Case: 3:11-cv-00626-bbc Document #: 1 Filed: 09/13/11 Page 1 of 12

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WISCONSIN

FREEDOM FROM RELIGION FOUNDATION, INC.; ANNIE LAURIE GAYLOR; ANNE NICOL GAYLOR; and DAN BARKER,
Plaintiffs,
V.
TIMOTHY GEITHNER, SECRETARY OF THE UNITED STATES DEPARTMENT OF THE TREASURY, and DOUGLAS SHULMAN, COMMISSIONER OF THE INTERNAL REVENUE SERVICE,
Defendants.
COMPLAINT

Case No. 11-CV-626

The Plaintiffs, as their Complaint against the Defendants, allege as follows: NATURE OF THE CLAIMS
1. The Plaintiffs seek a declaration under 28 U.S.C. § 2201 that 26 U.S.C. §107, both on its face and as administered by the Internal Revenue Service ("IRS") and the Department of the Treasury ("Treasury"), violates the Establishment Clause of the First Amendment to the Constitution of the United States by providing preferential tax benefits to ministers of the gospel. Plaintiffs request the Court to enjoin the allowance or grant of tax benefits exclusively for ministers of the gospel under §107.

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JURISDICTION AND VENUE 2. This court has federal question jurisdiction pursuant to 28 U.S.C. §1331 with

respect to the relief sought against the defendants. The Court also has the authority to issue a

declaratory judgment under 28 U.S.C. § 2201. The Court further has the authority to award

injunctive relief under 28 U.S.C. § 1343 and Fed. R. Civ. P. 65.

3. The individual plaintiffs are federal taxpayers who object to the allowance of

preferential tax benefits under the Revenue Code, including income tax exclusions for housing

allowances paid as part of compensation to ministers of the gospel; the individual plaintiffs each

receive a designated housing allowance from the plaintiff FFRF but the housing allowances do

not qualify for income tax exclusion because the individual plaintiffs are not practicing religious

clergy.

4. The individual plaintiffs are members of the plaintiff Freedom From Religion

Foundation, Inc. ("FFRF").

5. Venue is appropriate in the District Court for the Western District of Wisconsin,

pursuant to 28 U.S.C. §1391(e).

PARTIES 6. The plaintiff FFRF is a non-profit membership organization that advocates for the

separation of church and state and educates on matters of non-theism. FFRF has 17,167

members, residing in every state of the United States and the District of Columbia, including more

than 1,300 members in the State of Wisconsin.

7. States.

FFRF represents and advocates on behalf of its members throughout the United

2

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8. FFRF's membership includes individuals who are federal taxpayers residing in the Western District of Wisconsin, who are opposed to government preferences and favoritism toward religion; FFRF's principal office is in Madison, Wisconsin.
9. The plaintiff, Anne Nicol Gaylor, a federal taxpayer, resides in Madison, Wisconsin, and she is a Lifetime Member of, and President Emerita of FFRF; she is a non-believer who is opposed to government preferences and favoritism toward religion.
10. The plaintiff, Annie Laurie Gaylor, a federal taxpayer, also resides in Madison, Wisconsin, and she is a Lifetime Member of, and Co-President of FFRF; she is the Executive Editor of FFRFs periodical Freethought Today, and she is a non-believer who is opposed to government preferences and favoritism toward religion.
11. The plaintiff, Dan Barker, a federal taxpayer, also resides in Madison, Wisconsin, and he is a Lifetime Member of, and Co-President of FFRF; he is Public Relations Director of FFRF, and he also is a non-believer who is opposed to governmental preferences and favoritism toward religion; Barker also is an ordained minister who previously was able to utilize the housing allowance paid to him by prior church employers and he could exclude such payments from his taxable income; Barker is no longer a preaching minister, and he does not qualify for the housing allowance under §107 provided by FFRF, a non-profit organization that promotes non-belief.
12. The individual plaintiffs each currently receive a housing allowance designated by the FFRF Executive Council, its governing body; housing allowances also have been recently designated by the Executive Council for 2012; the designated housing allowances paid to the individual plaintiffs do not exceed the plaintiffs' housing-related expenses.
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13. The defendant, Timothy Geithner ("Geithner"), is the Secretary of the United States Department of the Treasury, with a principal address of 1500 Pennsylvania Avenue N.W., Washington, D.C. 20220; the defendant Geithner is sued in his official capacity.
14. The Defendant, Douglas Shulman ("Shulman"), is the Commissioner of the Internal Revenue Service, with a principal address of 1111 Constitution Avenue N.W., Washington, D.C. 20224; the defendant Shulman is sued in his official capacity.
THE ESTABLISHMENT CLAUSE IS VIOLATED BY EXCLUSIVE AND PREFERENTIAL TAX BENEFITS 15. The Establishment Clause of the First Amendment to the United States Constitution provides that "Congress shall make no law respecting an establishment of religion." 16. Section 107 of the Internal Revenue Code violates the Establishment Clause because it provides preferential tax breaks exclusively to ministers of the gospel; church ministers can pay virtually all of their housing costs with tax-free dollars under §107, but other taxpayers, like the plaintiffs, do not have this benefit. 17. The §107 tax exclusion can be used by ministers for virtually all of the costs of home ownership, including: Down payment on a home; home mortgage payments, including both interest and principal; real estate taxes; personal property tax; fire and homeowners liability insurance; rental payments; and cost of acquiring a home (i.e. legal fees, bank fees, title fees, etc.). The housing allowance can also be used for maintaining a home. Eligible costs or expenses include: Home improvements; minor repairs; utilities; furnishings and appliances (dishwasher, TV, refrigerator, pool table, vacuum cleaner, personal computer, etc.); home decor (rugs, curtains, plaints, knick knacks, wallpaper, paint, towels, bedding, etc.); lawn care (lawnmower, garden hose, sod, landscape tools, etc.); basic telephone services; cable TV; internet service; pest control; and miscellaneous (light bulbs, cleaning supplies, carpet cleaning, etc.).
4

