In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 18-1277 & 18-1280
ANNIE LAURIE GAYLOR, et al.,
Plaintiffs-Appellees,
v.
STEVEN T. MNUCHIN, et al.,
Defendants-Appellants,
and
EDWARD PEECHER, et al.,
Intervening
Defendants-Appellants.
____________________
Appeals from the United States District Court for the
Western District of Wisconsin.
No. 16-cv-215 — Barbara B. Crabb, Judge.
____________________
ARGUED OCTOBER 24, 2018 — DECIDED MARCH 15, 2019
____________________
Before BAUER, MANION, and BRENNAN, Circuit Judges.
BRENNAN, Circuit Judge. Since the Founders crafted the Re-
ligion Clauses of the First Amendment, courts have grappled
2 Nos. 18-1277 & 18-1280
with the “play in the joints” between them. Walz v. Tax Comm.
of City of N.Y., 397 U.S. 664, 669 (1970). This case calls us to do
so once more. Freedom From Religion Foundation (“FFRF”)
claims that a longstanding tax code exemption for religious
housing, 26 U.S.C. § 107(2) of the Internal Revenue Code, vi-
olates the Establishment Clause. The district court agreed.
The U.S. Treasury Department and several intervening reli-
gious organizations ask us to reinstate the exemption, assert-
ing that the survival of many congregations hangs in the
balance. We must decide whether excluding housing allow-
ances from ministers’ taxable income is a law “respecting an
establishment of religion” in violation of the First Amend-
ment.
I.
A. History of § 107(2)
The facts before us are not in dispute. The Sixteenth
Amendment was ratified in 1913, authorizing Congress to
levy an income tax. Congress imposed a federal income tax
that same year and has levied one in various forms since. As
a result, Congress and the Treasury Department needed to
define taxable “income.” A rule defining income that survives
today in the Internal Revenue Code is the “convenience-of-
the-employer” doctrine. Under that doctrine, housing pro-
vided to employees for the convenience of their employer is
exempt from taxable income. Early examples of exclusions
under the doctrine include housing provided to sailors living
aboard ships, workers living in camps, and hospital employ-
ees. But the convenience-of-the-employer doctrine was not
Nos. 18-1277 & 18-1280 3
made available to ministers.1 In 1921, the Treasury Depart-
ment announced ministers would be taxed on the fair rental
value of parsonages provided as living quarters. O.D. 862, 4
C.B. 85 (1921).
Congress reacted quickly and enacted a statute to exclude
church-provided parsonages from the taxable income of min-
isters. The Treasury Department interpreted this statute to
apply only to housing provided in-kind; cash housing allow-
ances were included in income. I.T. 1694, C.B. II-1, at 79 (1923).
This continued for decades until in the 1950s several ministers
successfully challenged the limitation to in-kind housing.2
Congress then enacted 26 U.S.C. § 107, which provides:
In the case of a minister of the gospel, gross in-
come does not include—
(1) the rental value of a home furnished to him
as part of his compensation; or
(2) the rental allowance paid to him as part of
his compensation, to the extent used by him to
rent or provide a home …
1 The text of the tax code refers specifically to “ministers of the gos-
pel,” so we use that term. Courts have long held the provision applies to
religious leaders of any denomination, regardless of formal title. See, e.g.,
Salkov v. Comm’r, 46 T.C. 190, 194 (1966) (holding a Jewish cantor was a
“minister of the gospel”).
2 See, e.g., Williamson v. Comm’r, 224 F.2d 377 (8th Cir. 1955); Conning
v. Busey, 127 F. Supp. 958 (S.D. Ohio 1954); MacColl v. United States,
91 F. Supp. 721 (N.D. Ill. 1950).
4 Nos. 18-1277 & 18-1280
Section 107(1) reauthorized the in-kind parsonage exemption
in place since the 1920s. Section 107(2) authorized the IRS to
also exempt cash allowances from ministers’ taxable income.3
B. District Court Proceedings
FFRF describes itself as a “nonprophet nonprofit” organi-
zation that “[t]akes legal action challenging entanglement of
religion and government, government endorsement or pro-
motion of religion.” What Does the Foundation Do?, FREEDOM
FROM RELIGION FOUNDATION, https://ffrf.org/faq/item/15001-
what-does-the-foundation-do (last visited March 10, 2019).
Seeking to challenge both § 107(1) and § 107(2), FFRF paid its
co-presidents Annie Gaylor and Dan Barker a portion of their
salaries in the form of a housing allowance. FFRF also paid
this housing allowance to a former president of the organiza-
tion, Anne Nicol Gaylor (“Nicol Gaylor”).4 FFRF, Gaylor,
Barker, and Nicol Gaylor, none of whom meet the IRS’s defi-
nition of “minister,” then sued the Treasury Department,
claiming § 107 violates the First Amendment because it con-
ditions a tax benefit on religious affiliation. We dismissed this
challenge for lack of standing because FFRF and its employees
never applied for § 107(1) or § 107(2) exemptions, so they were
3An amicus brief from the University of St. Thomas School of Law
(Minnesota) estimates that of the United States’ 384,000 congregations,
200,000 to 300,000 provide a housing allowance to their ministers under
26 U.S.C. § 107(2).
4 Nicol Gaylor, Annie Gaylor’s mother and co-founder of FFRF,
passed away during the initial lawsuit filed by FFRF. Although the party
to this lawsuit is technically the Estate of Anne Nicol Gaylor, we refer to
her as “Nicol Gaylor” for brevity.
Nos. 18-1277 & 18-1280 5
never denied them. Freedom From Religion Foundation, Inc. v.
Lew, 773 F.3d 815, 825 (7th Cir. 2014) (“Lew”).
