In 2009, the atheist group ” Freedom from Religion Foundation” filed a lawsuit challenging the constitutionality of Sections 107 and 265(1)(6) of the federal tax code, which establishes the housing allowance for ministers. Their argument stated that the unique benefit set aside for “ministers of the gospel” is a violation of the separation of church and state.
On Friday, June 17, 2011, this legal challenge to the clergy housing allowance was voluntarily dismissed in a California U.S. District Court. The reason the lawsuit was dropped was due to the fact that the atheist group was not directly affected by Sections 107 and 265(1)(6) of the federal tax code and therefore they do not have the standing to challenge it.
Note: Section 107 of the federal tax code relates to “ministers of the gospel” receiving a housing allowance. Section 265(1)(6) of the federal tax code allows “ministers of the gospel” to deduct their mortgage interest and real estate taxes on Schedule A in addition to using those expenses as housing allowance expenses.
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