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18. Preferential tax benefits provided exclusively to religious clergy violate the Establishment Clause; neutrality is required by the Establishment Clause, which means that tax benefits cannot be preferentially provided to ministers of the gospel.
19. Section 107 of the Revenue Code, both on its face and as administered by the defendants Geithner and Shulman, violates the Establishment Clause of the First Amendment because it provides tax benefits only to "ministers of the gospel," rather than to a broad class of taxpayers.
20. Section 107 was adopted in 1954, as a reaction to the Cold War antipathy to atheism, and it was intended to subsidize, promote, endorse, favor, and advance churches, religious organizations, and "ministers of the gospel;" by contrast, §107 also discriminates against the individual plaintiffs who cannot receive the same tax benefits because they are not practicing religious clergy.
21. In order to administer and apply § 107, moreover, the IRS and the Treasury must make sensitive, fact intensive, intrusive, and subjective determinations dependent on religious criteria and inquiries, such as whether certain activities constitute "religious worship" or "sacerdotal functions;" whether a member of the clergy is "duly ordained, commissioned, or licensed;" or whether a Christian college or other organization is "under the authority of' a church or denomination; or whether a full-time cantor in the Jewish faith qualifies as a minister of the gospel. These and other determinations result in "excessive entanglement" between church and state contrary to the Establishment Clause.
APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE AND TREASURY REGULATIONS 22. Section 107 of the Internal Revenue Code (26 U.S.C. § 107) provides as follows: In the case of a minister of the gospel, gross income does not include --
5

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(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 and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.
23. Section 107 permits only ministers of the gospel performing religious services to
exclude from their taxable income that portion of their compensation that is designated as a
housing allowance or housing provided in-kind.
24. In order to claim the housing allowance, the allowance must be provided as
compensation for services that are classified as the duties of a minister of the gospel; this
condition is unrelated to any requirement that the minister's residence be used to perform the
services of a minister.
25. Even retired ministers of the gospel are eligible to claim the exclusion for the
housing allowance because the allowance is deemed by the IRS to have been paid as part of the
retired minister's compensation for past services as a minister.
26. Section 1.107 1(a) of the Income Tax Regulations ("regulations") implements §107 and provides as follows:
In order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are "ordinarily the duties of a minister of the gospel." In general, the rules provided in §1.1402(c) 5 will be applicable to such determination. Examples of specific services the performance of which will be considered duties of a minister for purposes of §107 include the performance of sacerdotal functions, the conduct of religious worship, the administration and maintenance of religious organizations and their integral agencies, and the performance of teaching and administrative functions at theological seminaries.
27. Although neither §107 of the Code, nor §1.107 1 of the Treasury Regulations,
limits the tax benefits of §107 to ministers who are "duly ordained, commissioned, or licensed,"
6