In response, Gaylor and Barker filed amended tax returns
for 2012 and 2013 claiming refunds for their housing allow-
ances under § 107(2); Nicol Gaylor did the same for 2013. The
IRS erroneously issued refunds to Gaylor and Barker for 2013
but made no decisions on plaintiffs’ other claims. After more
than six months without IRS action on plaintiffs’ claims, FFRF
and its employees brought this suit. The IRS then denied the
2012 refund claims because none of the claimants were minis-
ters.
The Treasury Department moved to dismiss FFRF’s
§ 107(1) challenge for lack of subject matter jurisdiction. The
district court granted the motion for the same reasons we
articulated in Lew: FFRF’s employees never claimed a § 107(1)
exemption. FFRF does not appeal that ruling. Later, the dis-
trict court permitted several pastors who receive housing
allowances and their associated religious organizations to in-
tervene to defend § 107(2).5
The Treasury Department and intervenors moved for
summary judgment. The district court denied their motions
and instead granted summary judgment to FFRF and its em-
ployees. The court held that FFRF and its employees had
standing to challenge § 107(2), and that that statute violates
the Establishment Clause of the First Amendment. Gaylor v.
5 The intervening defendants are Bishop Edward Peecher, the Chicago
Embassy Church, Father Patrick Malone, the Holy Cross Church, the
Diocese of Chicago and Mid-America of the Russian Orthodox Church
Outside of Russia, and Pastor Christopher Butler. Each of the intervenors
receive or provide housing allowances under § 107(2).
6 Nos. 18-1277 & 18-1280
Mnuchin, 278 F. Supp. 3d 1081, 1104 (W.D. Wis. 2017). The
court held that § 107(2) violated the secular purpose prong of
the test set forth in Lemon v. Kurtzman, 403 U.S. 602 (1971), and
ruled that the statute’s true purpose was to “provide aid to a
group of religious persons.” Gaylor, 278 F. Supp. 3d at 1099.
The court rejected the argument that § 107(2) avoids excessive
government entanglement with religion, because in the
court’s view “concerns about entanglement [do not] justify
preferential treatment for religious persons.” Id. The Treasury
Department and the intervenors appeal.
II.
Neither the Treasury Department nor the intervenors
dispute the district court’s ruling that FFRF has standing to
challenge § 107(2). Nevertheless, even if the issue has not been
raised, if there is no Article III standing our court must dis-
miss the suit. Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d
583, 588 (7th Cir. 2016). We evaluate standing to determine
whether FFRF resolved the deficiencies we noted in Lew.
To establish Article III standing, plaintiffs must show they
have suffered “(1) a concrete and particularized ‘injury in fact’
(2) that is fairly traceable to the challenged action of the de-
fendant, and that is (3) likely to be redressed by a favorable
judicial decision.” Lew, 773 F.3d at 819 (citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). To challenge
the constitutionality of a tax provision, a plaintiff must have
“personally claimed and been denied the exemption.” Lew,
773 F.3d at 821.
An essential element of “injury in fact” is that the injury
be “actual and imminent, not conjectural or hypothetical.”
Nos. 18-1277 & 18-1280 7
Lujan, 504 U.S. at 561 (internal quotations and citations omit-
ted). When FFRF filed this action, Gaylor and Barker had yet
to be denied a refund from their 2012 tax returns, and Nicol
Gaylor had still, by the time of the district court’s decision,
received no answer to her 2013 refund request. Yet this does
not necessarily mean FFRF lacked standing. Under 26 U.S.C.
§ 6532(a)(1), an income tax refund suit may be filed no earlier
than six months after the refund claim was submitted. A stat-
ute cannot “‘lower the threshold for standing below the min-
imum requirements imposed by the Constitution,’ but
Congress does have the power to ‘enact statutes creating legal
rights, the invasion of which creates standing, even though no
injury would exist without the statute.’” Sterk v. Redbox
Automated Retail, LLC, 770 F.3d 618, 623 (7th Cir. 2014) (quot-
ing Kyles v. J.K. Guardian Sec. Servs., Inc., 222 F.3d 289, 294 (7th
Cir. 2000)).
The district court concluded it was reasonable to interpret
§ 6532(a)(1) as rendering a claim “effectively denied if the IRS
does not render a decision within six months.” Gaylor, 278
F. Supp. 3d at 1087. We agree. As the district court noted, pre-
venting a claimant from filing a refund suit until the IRS
responded to the claim “would allow the IRS to deprive a
party of standing indefinitely by withholding a decision.” Id.
at 1088. Several courts of appeals have cited the six-month fil-
ing requirement approvingly. See, e.g., Fletcher v. United States,
452 Fed. App’x 547, 552 (5th Cir. 2011) (“[B]efore a taxpayer
can bring a refund suit, he or she must … wait until either the
IRS denies the claim or six months have expired since filing
the administrative claim.”); Dumont v. United States, 345 Fed.
App’x 586, 590 (Fed. Cir. 2009) (“[A] suit … cannot be insti-
tuted until either the IRS denies the claim or six months pass
without its taking action.”); Sorenson v. Secʹy of Treasury of
8 Nos. 18-1277 & 18-1280
U.S., 752 F.2d 1433, 1438 (9th Cir. 1985), affʹd, 475 U.S. 851
(1986) (“The former section prohibits the courts from enter-
taining any refund suit filed before the expiration of six
months from the date the claim for refund is filed … .”); see
also Lew, 773 F.3d at 821 n.3 (“The plaintiffs could have … paid
income tax on their housing allowance, claimed refunds from
the IRS, and then sued if the IRS rejected or failed to act upon
their claims.”) (emphasis added).
Gaylor, Barker, and Nicol Gaylor have properly alleged a
“concrete, dollars-and-cents injury.” Lew, 773 F.3d at 821.
