Wisconsin Court Holds Parsonage Allowance Unconstitutional

Last Friday, a U.S. district court judge in the Western District of Wisconsin ruled that it is unconstitutional for the government to favor religion by not taxing tax ministers on housing allowances provided by their churches. This ruling does not take effect until after any appeals are complete, so it should not affect any ministers for the time being. Furthermore, the ruling addresses only cash housing allowances; ministers living in church-provided housing are not affected. If upheld, however, the ruling could have serious implications for ministers receiving cash housing allowances, with other challenges to special treatment for religious organizations and their employees likely to follow.

Subject to certain limitations, section 107(2) of the Internal...