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the IRS requires that a minister of the gospel be "duly ordained, commissioned, or licensed" in order for the minister to be entitled to tax benefits.
28. The Treasury regulations do not clarify the meaning of "duly ordained, commissioned, or licensed," and difficult determinations often must be made by the IRS as to whether this requirement is satisfied.
29. The §107 exclusion is available, according to the IRS, only when the minister is given use of a home or receives a housing allowance as compensation for service performed "in the exercise of' his or her ministry, a requirement borrowed from 26 U.S.C. §1402(c)(4).
30. The Treasury regulations under §1402(c)(4) contain detailed rules for determining the circumstances under which services performed by a minister are "in the exercise of' his or her ministry.
31. Section 1.1402(c) 5(b)(2) of the Treasury regulations provides that service performed by a minister in the exercise of a ministry includes: 1) the ministration of sacerdotal functions; 2) the conduct of religious worship; and 3) the control, conduct and maintenance of religious organizations (including the religious boards, societies, and other integral agencies of such organizations) under the authority of a religious body constituting a church or church denomination.
32. Section 1.1402(c) 5(b)(2)(ii) of the Treasury regulations further provides that service performed by a minister in the control, conduct and maintenance of a religious organization relates to directing, managing, or promoting the activities of such organization. This section also provides that any religious organization is deemed to be under the authority of a religious body constituting a church or church denomination if it is organized and dedicated to carrying out the tenets and principles of a faith in accordance with either the requirements or
7

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sanctions governing the creation of institutions of the faith. The term "religious organization" has the same meaning and application as is given to the term for income tax purposes.
33. Section 1.1402(c) 5(b)(2)(iv) of the Treasury regulations also provides in relevant part that if a minister is performing service for an organization which is operated as an integral agency of a religious organization under the authority of a religious body constituting a church or church denomination, all service performed by the minister in the control, conduct, and maintenance of such organization is in the exercise of his ministry, including purely secular duties.
34. The necessary determinations under §107 require that a significant amount of evidence be brought before the IRS to prove that an individual is in fact a minister for purposes of §107.
35. The inquiries under §107 require complex inquiries into the tenets of religious orthodoxy. Questions regarding church hierarchy also must be addressed when applying §107 because a religious organization is deemed to be under the authority of a church or church denomination if it is organized and dedicated to carrying out the tenets and principles of a faith in accordance with either the requirements or sanctions governing the creation of institutions of the faith.
36. The IRS is regularly required to make purely religious determinations in administering §107.
37. The intricacy of the religious questions arising under §107 create entanglement between the government and religion; difficult determinations must be made, for example, as to whether an organization constitutes an integral agency of a church; the IRS has consistently ruled that ordained ministers who teach at schools that are "integrally" related to churches are
8

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performing services within the exercise of a ministry, no matter what they teach; college administrators, and even basketball coaches, as well as teachers, therefore, qualify for the benefits of §107 if they are ordained as ministers.
FEDERAL TAX BENEFITS EXCLUSIVE TO MINISTERS VIOLATE THE ESTABLISHMENT CLAUSE AND THE EQUAL PROTECTION CLAUSE OF THE UNITED STATES CONSTITUTION
38. Section 107 of the Revenue Code provides preferential benefits to "ministers of the gospel" that are not provided to other taxpayers, such as the individual plaintiffs, nor to officers and leaders of other non-profit organizations.
39. Section 107 provides a benefit that is not neutrally available to other taxpayers, including the individual plaintiffs.
40. Section 107 directly benefits ministers and religion, most significantly by lowering a minister's tax burden.
41. Section 107 was not adopted in order to abate any substantial burden on free exercise rights.
42. Congress intended to provide a benefit to religion via the clergy housing exclusion, but a comparable exclusion is not available to other employees; the intent to provide a preferential benefit to religion is not a secular purpose.
43. Congress has acted at every turn to preferentially make tax breaks exclusively available to ministers; the resulting Internal Revenue Code includes provisions, including §107, that are not neutral and generally applicable to other taxpayers on a secular basis.
44. Section 107 has the effect of fostering governmental entanglement with religion, precisely in order to limit the tax break provided by §107 to religious clergy; the IRS must make
9

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complex, intrusive and subjective inquiries into religious matters when applying §107 in order to limit its preferential scope to ministers of the gospel.
45. Section 107, both on its face and as administered by the defendants Geithner and Shulman, violates the Establishment Clause of the First Amendment, and therefore the defendants should be enjoined from any further allowance of such tax benefits exclusively to ministers of the gospel.
46. Section 107 also violates the equal protection rights of the individual plaintiffs. 47. The actions of the defendants have the effect each year of excluding hundreds of millions of dollars from taxation, and this exclusion is available only to ministers of the gospel. 48. The tax preferences afforded ministers of the gospel constitute an exclusive and preferential subsidy to religion in violation of the United States Constitution. WHEREFORE, the Plaintiffs demand judgment as follows: A. Declaring that §107 of the Internal Revenue Code violates the Establishment Clause and the Equal Protection Clause of the United States Constitution; B. Enjoining the defendants from continuing to grant or allow preferential tax benefits under §107 of the Internal Revenue Code exclusively to religious clergy; C. Awarding the plaintiffs their reasonable costs and disbursements of this action as allowed by law; and
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D. Awarding such further relief as the Court deems just and equitable. / -61
Dated this / ci. day of September, 2011.
N, SUHR, CURRY & FIELD LLP

FADOCS\WD\26318\25\Al259439.DOCX

Richard L. Bolton Wisconsin State Bar No. 1012552 1 South Pinckney Street, 4th Floor P. 0. Box 927 Madison, WI 53701-0927 Telephone: (608) 257-9521 Facsimile: (608) 283-1709 Attorneys for Plaintiffs

11

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I hereby certify that on September 13, 2011, I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system, which will 'send notification electronically to all attorneys of record.
Ros4ie G. Stapleton
12

 
 Case: 3:11-cv-00626-bbc Document #: 13 Filed: 01/13/12 Page 1 of 13

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WISCONSIN

FREEDOM FROM RELIGION FOUNDATION, INC.; ANNIE LAURIE GAYLOR; ANNE NICOL GAYLOR; and DAN BARKER,
Plaintiffs, v.
UNITED STATES OF AMERICA, Defendant.

Case No. 11-CV-626

AMENDED COMPLAINT

The Plaintiffs, as their Amended Complaint against the Defendant, allege as follows: NATURE OF THE CLAIMS
1. The Plaintiffs seek a declaration under 28 U.S.C. § 2201 that 26 U.S.C. §107, both on its face and as administered by the Internal Revenue Service ("IRS") and the Department of the Treasury ("Treasury"), violates the Establishment Clause of the First Amendment to the Constitution of the United States by providing preferential and discriminatory tax benefits to ministers of the gospel. Section 107 also violates the equal protection component of the Due Process Clause of the Constitution. Plaintiffs request the Court to enjoin the allowance or grant of tax benefits exclusively to ministers of the gospel under §107.
JURISDICTION AND VENUE 2. This Court has federal question jurisdiction pursuant to 28 U.S.C. §1331 with respect to the relief sought against the defendants. The Court also has the authority to issue a

Case: 3:11-cv-00626-bbc Document #: 13 Filed: 01/13/12 Page 2 of 13
declaratory judgment under 28 U.S.C. § 2201. The Court further has the authority to award injunctive relief under 28 U.S.C. § 1343 and Fed. R. Civ. P. 65.
3. The United States has waived sovereign immunity, pursuant to 5 U.S.C. §702, for actions that seek specific relief other than money damages, as in this case; the waiver in §702, moreover, is not limited to claims brought pursuant to the review provisions contained in the Administrative Procedure Act.
4. The individual plaintiffs are federal taxpayers who object to the allowance of preferential and discriminatory tax benefits under the Revenue Code, including income tax exemptions for housing allowances paid as part of compensation to ministers of the gospel; the individual plaintiffs each receive a designated housing allowance from their employer, plaintiff FFRF, but their housing allowances do not qualify for income tax exemption because the individual plaintiffs are not religious clergy.
5. The individual plaintiffs are members of the plaintiff Freedom From Religion Foundation, Inc. ("FFRF").
6. Venue is appropriate in the District Court for the Western District of Wisconsin, pursuant to 28 U.S.C. §1391(e).
PARTIES 7. The plaintiff FFRF is a non-profit membership organization that advocates for the separation of church and state and educates on matters of non-theism. FFRF has 17,167 members, residing in every state of the United States and the District of Columbia, including more than 1,300 members in the State of Wisconsin. 8. FFRF represents and advocates on behalf of its members throughout the United States.
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9. FFRF's membership includes individuals who are federal taxpayers residing in the Western District of Wisconsin, who are opposed to government preferences and favoritism toward religion; FFRF's principal office is in Madison, Wisconsin.
10. The plaintiff, Anne Nicol Gaylor, a federal taxpayer, resides in Madison, Wisconsin, and she is a Lifetime Member of, and President Emerita of FFRF; she is a non-believer who is opposed to government preferences and favoritism toward religion.
11. The plaintiff, Annie Laurie Gaylor, a federal taxpayer, also resides in Madison, Wisconsin, and she is a Lifetime Member of, and Co-President of FFRF; she is the Executive Editor of FFRF's periodical Free Thought Today, and she is a non-believer who is opposed to government preferences and favoritism toward religion.
12. The plaintiff, Dan Barker, a federal taxpayer, also resides in Madison, Wisconsin, and he is a Lifetime Member of, and Co-President of FFRF; he is Public Relations Director of FFRF, and he also is a non-believer who is opposed to governmental preferences and favoritism toward religion. He is an ordained minister who previously was able to utilize the housing allowance paid to him by church employers and he could exclude such payments from his taxable income. He is no longer a preaching minister, and he does not qualify for the housing allowance under §107 provided by FFRF, a non-profit that promotes non-belief.
13. The individual plaintiffs each currently receive a housing allowance designated by the FFRF Executive Council, FFRF's governing body; the designated housing allowances paid to the individual plaintiffs by their employer FFRF do not exceed the plaintiffs' housing-related expenses.
14. Timothy Geithner ("Geithner"), is the Secretary of the United States Department of the Treasury, with a principal address of 1500 Pennsylvania Avenue N.W., Washington, D.C.
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20220; relief is sought against Geithner in his official capacity, and as such this action is deemed to include the United States of America.
15. Douglas Shulman ("Shulman"), is the Commissioner of the Internal Revenue Service, with a principal address of 1111 Constitution Avenue N.W., Washington, D.C. 20224; relief is sought against Shulman in his official capacity, and as such this action is deemed to include the United States of America.
THE ESTABLISHMENT CLAUSE IS VIOLATED BY EXCLUSIVE AND DISCRIMINATORY TAX BENEFITS 16. The Establishment Clause of the First Amendment to the United States Constitution provides that "Congress shall make no law respecting an establishment of religion." 17. Section 107 of the Internal Revenue Code violates the Establishment Clause because it provides preferential and discriminatory tax benefits exclusively to ministers of the gospel; church ministers can pay virtually all of their housing costs with tax-free dollars under §107, and implementing regulations, but other taxpayers, like the plaintiffs, are denied this benefit, as §107 is administered and enforced by the Internal Revenue Service. 18. The §107 tax exclusion can be used by ministers for virtually all of the costs of home ownership, including: Down payment on a home; home mortgage payments, including both interest and principal; real estate taxes; personal property tax; fire and homeowners liability insurance; rental payments; and cost of acquiring a home (i.e. legal fees, bank fees, title fees, etc.). The housing allowance can also be used for maintaining a home. Eligible costs or expenses include: Home improvements; minor repairs; utilities; furnishings and appliances (dishwasher, TV, refrigerator, pool table, vacuum cleaner, personal computer, etc.); home décor (rugs, curtains, plaints, knick knacks, wallpaper, paint, towels, bedding, etc.); lawn care (lawnmower,
4

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garden hose, sod, landscape tools, etc.); basic telephone services; cable TV; internet service; pest control; and miscellaneous (light bulbs, cleaning supplies, carpet cleaning, etc.).
19. Preferential and discriminatory tax benefits provided exclusively to religious clergy violate the Establishment Clause; neutrality is required by the Establishment Clause, which means that tax benefits cannot be preferentially provided to ministers of the gospel -- and discriminatorily denied to other taxpayers who receive similar housing allowances, including the individual plaintiffs in this case.
20. Section 107 of the Revenue Code, both on its face and as administered by Geithner and Shulman, and the federal agencies they oversee, violates the Establishment Clause of the First Amendment because it provides tax benefits only to "ministers of the gospel," rather than to a broad class of taxpayers.
21. Section 107 was adopted in 1954, as a reaction to Cold War antipathy to atheism, and it was intended to subsidize, promote, endorse, favor, and advance churches, religious organizations, and "ministers of the gospel;" §107 also discriminates against the individual plaintiffs who cannot receive the same tax benefits because they are not practicing religious clergy, although they otherwise receive designated housing allowances.
22. In order to administer and apply § 107, moreover, the IRS and the Treasury Department must make sensitive, fact intensive, intrusive, and subjective determinations dependent on religious criteria and inquiries, such as whether certain activities constitute "religious worship" or "sacerdotal functions;" whether a member of the clergy is "duly ordained, commissioned, or licensed;" or whether a Christian college or other organization is "under the authority of" a church or denomination; or whether a full-time cantor in the Jewish faith qualifies
5

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as a minister of the gospel. These and other determinations result in "excessive entanglement" between church and state contrary to the Establishment Clause.
APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE AND TREASURY REGULATIONS 23. Section 107 of the Internal Revenue Code (26 U.S.C. § 107) provides as follows: In the case of a minister of the gospel, gross income 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 and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities. 24. Section 107 permits only ministers of the gospel performing religious services to exclude from their taxable income that portion of their compensation that is designated as a housing allowance or housing provided in-kind. 25. In order to claim the housing allowance, the allowance must be provided as compensation for services that are classified as the duties of a minister of the gospel; this condition is unrelated to any requirement that the minister's residence be used to perform the services of a minister. 26. Even retired ministers of the gospel are eligible to claim the exclusion for the housing allowance because the allowance is deemed by the IRS to have been paid as part of the retired minister's compensation for past services as a minister. 27. Section 1.107 1(a) of the Income Tax Regulations ("regulations") implements §107 and provides as follows: In order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are "ordinarily the duties of a minister of the gospel." In general, the rules provided in §1.1402(c) 5 will be applicable to such determination. Examples of specific services the
6

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performance of which will be considered duties of a minister for purposes of §107 include the performance of sacerdotal functions, the conduct of religious worship, the administration and maintenance of religious organizations and their integral agencies, and the performance of teaching and administrative functions at theological seminaries. 28. Although neither §107 of the Code, nor §1.107 1 of the Treasury Regulations, limits the tax benefits of §107 to ministers who are "duly ordained, commissioned, or licensed," the IRS requires that a minister of the gospel be "duly ordained, commissioned, or licensed" in order for the minister to be entitled to tax benefits. 29. The Treasury regulations do not clarify the meaning of "duly ordained, commissioned, or licensed," and difficult determinations must be made by the IRS as to whether this requirement is satisfied. 30. The §107 exclusion is available, according to the IRS, only when the minister is given use of a home or receives a housing allowance as compensation for service performed "in the exercise of" his or her ministry, a requirement borrowed from 26 U.S.C. §1402(c)(4). 31. The Treasury regulations under §1402(c)(4) contain detailed rules for determining the circumstances under which services performed by a minister are "in the exercise of" his or her ministry. 32. Section 1.1402(c) 5(b)(2) of the Treasury regulations provides that service performed by a minister in the exercise of a ministry includes: 1) the ministration of sacerdotal functions; 2) the conduct of religious worship; and 3) the control, conduct and maintenance of religious organizations (including the religious boards, societies, and other integral agencies of such organizations) under the authority of a religious body constituting a church or church denomination.
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33. Section 1.1402(c) 5(b)(2)(ii) of the Treasury regulations further provides that service performed by a minister in the control, conduct and maintenance of a religious organization relates to directing, managing, or promoting the activities of such organization. This section also provides that any religious organization is deemed to be under the authority of a religious body constituting a church or church denomination if it is organized and dedicated to carrying out the tenets and principles of a faith in accordance with either the requirements or sanctions governing the creation of institutions of the faith. The term "religious organization" has the same meaning and application as is given to the term for income tax purposes.
34. Section 1.1402(c) 5(b)(2)(iv) of the Treasury regulations also provides in relevant part that if a minister is performing service for an organization which is operated as an integral agency of a religious organization under the authority of a religious body constituting a church or church denomination, all service performed by the minister in the control, conduct, and maintenance of such organization is in the exercise of his ministry, including purely secular duties.
35. The necessary determinations under §107 require that a significant amount of evidence be brought before the IRS to prove that an individual is in fact a minister for purposes of §107.
36. The inquiries under §107 require complex inquiries into the tenets of religious orthodoxy. Questions regarding church hierarchy also must be addressed when applying §107 because a religious organization is deemed to be under the authority of a church or church denomination if it is organized and dedicated to carrying out the tenets and principles of a faith in accordance with either the requirements or sanctions governing the creation of institutions of the faith.
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37. The IRS is regularly required to make purely religious determinations in administering §107.
38. The intricacy of the religious questions arising under §107 create entanglement between the government and religion; difficult determinations must be made, for example, as to whether an organization constitutes an integral agency of a church; the IRS has consistently ruled that ordained ministers who teach at schools that are "integrally" related to churches are performing services within the exercise of a ministry, no matter what they teach; college administrators, and even basketball coaches, as well as teachers, therefore, qualify for the benefits of §107 if they are ordained as ministers.
FEDERAL TAX BENEFITS AVAILABLE EXCLUSIVELY TO MINISTERS VIOLATE THE ESTABLISHMENT CLAUSE AND THE DUE PROCESS CLAUSE OF THE UNITED STATES CONSTITUTION 39. Section 107 of the Revenue Code provides preferential and discriminatory
benefits to "ministers of the gospel," which benefits are not provided to other taxpayers who receive housing allowances, such as the individual plaintiffs.
40. Section 107 provides a benefit that is not neutrally available to other taxpayers receiving housing allowances, including the individual plaintiffs.
41. Section 107, as administered and applied by the IRS and Treasury Department, directly benefits ministers and religion, most significantly by lowering a minister's tax burden, while discriminating against the individual plaintiffs solely on the basis of religious criteria.
42. Section 107 was not adopted in order to abate any substantial burden on free exercise rights.
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43. Section 107 provides a benefit to religion via the clergy housing exclusion, but a comparable exclusion is not available to other employees receiving housing allowances, including the individual plaintiffs.
44. Section 107, on its face and as administered by the IRS and the Treasury Department, provides benefits exclusively to ministers; the resulting Internal Revenue Code includes regulations that are not neutral and generally applicable to other taxpayers on a secular basis.
45. Section 107 has the effect of fostering governmental entanglement with religion, precisely in order to limit the tax benefits provided by §107 to religious clergy; the IRS must make complex, intrusive and subjective inquiries into religious matters when applying §107 in order to limit its preferential scope to ministers of the gospel.
46. Section 107, both on its face and as administered by Geithner and Shulman, violates the Establishment Clause of the First Amendment, and therefore the IRS and Treasury Department should be enjoined from further allowing such tax benefits exclusively to ministers of the gospel.
47. The discriminatory benefits allowed by §107, as administered by the IRS and Treasury Department, imposes obligations on the individual plaintiffs that are not imposed on ministers, which burden on the plaintiffs results exclusively from the application of religious criteria.
48. The individual plaintiffs would be entitled to claim a housing allowance exclusion from income -- but for the religious criteria applied by the IRS and Treasury Department in administering and applying §107.
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49. The exclusion allowed by the IRS and Treasury Department, pursuant to §107, is underinclusive, including because the individual plaintiffs are otherwise similarly situated to ministers who receive the benefit of the exemption, albeit ministers receive the benefit solely on the basis of religious criteria. The individual plaintiffs would otherwise qualify for the housing exemption of §107 except for the application of religious criteria by the IRS and Treasury Department.
50. The individual plaintiffs have suffered actual injury as a result of their discriminatory treatment by the IRS and Treasury Department, pursuant to §107 and implementing regulations, but they have no other available remedy because they are not entitled to the exclusion as §107 is administered and enforced by the IRS and Treasury Department.
51. As a result of the discriminatory treatment resulting from the administration of §107 by the IRS and Treasury Department, the individual plaintiffs seek equal treatment in the form of a level playing field, including by denying benefits to the favored group in this case.
52. The plaintiffs have standing to challenge the exemptions allowed by the IRS and Treasury Department, pursuant to §107 and implementing Treasury regulations, because the exemption to religious clergy is underinclusive vis-à-vis the individual plaintiffs herein, who are otherwise qualified for the housing allowance exemption except for the religious criteria utilized by the United States in regard to this tax benefit.
53. The discriminatory treatment of the plaintiffs on the basis of religious criteria violates the equal protection rights of the individual plaintiffs under the Due Process Clause of the Constitution, as well as their constitutional rights under the Establishment Clause.
54. The actions of the defendants have the effect each year of excluding hundreds of millions of dollars from taxation, and this exclusion is available only to ministers of the gospel.
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55. The tax benefits provided ministers of the gospel constitute an exclusive and discriminatory subsidy to religion in violation of the United States Constitution.
WHEREFORE, the Plaintiffs demand judgment as follows: A. Declaring that §107 of the Internal Revenue Code, and implementing Treasury Regulations, violate the Establishment Clause and the Due Process Clause of the United States Constitution; B. Enjoining the defendants, including the IRS and Treasury Department, from continuing to grant or allow preferential and discriminatory tax benefits under §107 of the Internal Revenue Code exclusively to religious clergy; C. Awarding the plaintiffs their reasonable costs and disbursements of this action as allowed by law; and D. Awarding such further relief as the Court deems just and equitable.
Dated this 13th day of January, 2012. BOARDMAN & CLARK LLP By /s/ Richard L. Bolton Richard L. Bolton Wisconsin State Bar No. 1012552 1 South Pinckney Street, 4th Floor P. O. Box 927 Madison, WI 53701-0927 Telephone: (608) 257-9521 Facsimile: (608) 283-1709 Attorneys for Plaintiffs
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Case: 3:11-cv-00626-bbc Document #: 13 Filed: 01/13/12 Page 13 of 13 CERTIFICATE OF SERVICE
I hereby certify that on January 13th, 2012, I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system, which will send notification electronically to all attorneys of record.
/s/ Rosalie G. Stapleton Rosalie G. Stapleton
F:\DOCS\WD\26318\25\A1329493.DOCX
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 Case: 3:11-cv-00626-bbc Document #: 30 Filed: 08/29/12 Page 1 of 20
IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FREEDOM FROM RELIGION FOUNDATION, INC., ANNIE LAURIE GAYLOR, ANNE NICOL GAYLOR and DAN BARKER,
OPINION AND ORDER Plaintiffs,
11-cv-626-bbc v. UNITED STATES OF AMERICA,
Defendant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Plaintiffs Freedom from Religion Foundation, Inc., Annie Laurie Gaylor, Anne Nicol Gaylor and Dan Barker brought this lawsuit under the Administrative Procedure Act, 5 U.S.C. § 702, to challenge the constitutionality of 26 U.S.C. § 107, which gives a tax exemption to any “minister of the gospel” for compensation received related to certain housing expenses. In particular, plaintiffs contend that § 107 violates their rights under the establishment clause of the First Amendment and the equal protection component of the Fifth Amendment. They seek to enjoin the government from “continuing to grant or allow preferential and discriminatory tax benefits under §107 of the Internal Revenue Code exclusively to religious clergy.” Am. Cpt., dkt. #13, at 12.
In an order dated June 28, 2012, dkt. #24, I questioned whether plaintiffs could sue under § 702 because that statute is limited to challenges of “agency action” and requires the
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plaintiffs to name “the Federal officer or officers (by name or by title), and their successors in office, personally responsible for compliance” with plaintiffs’ proposed injunction. I agree with the parties that any failure by plaintiffs to comply with § 702 may be resolved by naming as defendants Timothy Geithner (Secretary of the Department of the Treasury) and Douglas Shulman (Commissioner of the Internal Revenue Service), who are in charge of the agencies responsible for administering § 107. Because plaintiffs seek to name Geithner and Shulman in their official capacities as agents of the United States, I may amend the caption to include them without requiring plaintiffs to file a new complaint. E.g., Jaros v. Illinois Dept. of Corrections, 684 F.3d 667, 670 (7th Cir. 2012).
With that question resolved, I turn to defendant’s motion to dismiss for lack of subject matter jurisdiction on the ground that plaintiffs have not been injured by § 107 and therefore lack standing to sue. In response, plaintiffs say that their injury is the unequal treatment they receive under the statute. Because a portion of their salary is designated as a housing allowance, they say that they would be entitled to an exemption under § 107 but for the limitation to “ministers of the gospel.” Defendant acknowledges that the denial of a tax exemption constitutes an adequate injury for the purpose of standing, but it argues that plaintiffs cannot file a federal lawsuit until they claim an exemption on their tax returns and the IRS denies the claim.
I am denying defendant’s motion to dismiss. Because it is clear from the face of the statute that plaintiffs are not entitled to the exemption, I see no reason to make their standing contingent on the futile exercise of making a formal claim with the IRS.
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ALLEGATIONS OF FACT Plaintiff Freedom from Religion Foundation is a non-profit membership organization that “advocates for the separation of church and state and educates on matters of non-theism.” The foundation’s principal office is in Madison, Wisconsin. Plaintiffs Annie Laurie Gaylor and Dan Barker are the co-presidents of the foundation; Anne Nicol Gaylor is the president emerita. The foundation’s executive council provides each of the individual plaintiffs a housing allowance that does not exceed plaintiffs' housing-related expenses. Plaintiffs are challenging the constitutionality of 26 U.S.C. § 107, which is titled “Rental value of parsonages” and provides: In the case of a minister of the gospel, gross income 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 and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities. Plaintiff Barker is a former ordained minister who previously excluded his housing allowance from his taxable income, but no longer does so. The individual plaintiffs believe they would be entitled to claim the § 107 exemption if it were not limited to ministers of the gospel.
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OPINION The sole issue raised by defendant’s motion to dismiss is whether plaintiffs have standing to challenge the constitutionality of 26 U.S.C. § 107; defendant does not challenge the merits of plaintiffs’ complaint at this stage of the case. The standard for determining standing under the Constitution is well established: plaintiffs must show that they suffered an injury in fact that is fairly traceable to the defendant's action and capable of being redressed by a favorable decision from the court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Because each of the individual plaintiffs is a member of the foundation and a purpose of the foundation is related to plaintiff’s claims in this lawsuit, the foundation’s standing rises and falls with the members’. Sierra Club v. Franklin County Power of Illinois, LLC, 546 F.3d 918, 924 (7th Cir. 2008).
A. Injury in Fact 1. Taxpayer standing
Most of defendant’s opening brief is devoted to arguing that plaintiffs do not have what courts refer to as “taxpayer standing.” Under that theory, the plaintiff objects to a particular government expenditure and claims as an injury the misuse of the plaintiff’s tax dollars. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 343-44 (2006) (“[T]he alleged injury is based on the asserted effect of the allegedly illegal activity on public revenues, to which the taxpayer contributes.”). This theory has been rejected by the Supreme Court in most cases on the ground that “interest in the moneys of the Treasury . . . is shared with
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millions of others; is comparatively minute and indeterminable; and the effect upon future taxation, of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive powers of a court of equity.” Frothingham v. Mellon, decided with Massachusetts v. Mellon, 262 U.S. 443, 486-87 (1923). See also Arizona Christian School Tuition Organization v. Winn, 131 S. Ct. 1436, 1439 (2011) (“[T]he mere fact that a plaintiff is a taxpayer is not generally deemed sufficient to establish standing in federal court.”).
I need not consider whether plaintiffs have taxpayer standing because they are not asserting that argument in this case. The foundation raised it in a previous challenge to § 107 brought in the Eastern District of California and received a favorable ruling from the court after the government filed a motion to dismiss. Freedom From Religion Foundation, