Many churches give their pastors an allowance to help ease housing-related expenses, such as utility bills, repairs, and yard work costs. The parsonage exemption allows ministers to receive this money free of any federal taxes.
However, a lawsuit filed in 2009 by Freedom from Religion Foundation, expected to go to trial in fall 2011, threatens the constitutionality of sections 107 and 265(1)(6) of the federal tax code, which establishes the housing allowance for ministers. The group asserts the unique benefit set aside especially for “ministers of the gospel” is a violation of separation of church and state.
The FFRF cites the 1989 U.S. Supreme Court case Texas Monthly, Inc. v. Bullock to assert that tax benefits given only to religious institutions violate the Constitution’s Establishment Clause.
