Portico Helps File Amicus Brief to Defend Clergy Housing Exclusion

May. 06, 2018

On April 26, 2018, the Church Alliance filed an amicus curiae brief in the Seventh Circuit U.S. Court of Appeals (Chicago) in the case challenging the constitutionality of the cash housing allowance exclusion for clergy.

An amicus curiae brief, legal Latin for “Friend of the Court,” is written and submitted to a court of law by those who are not a party to the case and want to offer information or insights that could have bearing on the court’s decision. The Church Alliance is a coalition of the chief executive officers of 38 denominational benefit programs, and Portico Benefit Services President and CEO, Rev. Jeff Thiemann, actively worked in support of this brief.

The clergy housing allowance, commonly called “clergy housing exclusion,” stems from Internal Revenue Code Section 107(2). This Code section excludes the value of clergy housing from income taxation.

In the case Annie Laurie Gaylor, Freedom From Religion Foundation et al v. Steve Mnuchin et al., the federal district court for the Western District of Wisconsin declared the tax-free housing allowance for clergy under Code §107(2) unconstitutional. On December 13, 2017, the district court entered its final order in the case, which directs the government to cease enforcing Code §107(2). However, the district court delayed the effect of the order until 180 days after the conclusion of all appeals. The government appealed to the Seventh Circuit in February.

Barbara Boigegrain, chair of the Church Alliance and chief executive of Wespath Benefits and Investments (The United Methodist Church pension and health benefits board), said, “The Church Alliance’s mission is protecting the benefits of our covered clergy and retirees. This case has both direct and indirect impact on the compensation, retirement benefits, and housing of clergy across religious traditions, making it a critical case for the Church Alliance to advocate on behalf of our participants.”

The Church Alliance brief adds a perspective that is not duplicated in the government’s brief, focusing on the legal history of permitted legislative accommodations of religion. The brief argues that Code §107(2) is a constitutionally permitted accommodation of religion when viewed in the context of Code §107(1) (the exclusion for in-kind clergy housing, e.g., parsonage or manse) and Code §119, which excludes employer-provided housing from employees’ incomes in numerous secular circumstances. In addition, the Church Alliance brief brings to the court’s attention the particularly strong reliance interests that would render a change in the law on this point inappropriate and unjust.

Thiemann is an active member of the Church Alliance Steering Committee, and feels strongly that it’s Portico’s role to defend the benefits-related interests of its members, particularly in situations where their financial well-being is at stake. “Generations of pastors have made financial and retirement planning decisions based on the availability of the housing allowance exclusion,” he said. “If these tax rules, established by Congress, are now found unconstitutional, the financial well-being of many of our clergy will be negatively affected, and in some cases, jeopardized.”

In addition to the members of the Church Alliance and the Evangelical Lutheran Church in America (ELCA), a broad ecumenical array of other religious organizations joined the brief, including among others, The United Methodist Church’s General Council on Finance and Administration, the U.S. Conference of Catholic Bishops, The Church of Jesus Christ of Latter Day Saints, the Salvation Army, the Southern Baptist Ethics and Religious Liberty Commission, and numerous organizations affiliated with the Jewish Conservative Movement or the Jewish Reform Movement.

About the Church Alliance
The Church Alliance includes mainline and evangelical Protestant denominations, two branches of Judaism and Catholic dioceses, schools, and institutions. Their benefit programs provide retirement and health benefits to more than 1 million clergy, lay workers, and their family members.

The Church Alliance was formed in 1975 as the “Church Alliance for Clarification of ERISA” to address the problems presented for established church plans by the Employment Retirement Income Security Act of 1974 (ERISA), and continues to ensure that benefit-related legislative and regulatory initiatives fully address the unique nature of church plans.

In some cases the Church Alliance has acted in a “self-regulatory” manner by advocating for changes that actually limited the tax rules and regulations that govern church benefit plans and clergy participants. As a result, over the years, the Church Alliance has been involved with numerous pieces of legislation (and legislative proposals) that directly impact church benefit plans and programs.

For more information: church-alliance.org

About Portico Benefit Services
A ministry of the ELCA, Portico Benefit Services provides health, retirement, disability, and survivor benefits and related services for approximately 50,000 active and retired ELCA rostered ministers, lay employees, and their families. For more information, contact Portico at 800.352.2876.