The Church Alliance--a coalition of the chief executive officers of
38 denominational benefit programs including Church of the Brethren
Benefit Trust (BBT)--has filed an amicus curiae brief in the Seventh
Circuit US Court of Appeals (Chicago) in the case challenging the
constitutionality of the clergy housing exclusion under Section 107(2)
of the Internal Revenue Code of 1986 (Code).
BBT participates as a member organization of the Church Alliance,
where BBT president Nevin Dulabaum serves as the Church of the Brethren
representative. Church of the Brethren general secretary Stan Noffsinger
and associate general secretary Mary Jo Flory-Steury have signed on in
support of the brief on behalf of the denomination.
The case is Freedom From Religion Foundation, Inc., et al. v. Jacob
Lew, et al. (FFRF v. Lew). The US government is appealing a decision by
Judge Barbara Crabb, US District Court for the Western District of
Wisconsin (November 2013), that Code §107(2) is unconstitutional.
Clergy housing exclusion
Code §107(2), commonly called “clergy housing exclusion” or “clergy
housing allowance,” excludes from income taxation the cash compensation
provided to “ministers of the gospel” (clergy) toward the cost of their
housing. This section of the IRS code essentially excludes the value of
clergy-owned housing from income taxation. It is related to Code
§107(1), which excludes from a minister’s taxable income the value of
church-provided housing (commonly called a parsonage, vicarage, or
manse). The FFRF v. Lew appeal does not involve a challenge to Code
§107(1).
Judge Crabb ruled that Code §107(2) is unconstitutional because it
violates the Establishment Clause of the First Amendment to the US
Constitution. Under the Establishment Clause, “Congress shall make no
law respecting an establishment of religion....” Judge Crabb stayed the
effect of her ruling until all appeals are exhausted. The government’s
opening brief was filed on April 2.
The Church Alliance brief adds a perspective not duplicated in the
government’s brief, focusing on the jurisprudential history of permitted
legislative accommodations of religion. The brief argues that Code
§107(2) is a constitutionally permitted accommodation of religion when
viewed in the context of Code §107(1), the parsonage exclusion, and Code
§119, which excludes employer-provided housing from employees’ incomes
in numerous secular circumstances.
“The Church Alliance has a substantial interest in the validity of
Code §107(2) because of the immediate impact on compensation and housing
of active clergy in the benefit plans of its member denominations, and
also because of the indirect impact on retirement benefits,” said
Barbara Boigegrain, chair of the Church Alliance and chief executive of
the General Board of Pension and Health Benefits of the United Methodist
Church.
Religious organizations represented
The members of the Church Alliance stand with other religious
organizations in their vested interest in the outcome of this
litigation. The clergy housing exclusion is important to millions of
active and retired clergy from the 38 Church Alliance-represented
denominations including, in addition to the Church of the Brethren, the
American Baptist Churches in the USA, Church of the Nazarene, Christian
Church (Disciples of Christ), Christian Brothers Services, Episcopal
Church, Evangelical Lutheran Church in America, Joint Retirement Board
for Conservative Judaism, Lutheran Church-Missouri Synod, Presbyterian
Church (USA), Reform Pension Board, Southern Baptist Convention, United
Church of Christ, and the United Methodist Church, among others.
Numerous other churches, associations or conventions of churches, and
other religious organizations with religious leaders eligible for the
clergy housing exclusion under Code §107(2) are additional signers of
the brief, supporting the filing of the Church Alliance’s brief and the
positions advocated in it. They include the US Conference of Catholic
Bishops, Central Conference of American Rabbis, Moravian Church,
Rabbinical Assembly, Salvation Army, Union for Reform Judaism, United
Synagogue of Conservative Judaism, and Wisconsin Council of Churches,
among others.
The Church Alliance first formed in 1975 as the “Church Alliance for
Clarification of ERISA” to address the problems presented for
established church plans by the Employment Retirement Income Security
Act of 1974 (ERISA). The Church Alliance advocated for changes to the
church plan definitions in ERISA and the Code. As a result of these
efforts, Congress revised the definition of “church plan” in both ERISA
and the Code when it passed the Multiemployer Pension Plan Amendments
Act of 1980 (MPPAA) to make clear that a church plan can provide
retirement and welfare benefits to employees of all church agencies. The
Church Alliance continues to ensure that benefit-related legislative
and regulatory initiatives fully address the unique nature of church
plans.
For more information about Brethren Benefit Trust go to www.brethrenbenefittrust.org . For more information about the Church Alliance go to www.church-alliance.org.
-- Much of this report was provided by M. Colette Nies, managing
director of Communications for the United Methodist Church General Board
of Pension and Health Benefits.
Source: 4/22/2014 Newsline
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