“[T]hey have incurred a cost or been denied a benefit on
account of their religion [or lack thereof],” Arizona Christian
Sch. Tuition Org. v. Winn, 536 U.S. 125, 130 (2011), which con-
fers Article III standing. Because its members have standing
and the contested issue is germane to its organizational pur-
pose, FFRF has organizational standing to sue as well. See
Sierra Club v. United States E.P.A., 774 F.3d 383, 388–89 (7th
Cir. 2014) (“‘An organization has standing to sue if (1) at least
one of its members would otherwise have standing; (2) the
interests at stake in the litigation are germane to the organiza-
tion’s purpose; and (3) neither the claim asserted nor the relief
requested requires an individual member’s participation in
the lawsuit.’”) (quoting Sierra Club v. Franklin Cty. Power of Ill.
LLC, 546 F.3d 918, 924 (7th Cir. 2008)).
III.
This case comes to us after a grant of summary judgment,
so we assess the parties’ claims de novo. Freedom from Religion
Found., Inc. v. Concord Cmty. Sch., 885 F.3d 1038, 1045 (7th Cir.
2018) (“Concord”).
Nos. 18-1277 & 18-1280 9
Currently, Establishment Clause jurisprudence incorpo-
rates a number of tests when evaluating the constitutionality
of government action. Two are relevant to this case: the test
announced in Lemon v. Kurtzman, 403 U.S. 602 (1971), and the
“historical significance” test of Town of Greece v. Galloway, 572
U.S. 565, 576 (2014).6 Because the Supreme Court has not clar-
ified which should take precedence, we evaluate FFRF’s
claims under both tests and associated case law. See Concord,
885 F.3d at 1045 n.1 (“Indeed, there is debate among the Jus-
tices about the continuing validity of the endorsement
test. … For now, we do not feel free to jettison that test alto-
gether … .”).7 We consider this case under the Lemon test in
6 A third relevant to this challenge, the endorsement test, clarifies
Lemon and is woven into our consideration of § 107(2) under the Lemon
test, particularly under the second prong. See, e.g., Freedom from Religion
Found., Inc. v. City of Marshfield, Wis., 203 F.3d 487, 493 (7th Cir. 2000), as
amended on denial of rehʹg and rehʹg en banc (Mar. 22, 2000) (“[T]he effect
prong of [the Lemon] test has been analyzed under the ‘perception of en-
dorsement’ test developed in Lynch v. Donnelly, 465 U.S. 668, 690 (1984)
(O’Connor, J., concurring).”).
7 An amicus brief filed by Wisconsin and fifteen other states notes the
Supreme Court has not applied the Lemon test to a religious freedom case
in many years. Even so, until the Supreme Court explicitly overturns
Lemon we must apply it, as well as the other tests more recently relied
upon by the Court. Other circuit courts also apply multiple tests when
considering a challenge under the Establishment Clause. See, e.g., American
Humanist Assoc. v. McCarty, 851 F.3d 521, 525–26 (5th Cir. 2017) (balancing
the Lemon, endorsement, and coercion tests against the historical signifi-
cance test in Town of Greece); Smith v. Jefferson Cty. Bd. of Sch. Comm’rs,
788 F.3d 580, 586–87 (6th Cir. 2015) (setting forth Lemon, the endorsement
test, and Town of Greece as the “three main jurisprudential threads” that
must be woven together in assessing government action under the Estab-
lishment Clause).
10 Nos. 18-1277 & 18-1280
this Part of this opinion, and under the “historical signifi-
cance” test in Part IV.
Lemon summarized prior case law into a three-prong test:
“[f]irst, the statute must have a secular legislative purpose;
second, its principal or primary effect must be one that neither
advances nor inhibits religion; finally, the statute must not
foster an excessive government entanglement with religion.”
403 U.S. at 612–13 (internal citations and quotations omitted).
This test is not cumulative: if § 107(2) fails any of Lemon’s three
prongs, it violates the Establishment Clause.
A. Secular Legislative Purpose
We first examine whether § 107(2) has a secular legislative
purpose. “When the government acts with the ostensible and
predominant purpose of advancing religion, it violates that
central Establishment Clause value of official religious neu-
trality, there being no neutrality when the government’s os-
tensible object is to take sides.” McCreary Cty., Ky. v. Am. Civil
Liberties Union of Ky., 545 U.S. 844, 860 (2005) (citing Corpora-
tion of Presiding Bishop of Church of Jesus Christ of Latter-day
Saints v. Amos, 483 U.S. 327, 330 (1987)). A statute is unconsti-
tutional under this test “only when … there [is] no question
that the statute … was motivated wholly by religious consid-
erations.” Lynch v. Donnelly, 465 U.S. 668, 680 (1984). The
Treasury Department and intervenors point to three secular
legislative purposes of the statute: to eliminate discrimination
against ministers, to eliminate discrimination between minis-
ters, and to avoid excessive entanglement with religion. FFRF
counters that § 107(2) was passed to confer a government ben-
efit on religion, which necessarily violates the Establishment
Clause.
Nos. 18-1277 & 18-1280 11
We will defer to a government’s sincere articulation of sec-
ular purpose, so long as the plaintiffs have not proved that
articulation of purpose is a sham. Edwards v. Aguillard, 482
U.S. 578, 586–87 (1987) (“While the Court is normally defer-
ential to a State’s articulation of a secular purpose, it is
required that the statement of such purpose be sincere and
not a sham.”); Cohen v. City of Des Plaines, 8 F.3d 484, 489 (7th
Cir. 1993) (“We will defer to a municipality’s sincere articula-
tion of a secular purpose.”). This does not mean “that the
law’s purpose must be unrelated to religion … .” Amos, 483
U.S. at 335. Instead, “the government lacks a secular purpose
under Lemon only when ‘there is no question that the statute
or activity was motivated wholly by religious considera-
tions.’” Milwaukee Deputy Sheriffs’ Ass’n v. Clarke, 588 F.3d 523,
527–28 (7th Cir. 2009) (quoting Books v. Elkhart Cty., 401 F.3d
857, 863 (7th Cir. 2005), in turn quoting Lynch, 465 U.S. at 680).
