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Atheists just say no to clergy tax break
First Published Aug 21 2013 12:19 pm • Last Updated Aug 21 2013 12:19 pm

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 it — and she’s asking a federal judge for help.

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The standoff is the latest twist in a court battle about 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 Internal Revenue Service and the Rev. Rick Warren, of Southern California’s Saddleback Church.

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.


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Critics of the housing allowance say it is unfair to the general public. They pay more because clerics 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 about 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 case 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 say 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 IRS 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 nontheistic in nature," the government argued in a motion to dismiss the suit.

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