Kentucky Judge Upholds Tax Breaks for Clergy

Amanda Casanova | Contributor | Updated: May 23, 2014

Kentucky Judge Upholds Tax Breaks for Clergy

A Kentucky judge has struck down an atheist challenge to tax benefits for clergy and churches.

The decision comes months after a Wisconsin federal judge threw out a housing tax break for pastors. The judge said the housing allowance was unconstitutional. The case has since been appealed to the Seventh Circuit.

In the Kentucky case, three groups, American Atheists, Atheists of Northern Indiana, and Atheist Archives of Kentucky, argued that the current tax code provisions unfairly favor churches and pastors.

The lawsuit, according to the Evangelical Council for Financial Accountability, challenged:

  • the church exemption from the requirement to file applications for recognition of tax-exempt status (Form 1023),

  • the church exemption from filing annual information returns (Form 990),

  • the clergy housing exclusion,

  • the exemption from income tax withholding and FICA taxes for ministers, and

  • the specific audit procedures for churches.

In the decision, the judge said a plaintiff must "allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief."

The Atheist groups have not applied for religious exemptions.

"At this point, the Atheists have no idea whether they could gain classification as a church or religious organization under I.R.C. 501(c)(3) because they have never sought such classification," Judge William O. Bertelsman said.

The ruling only applies to Kentucky.


Publication date: May 23, 2014

Kentucky Judge Upholds Tax Breaks for Clergy