheism can function as a religion. So leaders of an atheist organization may qualify for the exemption.

No thanks, Gaylor said.

“We are not ministers,” she said. “We are having to tell the government the obvious: We are not a church.”

The legal status of the parsonage exemption has been challenged for more than a decade ever since a dispute between the IRS and the Rev. Rick Warren of Saddleback Church in California.

In 2002, the IRS tried to charge Warren back taxes after he claimed a housing allowance of more than $70,000. The dispute landed in federal court and eventually Congress intervened by clarifying the rules for the housing allowance.

The allowance now is limited to either the fair market rental value of the house or the money actually spent on housing. Clergy can claim the tax break for only one house.

Critics of the housing allowance say it is unfair to the general public. They pay more because clergy pay less.

Defenders of the allowance point out that most ministers and other clergy are considered self-employed and so pay higher tax rates than other workers. The tax allowance helps balance that out.

Gaylor, and her husband, Dan Barker, want the allowance eliminated. Their legal battle with the government over the exemption has been part chess match and part high-stakes poker game.

The foundation first filed a suit challenging the exemption in 2009 in California but later dropped the suit because of concerns about whether it had legal standing in the state. It re-filed the suit in Wisconsin in 2011, and in late August 2012 a federal judge ruled that suit could go forward.

The case is simple: The foundation board voted to give both Gaylor and Barker a housing allowance of $15,000 a year. But the couple says they can’t claim that as tax-free income since they are not clergy.

The government disagrees.

In a brief, the Justice Department argued that leaders of an atheist group may qualify for an exemption. Buddhism or Taosim don’t include a belief in God and are considered religions, the government’s lawyers argued, so why not atheism?

The Internal Revenue Service does require, among other things, that a “minister” be seen as a spiritual leader and provide services for a religious organization. Belief in a deity is not required.

“Plaintiffs may not presume that a law’s reference to religion necessarily excludes beliefs that are specifically non-theistic in nature,” the government argued in a motion to dismiss the suit.

Larry Crain, president of the Brentwood, Tenn.-based Church Law Institute and a longtime First Amendment lawyer, said the government might be right.

“They make an interesting point,” he said. “If they (atheist foundation officials) apply for the exemption, they might get it.”

But the government’s argument misses the point, Gaylor said. She’s not filed a tax return claiming the allowance and doesn’t know if she would accept one if the government allowed it.

“That’s not what we are after,” she said.

The foundation also is suing the government over several nonprofit laws that govern churches. They want government to enforce rules that ban pastors from giving political endorsements and to require churches to file the same Form 990 tax returns as other charities.

Gaylor said the government should not give religious groups any special treatment.

But Eric Stanley, senior counsel of Scottsdale, Ariz.-based Alliance Defending Freedom, said the First Amendment does give churches and other religious groups special privileges. He said that too much government regulation of churches would interfere with religious freedom.

Stanley believes that the Justice Department has called the foundation’s bluff in the parsonage lawsuits.

“What is really going on is that they don’t like the housing allowance,” he said. “The foundation wants the government to be hostile to religion.”

Gaylor is amused by at least one part of the government’s recent legal filings. She said the parsonage allowance was first put in place in the 1920s to help ministers to fight against “godlessness.”

“They can’t now reward the Freedom From Religion Foundation to fight for godlessess,” she said.

(Bob Smietana writes for USA Today and The Tennessean.)

About the author

Bob Smietana

Bob Smietana is a veteran religion writer and editor-in-chief of Religion News Service.


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  • Kudos to the groundbreakers of FFRF! Christians have too long had advantages that other groups have not had, including tax breaks, and that is wrong. Our founding fathers knew the dangers of theocracy, and that’s why they deliberately did not make this a Christian nation. Christians aren’t being discriminated against when they’re merely expected to be treated equally. Special treatment is not fair or constitutional.

  • This is another Republican dirty trick, trying to save face. Non-theists recently requested to have a representative to function as a chaplain in one or both Houses of our Congress. They were denied. Now some group of deceitful Republicans is at work urging a governmental department to give a tax break to a genuine non-profit that hasn’t asked for one, doesn’t want one, and won’t accept one. This is just another Republican political trick to take attention away from the farcical action under Congressman Daryl Issa’s false claims of IRS “scandals” for investigating or refusing tax breaks to political groups that have distorted the original wording and intent of IRS law referring to groups that were to be “exclusively” non-profit and changing it to “primarily” non-profit. They were in no way non-profit at all, only “exclusively” political.

  • More than not making ours a Christian nation, those wise Founders and Framers specified that there should be “no establishment of religion,” any religion. When government funds are used to support any religion or religion-sponsored activities, even Bush II’s and Obama’s “faith-based” violations, that is “establishment” and unconstitutional. History has shown that even those religions the provide humanitarian services out of concern for their fellows, do so to attract followers and, in many cases, proselytize in all sorts of clever ways and make fellowship a requirement for receiving their service.