So we evaluate the purposes articulated by the Treasury De-
partment to determine whether they are sincere, or whether
the government’s “‘actual purpose is to endorse or disap-
prove of religion.’” Edwards, 482 U.S. at 585 (quoting Lynch,
465 U.S. at 690 (O’Connor, J., concurring)).
The Treasury Department first contends Congress passed
§ 107 to put ministers on equal footing with secular employ-
ees receiving the same benefits; in other words, to eliminate
discrimination against ministers. The Treasury Department
points to its 1921 decision to not exclude parsonages from tax-
able income and Congress’s quick passage of the parsonage
exemption, now codified at § 107(1), in response. The Treas-
ury Department argues this is a secular purpose because it
simply places religious employees on par with secular ones.
FFRF counters that the benefits given to ministers under
§ 107(2) are different—and better—than those the tax code
12 Nos. 18-1277 & 18-1280
gives to secular employees. FFRF argues putting ministers in
a better position than secular employees promotes the dis-
semination of religious ideas and thus cannot be secular.
To determine whether § 107(2) confers a special benefit, or
simply integrates ministers into an existing tax system, we
must delve into the convenience-of-the-employer doctrine.
Though the doctrine was originally developed in Treasury
Department regulations, it has since been codified in several
places. The principal statute is 26 U.S.C. § 119(a)(2) and ex-
empts meals and lodging furnished to employees if they meet
five requirements: the meal or lodging is furnished (1) by an
employer to an employee, (2) in kind (as opposed to in cash),
(3) on the business premises of the employer, (4) for the con-
venience of the employer, and (5) as a condition of employ-
ment. See also 26 C.F.R. § 1.119-1(b) (2018). This exemption
applies generally: any qualifying employee can rely on
§ 119(a)(2), including religious employees.8
The express proof requirements of § 119(a)(2) are relaxed
throughout the tax code for various types of employees. Sec-
tion 119(c) exempts employees living in a foreign camp from
needing to fulfill the “business premises” and “condition of
employment” factors. Section 119(d) exempts certain teachers
and university employees from the convenience-of-the-
employer doctrine altogether, and allows them to exclude
from taxable income the fair rental value of campus housing.
Myriad provisions in Title 26 employ this categorical
approach and exempt any form of housing benefits, whether
8 For additional history on the development of the convenience-of-the-
employer doctrine, see Commissioner v. Kowalski, 434 U.S. 77, 84–96 (1977).
Nos. 18-1277 & 18-1280 13
in cash or in kind: § 132 and § 162 exclude housing provided
to an employee away on business for less than a year; § 134
excludes housing provided to current or former members of
the military; § 911 excludes housing above a certain level pro-
vided to citizens or residents living abroad; § 912 excludes
housing provided to government employees living abroad;
and, of course, § 107 excludes housing provided to ministers.
These categorical exemptions allow hundreds of thousands of
employees (including ministers) to receive tax-exempt
housing every year without needing to satisfy the proof re-
quirements of § 119(a)(2).
These parallel provisions show an overarching arrange-
ment in the tax code to exempt employer-provided housing
for employees with certain job-related housing requirements.
Congress has exempted certain categories of employees from
complying with the specific requirements of § 119(a)(2) to
simplify the application of the convenience-of-the-employer
doctrine to those occupations. Section 107, including subsec-
tion (2), recognizes ministers often use their homes as part of
their ministry. This provision thus eases the administration of
the convenience-of-the-employer doctrine by providing a
bright-line rule, instead of requiring that ministers and the
IRS repeatedly engage with a fact-intensive standard.
Reading § 107(2) in isolation from the other convenience-
of-the-employer provisions, and then highlighting the term
“minister,” could make the challenged statute appear to pro-
vide a government benefit exclusively to the religious. But
reading it in context, as we must, we see § 107(2) is simply one
of many per se rules that provide a tax exemption to employ-
ees with work-related housing requirements. See ANTONIN
14 Nos. 18-1277 & 18-1280
SCALIA & BRYAN A. GARNER, READING LAW 252 (2012) (“‘Sev-
eral acts in pari materia, and relating to the same subject, are to
be taken together, and compared in construction of them, be-
cause they are considered as having one object in view, and
as acting upon one system.’”) (quoting 1 James Kent, Commen-
taries on American Law 433 (1826)); see also Mueller v. Allen, 463
U.S. 388, 396 (1983) (upholding Minnesota tax deduction for
tuition expenses, primarily used by parents of children at sec-
tarian schools, in part because the deduction was “only one
among many deductions—such as those for medical ex-
penses … and charitable contributions … available under the
Minnesota tax laws”). Congress’s policy choice to ease the ad-
ministration of the convenience-of-the-employer doctrine by
applying a categorical exclusion is a secular purpose, not
“motivated wholly by religious considerations.” Lynch, 465
U.S. at 680.
FFRF argues considering the context of § 107(2) is inapt.
To FFRF, the benefits the statute provides apply to a broader
category of persons—any minister, as opposed to any minis-
ter that uses his or her home for religious purposes—than
other categorical housing exclusions in the tax code. The dis-
trict court agreed, and found that § 107(2) is not analogous to
other bright-line housing benefit provisions in the tax code
because, in comparison, it is overinclusive. Gaylor, 278
F. Supp. 3d at 1095 (“[Sections 134, 911, and 912] relate to em-
ployees whose housing is necessarily affected by their
jobs. … Some ministers may be in a similar situation … but by
no means are all ministers so restricted … .”) (emphasis in
original).
It is not immediately apparent that § 107(2) is broader than
the other categorical exemptions for employee housing. For
Nos. 18-1277 & 18-1280 15
example, under 26 U.S.C. § 911, any person living abroad is
permitted to exclude or deduct housing expenses, regardless
whether that person is living abroad at the behest of his or her
employer.
But to the extent § 107(2) may be overinclusive, that alone
does not render the statute unconstitutional. FFRF’s argu-
ment is a critique of categorical rules generally, rather than of
§ 107(2) specifically. “Read literally, rules are generally over-
inclusive and underinclusive if assessed by references to their
purposes. There is always a gap between the justification for
a rule … and the rule itself.” Cass R. Sunstein, Problems with
Rules, 83 CALIF. L. REV. 953, 990–91 (1995). No rule will per-
fectly address the concerns to which it is addressed, because
“[a]ll generalizations … are to some degree invalid, and hence
every rule of law has a few corners that do not quite fit.” An-
tonin Scalia, The Rule of Law as a Law of Rules, 56 U. CHI. L. REV.
1175, 1177 (1989). Categorical rules sacrifice precision of result
for administrative ease and equality of result. So it is not sur-
prising that § 107(2) covers some housing allowances that
may be excluded under a case-by-case discretionary standard.
In this respect, § 107(2) is not an outlier.
Important to our consideration, any imprecision does not
make § 107(2) any less analogous to other “convenience-of-
the-employer” related provisions in the tax code. Each covers
a different subset of eligible taxpayers and activities, but they
all serve a common purpose: excluding from taxable income
certain employment-related expenses. The constitutionality
of § 107(2) does not turn on which ministers the statute in-
cludes or excludes. See, e.g., Kowalski, 434 U.S. at 95–96
(“[A]rguments of equity have little force in construing the
boundaries of exclusions and deductions from income many
16 Nos. 18-1277 & 18-1280
of which, to be administrable, must be arbitrary.”); Delong v.
Depʹt of Health & Human Servs., 264 F.3d 1334, 1343 (Fed. Cir.
2001) (“Like all bright line rules, [the statute] is both over-
inclusive and under-inclusive, but the imprecision of the stat-
ute does not make it unconstitutional.”).
The second secular legislative purpose cited by the Treas-
ury Department is elimination of discrimination between
ministers. The government argues Congress passed § 107(2)
because providing the tax exemption only to ministers given
in-kind housing tended to exclude ministers of smaller or
poorer denominations. FFRF argues this is a sham and the
true justification was to subsidize religion, based on a state-
ment made in the early 1950s by § 107(2)’s sponsoring repre-
sentative Peter Mack: “Certainly, in these times when we are
being threatened by a godless and antireligious world move-
ment we should correct this discrimination against certain
ministers who are carrying on such a courageous fight against
this foe.” Hearings Before the Committee on Ways and Means:
Statement of Hon. Peter F. Mack, Jr., on H.R. 4275, Concerning the
Taxability of a Cash Allowance Paid to Clergymen in Lieu of
Furnishing Them a Dwelling, 83d. Cong. 1, at 1576 (June 9,
1953). The Treasury Department and intervenors respond by
quoting other statements by Representative Mack from the
same hearing, such as that the bill was proposed because
“present tax laws are discriminatory among our clergy,” id. at
1574–75, and because he believed “a serious injustice [was]
being done to those ministers who must provide their own
home,” id. at 1576.
This smattering of legislative history does not establish
Representative Mack’s motives in proposing the bill. Even if
Nos. 18-1277 & 18-1280 17
his first quote above did so, the motivation of one representa-
tive in a House of 435 does not definitively reveal the impetus
behind the bill’s passage. At the same hearing, other repre-
sentatives stated different motives. Speaking on the same pro-
posed provision, Representative Ray G. McKennan said the
changes were proposed to “create an equitable condition for
ministers similarly situated, and would probably eliminate
court action [by ministers suing for discrimination].” Id. at
1574.
The legislative record does not establish a singular motive
behind § 107(2). Conflicting statements among members of
Congress—even by the same member—reveal the unreliabil-
ity of this legislative history. Certainly, these statements do
not render “a sham” the Treasury Department’s proffered
purpose of avoiding discrimination among religions. Cf.
Edwards, 482 U.S. at 586–87. As such, we take the government
at its word, which resolves this question. “The clearest com-
mand of the Establishment Clause is that one religious
denomination cannot be officially preferred over another.”
Larson v. Valente, 456 U.S. 228, 244 (1982). Avoidance of dis-
crimination against certain religions in favor of others is a per-
missible secular legislative purpose.
The third secular legislative purpose cited by the Treasury
Department is to avoid excessive entanglement with religion.
To the government, Congress’s decision to exempt ministers
from the proof requirements of § 119(a)(2) prevents the IRS
from conducting intrusive inquiries into how religious organ-
izations use their facilities. See, e.g., Amos, 483 U.S. at 339
(“avoid[ing] … intrusive inquiry into religious belief …” pre-
vents entanglement). FFRF responds that § 107(2) does not
18 Nos. 18-1277 & 18-1280
avoid such entanglement because the IRS must still adminis-
ter a test to determine whether a taxpayer qualifies as a min-
ister. FFRF argues this is as fact-intensive an audit as the
inquiry administered for the generally applicable statutory
exemption, § 119(a)(2).
On this entanglement question, two Supreme Court deci-
sions are particularly instructive. In Walz v. Tax Comm. of City
of N.Y., the Court upheld a New York property tax exemption
for properties owned by churches and used exclusively for re-
ligious worship. Walz disagreed with the lower court’s exam-
ination of churches’ contribution to the social welfare to
determine whether the tax exemption had a secular purpose:
To give emphasis to so variable an aspect of the
work of religious bodies would introduce an
element of governmental evaluation and stand-
ards as to the worth of particular social welfare
programs, thus producing a kind of continuing
day-to-day relationship which the policy of
neutrality seeks to minimize.
397 U.S. at 674. Similarly, in Amos v. Corporation of the Presiding
Bishop of the Church of Jesus Christ of Latter-day Saints, the
Supreme Court upheld a categorical exemption for religious
organizations from the provisions of Title VII of the Civil
Rights Act of 1964. The opinion noted that, under Lemon, “it
is a permissible legislative purpose to alleviate significant
governmental interference with the ability of religious organ-
izations to define and carry out their religious missions.”
