The U.S. District Court for the Eastern District of Kentucky recently dismissed a lawsuit filed by the American Atheists, holding that the plaintiffs lacked standing. The American Atheists and several affiliated organizations had filed a complaint challenging various preferences for churches in the tax code, including the exception to filing the Form 990 and the parsonage allowance. The plaintiffs alleged that the challenged statutes violated various constitutional provisions, including the Equal Protection Clause and the Establishment Clause.
In general, plaintiffs may not bring suit to challenge the constitutionality of a law unless they can demonstrate that the law causes them to suffer actual, particular harm. Because the American Atheists had not actually claimed an exemption from filing the Form 990 or attempted to pay their executives a tax-free clergy housing allowance, the court held that their putative injury was mere speculation. The court found persuasive the government’s argument that the American Atheists could, conceivably have qualified as a “church” despite their non-theistic views. Because the plaintiffs had never sought classification as a church, Judge William Bertelsman concluded that they had not suffered injury and lacked standing. (Despite the government’s argument, it is highly unlikely that an atheist group could satisfy many of the 14 criteria the IRS currently uses to determine whether an organization is a church.)
Judge Bertelsman distinguished the case from the decision of the U.S. District Court for the Western District of Wisconsin in Freedom from Religion Foundation, Inc. v. Werfel, in which Judge Barbara Crabb had concluded that the clergy housing allowance was unconstitutional, violating the Establishment Clause. The Freedom from Religion Foundation case included two individual plaintiffs who claimed that their housing allowance was not tax-free because they were not practicing clergy. In contrast, Judge Bertelsman noted that the American Atheists suit included no individual plaintiffs who could claim their housing allowance was not exempt. In addition, in Freedom From Religion Foundation, the government had admitted that FFRF could not qualify as a church, whereas in American Atheists, the IRS refused to admit that American Atheists could not qualify as a church.
Judge Crabb’s ruling that the clergy housing allowance is unconstitutional is currently on appeal in the Seventh Circuit.