    Consider the lesbian social worker who was fired several years ago from a Baptist children’s home in Kentucky–the same home in which my grandmother was placed in 1875–simply because she was homosexual–a grave sin in many Baptist circles. A federal judge just recently declared that action unconstitutional. Thank goodness someone is being constitutionally honest and making sense.

    But why should these things depend on individual interpretations? Why can’t conditions, situations, individuals be more secure? The history of this nation has been littered with flagrant violations of many constitutional protections like non-establishment, exaggerations to bear arms and form “well regulated militias,” and distorted invasions of our privacy. Our history is littered with violations of our Constitution.

    We have never really been a democracy, and we are fast following the path of every previous great power into extinction because we do not live by justice, we do not live by our own Constitution. And how can we brag about the original that protected slavery and prevented women from voting?

  • Atheism IS a religion. A highly negative religion, but still a religion. So if Obama and Holder want to give you folks a tax break, you might as well accept it!

  • If atheism is a religion, then not playing football is a sport. Get educated rather then posting your troll nonsense..

  • I don’t understand her claim of “unfair advantage”. Is there a game with a score that she’s worried about them getting ahead in? Advantage against what? How does this really affect her? Most ministers (guys like the Saddleback minister aside) make very, very little money and their housing allowance really is part of their “salary”. Not sure why she’s so upset over that.

  • If you put structure and organization into your “not playing football” and lobby against football, it has become your “sport”.

  • Atheism is not a religion, it is an awareness that humans commonly invent fictional characters, including gods. God is the name of organized crime’s most lucrative confidence scam.

  • Atheism is a world view and a way to look at data- certainly not a religion. Bald is not a hair style. The government should crack down on many of these “not for profit” businesses including churches. Both sides use tax free status for political activity.

  • As a spouse of a Minister who lives in a manse, I can affirm that the ‘Housing Allowance’ is FICA tax free, but not SECA tax free.

    We have to pay Social Security and Medicare taxes under SECA on the ‘allowance’ even though we don’t receive any money as we live in church supplied housing.

    As far as it being ‘unfair’ … well, you show me a job where someone who has a Master’s or Doctorate degree and still makes less than 40K a year.

    We’re lucky, my wife is ‘second career’ and didn’t have to worry about paying off college loans, we’re also childless, so we don’t have to worry about costs for raising a family.

    Many young ministers have to pay on loans, and raise a young family. They usually serve a congregation of anywhere from 50 to 150, and their annual salary is closer to blue-collar ($27,000 a year) than one that reflects the Master’s degree they may have. A tax-free housing allowance helps out with providing a roof over the family’s head, and not much else. These people become ministers not with dreams of being a mega-church pastor, but because they are called to the ministry.

    They often can’t afford to buy a house, so they rent. There’s goes any mortgage related exemption, they may not have enough medical bills to deduct, so no qualification of any other exemption at the 2% AGI level.

    Most often, the only income tax break they get is the Housing Allowance exemption, and as I mentioned, that’s only a partial exemption from FICA. As self employed, unless they get a (FICA taxable) SS allowance from their church, they pay a full 12.4% Social Security tax, and 2.9% Medicare tax on the Housing Allowance. (Unless they’ve opted out of Social Security, which fewer and fewer are.)

    And there are no exemptions from paying that 15.3% tax. In our case, we’re paying that on 10.4K, which comes out to an additional $1590 or so a year in taxes.

  • Lobbying against a sport has none of the characteristics of following a sport, just as lobbying against religion has none of the characteristics of following a religion. Advocating that people should not follow a religion does not make me a preacher any more than advocating people not follow football would make me an athlete/coach.

  • What in there is different than the average blue collar or new public school teacher? Everyone struggles, but the various exemptions clergy and churches receive are not justified anywhere in your post.

  • This is bogus. I get a housing allowance from my church. I have to apply for it. If the atheists don’t want it don’t apply for it.

  • All these people are really interested is in carrying out their persecution of religious people. They do not really care about fairness. The members of my parish have already paid taxes on every penny that I get as a priest. My megar housing allowance does not even cover the cost of my housing. Since the feds have offered this woman a clergy housing allowance as an atheist minister, she has no grounds for complaint. Her effort is merely a part of the war against religion being waged by a group of hate filled anti-religious fanatics. Thy do not realize it, but they do worship a god, themselves.That they even gain an hearing shows how dysfunctional our society has become. A functional society would ignore them and let them live their self-centered lives without bothering anyone.

  • Christians are not given “advantages.” The tax status in question is available to those of any religion.

  • Here’s the deal: clergy are treated as “self-employed” when they manifestly aren’t. This legal fiction is necessary in order to avoid taxing the churches they serve, since “the power to tax is the power to destroy.” So clergy are treated with regard to Social Security in a way that no other taxpayers are–unlike the self-employed, who choose to be such, clergy are forced to accept a tax status that more than doubles their Social Security tax bill (because the assessment for it also includes the fair rental value of their house, which no other employee has to do). The housing allowance is essentially a way of balancing the scales while still maintaining the tax-exempt status of churches.

  • There are MANY social workers who have Masters degrees making well less than 40K a year.

    And if that isn’t answer enough – maybe you should have chosen a different career, really.