Chicago clergy are fighting a federal judge’s recent ruling that tax-free housing allowances for clergy violate the separation of church and state.
The 7th Circuit Court of Appeals in Chicago will be asked to weigh in on the challenge to the so-called parsonage allowance — an Internal Revenue Service benefit that allows clergy to exclude from their tax returns the compensation earmarked for mortgage payments, rent, utility bills or maintenance costs.
The ministerial tax break has been on the books for more than 60 years and is cited by many houses of worship, particularly smaller, independent ones, as an important financial underpinning to carrying out their mission.
But it has become the latest target of the Freedom From Religion Foundation, a self-proclaimed guardian of church-state separation based in Madison, Wis., that challenged the tax break, and won, in a Wisconsin court.