Ruling against ministers housing allowance exemption appealed by Justice Department

A federal judge's ruling that the ministers' housing allowance is unconstitutional has been appealed by government lawyers who argue the allowance should be upheld. The appeal will be heard by the Seventh Circuit Court of Appeals in Chicago.

The November decision by federal Judge Barbara Crabb was stayed pending appeal, meaning it had no immediate impact on clergy. The court challenge to ministers' housing allowance was brought by the Freedom From Religion Foundation (FFRF).

The appeal, being waged by Justice Department attorneys, is welcome news for ministers and provides an opportunity for the federal appeals court to uphold the longstanding statute that allows churches to provide a tax-free housing allowance to ministers. A 2010 ruling by Crabb, an appointee of President Jimmy Carter, that the National Day of Prayer violated the establishment clause of the First Amendment was overturned by the Seventh Circuit in 2011.

"Pastors and others in ministry are facing challenges here in the United States that would have been unthinkable as little as a decade ago," said Tim Head, GuideStone executive officer for denominational and public relations services who was a lawyer before being called into ministry. "While we welcome news of the government's appeal, we recognize this case is far from settled, and we remain engaged to advocate for the housing allowance benefit."

GuideStone, as part of a longstanding coalition of ministerial benefit boards, intends to file a friend-of-the-court brief in support of the government's position that the ministers' housing allowance is constitutional.

Ministers should consult with the annual tax guide made available at GuideStone.org tax guide and GuideStone's housing allowance information at GuideStone.org housing allowance to ensure they are properly documenting housing allowance as part of a church business action and reporting it appropriately on their income tax returns.

"We live in a world that is not as receptive to the ministry of the church or of ministers in general as the world in which we grew up," GuideStone President O.S. Hawkins said. "Rather than discouraging us, that fact serves to encourage our employees to continue to seek out opportunities to advocate on behalf of our more than 200,000 participants across this country."