Amos, 483 U.S. at 335.
Any financial interaction between religion and govern-
ment—like taxing a church, or exempting it from tax—entails
Nos. 18-1277 & 18-1280 19
some degree of entanglement. But only excessive entangle-
ment violates the Establishment Clause. See Walz, 307 U.S. at
674 (“We must also be sure that the end result—the effect—is
not an excessive government entanglement with religion.”)
Crucial to our evaluation, the Supreme Court has already per-
mitted the level of entanglement incurred under § 107(2). In
Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC,
565 U.S. 171 (2012), the Court inquired into the facts underly-
ing Hosanna-Tabor’s employment to determine whether she
was a minister. Id. at 190–92. The IRS does the same under
§ 107(2) to determine whether a taxpayer qualifies as a minis-
ter. The Court would not have so inquired if it violated the
Establishment Clause.
In contrast, the application of § 119(a)(2) to ministers
would entangle church and state far more than under
§ 107(2). For example, to determine what constitutes the busi-
ness premises of the employer under § 119(a)(2), the IRS
would have to determine what the “business” of the church is
and where and how far the “premises” of the church extend.
See EDWARD A. ZELINSKY, TAXING THE CHURCH 168–69 (2017).
To do so, the IRS would need to interrogate ministers on the
specifics of their worship activities, even determine which
activities constitute “worship.” Such government inquiries
into the internal affairs of churches to determine their eligibil-
ity for tax relief have been rejected as excessive entanglement.
See, e.g., Serbian E. Orthodox Diocese for U.S. of Am. & Canada v.
Milivojevich, 426 U.S. 696, 708–20 (1976) (holding civil courts
cannot interfere with the rulings of ecclesiastical tribunals on
church affairs); Schleicher v. Salvation Army, 518 F.3d 472, 475
(7th Cir. 2008) (“Congress does not want courts to interfere in
the internal management of churches … .”).
20 Nos. 18-1277 & 18-1280
Worse, if subject to § 119(a)(2), congregations might alter
their religious activities to attempt to conform with its re-
quirements. Congress enacted § 107(2) in part to avoid that.
And congressional action “to minimize governmental inter-
ference with the decision-making process in religions … does
not violate the Establishment Clause.” Amos, 483 U.S. at 336
(internal citations and quotations omitted).
The categorical nature of § 107(2) also avoids excessive
entanglement by providing ministers and their churches cer-
tainty as to whether their housing allowances will be exempt
from tax. In Amos, the Supreme Court held “it is a significant
burden on a religious organization to require it, on pain of
substantial liability, to predict which of its activities a secular
court will consider religious.” Amos, 483 U.S. at 336.
Recognizing the potentially excessive entanglement
threatened by the application of § 119(a)(2) to ministers, Con-
gress enacted a less-entangling tax exemption. Seeking to
avoid government entanglement is a secular legislative pur-
pose under Lemon. See, e.g., Medina v. Catholic Health Initiatives,
877 F.3d 1213, 1231 (10th Cir. 2017) (“[T]he Supreme Court has
expressly held that a purpose of avoiding government entan-
glement does not violate the Establishment Clause.”) (citing
Amos, 483 U.S. at 335). Because the government has articu-
lated not one, but three secular purposes, we conclude the
first prong of Lemon is satisfied.
B. Primary Effect of Advancing or Inhibiting Religion
The second prong of the Lemon test requires that a statute
have a “principal or primary effect … that neither advances
nor inhibits religion.” Lemon, 403 U.S. at 612. “For a law to
have forbidden ‘effects’ under Lemon, it must be fair to say
Nos. 18-1277 & 18-1280 21
that the government itself has advanced religion through its
own activities and influence.” Amos, 483 U.S. at 337 (emphasis
in original). This entails “sponsorship, financial support, and
active involvement of the sovereign in religious activity.”
Walz, 297 U.S. at 668.
FFRF contends the Supreme Court’s holdings in Amos and
Walz were superseded by Justice Brennan’s plurality opinion
in Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989). That case
resolved an Establishment Clause challenge to a state tax ex-
emption for religious publications. To determine whether
Justice Brennan’s opinion controls, we examine the grounds
for decision in Texas Monthly’s various concurrences. See
Marks v. United States, 430 U.S. 188, 193 (1977) (“When a frag-
mented Court decides a case and no single rationale explain-
ing the result enjoys the assent of five Justices, the holding of
the Court may be viewed as that position taken by those
Members who concurred in the judgments on the narrowest
grounds.”).
In Texas Monthly, Justice Brennan authored an opinion
joined by Justice Marshall and Justice Stevens and announced
the result of the case; Justice White concurred in the result and
wrote separately; Justice Blackmun concurred in the result
and wrote for himself and Justice O’Connor; and Justice Scalia
filed a dissenting opinion, joined by Chief Justice Rehnquist
and Justice Kennedy. Justice Brennan’s opinion concluded
that the tax exemption for religious publications violated the
Establishment Clause because “[e]very tax exemption consti-
tutes a subsidy that affects nonqualifying taxpayers.” Texas
Monthly, 489 U.S. at 14 (Brennan, J., plurality opinion). He
stated any subsidy directed “exclusively to religious organi-
22 Nos. 18-1277 & 18-1280
zations that is not required by the Free Exercise Clause … can-
not but convey a message of endorsement to slighted mem-
bers of the community.” Id. at 15 (internal citations and
quotations omitted).
The other opinions in Texas Monthly were narrower in
scope. Justice White’s concurrence reached the same result,
but on an independent ground, the Press Clause. Justice
Blackmun’s concurrence agreed that the tax exemption vio-
lated the Establishment Clause, but did not adopt many of
Justice Brennan’s sweeping statements. Justice Blackmun
urged that the case be resolved narrowly and concluded only
that “a tax exemption limited to the sale of religious literature
by religious organizations violates the Establishment Clause.”
Id. at 28 (Blackmun, J., concurring) (emphasis in original). Be-
cause Justice Blackmun decided the case on Establishment
Clause grounds,9 and on a narrower basis than Justice
Brennan’s opinion, under the Marks rule Justice Blackmun’s
concurrence sets the rule of decision of Texas Monthly. His
concurrence did not comment on what constitutes a forbid-
den effect under Lemon, so Texas Monthly does not alter our
analysis of this second prong.
9 Even if Justice White’s opinion were based on narrower grounds
than Justice Blackmun’s opinion, it reached the same result under a differ-
ent constitutional clause. “Marks applies ‘only when one opinion is a log-
ical subset of other, broader opinions.’” Gibson v. American Cyanamid Co.,
760 F.3d 600, 619 (7th Cir. 2014) (quoting King v. Palmer, 950 F.2d 771, 781
(D.C. Cir. 1991) (en banc)). Justice Blackmun’s opinion provided the fourth
and fifth votes in Texas Monthly and shared the “common denominator”
of resolving the issue under the Establishment Clause, so it controls. Gib-
son, 760 F.3d at 619 (quoting United States v. Heron, 564 F.3d 879, 884 (7th
Cir. 2009)).
Nos. 18-1277 & 18-1280 23
With Walz and Amos still in effect, we evaluate forbidden
effects under their framework. FFRF contends a tax exemp-
tion for religion is identical to a government subsidy for reli-
gion. In economic terms, a subsidy and a tax exemption may
have the same practical impact. See, e.g., Adam Chodorow,
The Parsonage Allowance, 51 U.C. DAVIS L. REV. 849, 854 (2018)
(“The claim that exemptions differ from direct subsidies for
Establishment Clause purposes simply ignores economic re-
ality.”). But the Supreme Court has already found a constitu-
tionally significant difference between the two on taxing
religion. “The grant of a tax exemption is not sponsorship
since the government does not transfer part of its revenue to
churches but simply abstains from demanding that the
church support the state.” Walz, 397 U.S. at 675.10
Under Walz and Amos, then, § 107(2) does not advance re-
ligion on behalf of the government. Providing a tax exemption
does not “connote[] sponsorship, financial support, and active
involvement of the [government] in religious activity” under
Walz, 397 U.S. at 668; see also Amos, 483 U.S. at 337 (“[W]e do
not see how any advancement of religion achieved by the [ex-
empt religious organization] can be fairly attributed to the
Government, as opposed to the Church.”).
Under these precedents, the primary effect of § 107(2) is
not to advance religion on behalf of the government, but to
10 The Supreme Court tacitly reaffirmed this approach in its standing
discussion in Arizona Christian Sch. Tuition Org. v. Winn, 536 U.S. 125
(2011). There, it held taxpayers had no standing to challenge a tax credit
directed primarily towards sectarian schools because “[w]hen the govern-
ment declines to impose a tax, … there is no … connection between dis-
senting taxpayer and alleged establishment.” Id. at 142.
24 Nos. 18-1277 & 18-1280
“allow[] churches to advance religion, which is their very pur-
pose.” Amos, 483 U.S. at 337 (emphasis in original). So § 107(2)
passes the second prong of Lemon.
C. Excessive Entanglement with Religion
The third prong of the Lemon test is whether the state “fos-
ter[s] ‘an excessive government entanglement with religion.’”
Lemon, 403 U.S. at 613 (quoting Walz, 397 U.S. at 674). We have
addressed this prong in Part III.A above. Because some level
of church-state interaction is unavoidable, “[e]ntanglement is
a question of kind and degree.” Lynch, 465 U.S. at 684.
Section 107(2) avoids government inquiry into the use of a
minister’s home, but it still requires the IRS to determine who
qualifies as a minister eligible for the exemption. Even if the
IRS’s test for who qualifies as a minister involves entangle-
ment, it is of a nature approved by the Supreme Court in
Hosanna-Tabor. See Hosanna-Tabor, 565 U.S. at 190–95 (engag-
ing in a fact-bound analysis to determine whether the peti-
tioner qualified as a minister). The alternative would be to
force ministers to comply with the far more detailed and par-
ticular, and thus more entangling, requirements of § 119(a)(2).
In answer to these concerns, Congress chose to enact
§ 107(2). Legislative determinations about the Establishment
Clause, while not binding, are entitled to deference. “We in
the Judiciary must be wary of interpreting [the Religion]
Clauses in a manner that negates the legislative role alto-
gether.” Texas Monthly, 489 U.S. at 28 (Blackmun, J., concur-
ring). Legislative deference is particularly great for
classifications in tax legislation. See, e.g., Regan v. Taxation with
Representation of Washington, 461 U.S. 540, 547 (1997) (“Legis-
latures have especially broad latitude in creating classifica-
tions and distinctions in tax statutes.”); Madden v. Kentucky,
Nos. 18-1277 & 18-1280 25
309 U.S. 83, 88 (1940) (holding that for tax classifications chal-
lenged under the Fourteenth Amendment, “the presumption
of constitutionality can be overcome only by the most explicit
demonstration that a classification is a hostile and oppressive
discrimination against particular persons and classes”).
Congress decided § 107(2) is the less entangling option, so we
will not disturb it.
We conclude § 107(2) has a secular legislative purpose, its
principal effect is neither to endorse nor to inhibit religion,
and it does not cause excessive government entanglement.
Here, “[t]here is no genuine nexus between tax exemption
and establishment of religion.” Walz, 397 U.S. at 675. Section
107(2), then, does not violate the Establishment Clause under
the Lemon test.
IV.
We next examine whether § 107(2) passes the historical
significance test.11 The Supreme Court has held “the Estab-
lishment Clause must be interpreted ‘by reference to histori-
cal practices and understandings.’” Town of Greece v. Galloway,
572 U.S. 565, 576 (2014) (quoting Cty. of Allegheny v. Am. Civil
11 FFRF and amici curiae supporting appellees’ position offer no ar-
guments under the historical significance test, except to assert the test ap-
plies only to legislative prayer. We find no such limitation. Though Town
of Greece addressed legislative prayer, it stated that “the Establishment
Clause must be interpreted ‘by reference to historical practices and under-
standings.’” 572 U.S. at 576 (quoting Cty. of Allegheny, 492 U.S. at 670
(Kennedy, J., concurring in judgment in part and dissenting in part)). This
language does not limit the application of the Town of Greece standard to
constitutional challenges to legislative prayer. As this part discusses, other
Supreme Court cases have examined relevant history as to monuments as
well as the ministerial exception.
26 Nos. 18-1277 & 18-1280
Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573, 670
(1989) (Kennedy, J., concurring in judgment in part and dis-
senting in part)). This fact-bound test was developed in three
cases. First, in Van Orden v. Perry, 545 U.S. 677 (2005) (plurality
opinion), the Court considered whether a monument
inscribed with the Ten Commandments on Texas government
property violated the Establishment Clause. Van Orden criti-
cized the Lemon test for ignoring the “strong role played by
religion and religious traditions throughout our Nation’s
history.” Id. at 683. Instead, the Court reviewed a number of
historical examples of governments referencing God and dis-
playing the Ten Commandments without issue. On that basis,
the Court held the monument did not violate the Establish-
ment Clause. Id. at 692.
Next, in Hosanna-Tabor, a unanimous Supreme Court held
that the Establishment Clause prevents governments from in-
terfering with the decision of a religious group to terminate
one of its ministers. In so deciding, the opinion explored the
history of church-state relations in the United States and Eng-
land, back to the Magna Carta. Hosanna-Tabor, 565 U.S. at 182.
From that history, the Court determined that the First
Amendment was adopted in part to prevent “the new Federal
Government—unlike the English Crown—[from a] role in fill-
ing ecclesiastical offices.” Id. at 184. This determination
formed the basis of the Court’s decision.
Finally, in Town of Greece the Supreme Court applied the
historical significance test when it held legislative prayer does
not violate the Establishment Clause. The Court held that
“[a]ny test the Court adopts [for the Establishment Clause]
Nos. 18-1277 & 18-1280 27
must acknowledge a practice that was accepted by the Fram-
ers and has withstood the critical scrutiny of time and political
change.” Town of Greece, 572 U.S. at 577.
We now apply the historical significance test to this case.
FFRF offers no evidence that provisions like § 107(2) were his-
torically viewed as an establishment of religion. The govern-
ment and intervenors, and amici curiae supporting their
position, have provided substantial evidence of a lengthy
tradition of tax exemptions for religion, particularly for
church-owned properties. For over two centuries, the states
have implemented church property tax exemptions in various
forms. See John Witte, Jr., Tax Exemption of Church Property:
Historical Anomaly or Valid Constitutional Practice?, 64 S. CAL.
L. REV. 363, 380 (1991) (“The colonial law exemption of church
property continued largely uninterrupted in the early dec-
ades of the American republic.”); see also id. at 389–95 (detail-
ing state protections for religious tax exemptions from the late
19th to early 20th centuries). When challenged on establish-
ment grounds, such tax exemptions typically have been up-
held. See, e.g., Trustees of Griswold College v. State, 46 Iowa 275,
282 (1877) (ruling the state constitution’s Establishment
Clause “does not [implicate] the exemption from taxation of
such church property as the legislature may think proper”).
Congress has enacted federal tax exemptions for religious
organizations as far back as 1802, when it permitted the
County of Alexandria (then under federal control) to exempt
church property from taxation, see 7 Cong. Ch. 53, May 3,
1802, 2 Stat. 194, and as recently as 2002, the last time § 107
was amended. See Clergy Housing Allowance Clarification
Act of 2002, Pub. L. No. 107–181, 116 Stat. 583. As early as
28 Nos. 18-1277 & 18-1280
1885, the U.S. Supreme Court acknowledged and accepted re-
ligious property tax exemptions in Gibbons v. District of
Columbia, 116 U.S. 404 (1886), “reflecting more than a century
of our history and uninterrupted practice.” Walz, 397 U.S. at
680. Today, more than 2,600 federal and state tax laws provide
religious exemptions. NINA J. CRIMM & LAURENCE H. WINER,
POLITICS, TAXES, AND THE PULPIT: PROVOCATIVE FIRST
AMENDMENT CONFLICTS 43 (2011).
The district court distinguished § 107(2) from this long
and continuing historical tradition of property tax exemp-
tions by noting the statute is an income tax exemption. We
find this too fine a distinction, as it ignores the impact of the
Sixteenth Amendment. Before 1913, Congress could not con-
stitutionally tax housing provided to ministers as part of their
income. See Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601,
637 (1895) (invalidating a state income tax). Within a few
years of income becoming taxable, Congress moved to
exclude parsonages from income, and a few decades later ex-
cluded cash housing allowances as well. Congress was con-
tinuing its “historical practice[]” of exempting certain church
resources from taxation. Town of Greece, 572 U.S. at 576. This
endeavor limits entanglement between church and state, see
supra at Part III.C. Given this history, we conclude § 107(2)
does not violate the Establishment Clause under the historical
significance test.
V.
FFRF claims § 107(2) renders unto God that which is
Caesar’s. But this tax provision falls into the play between the
joints of the Free Exercise Clause and the Establishment
Clause: neither commanded by the former, nor proscribed by
Nos. 18-1277 & 18-1280 29
the latter. We conclude § 107(2) is constitutional. The
judgment of the district court is REVERSED.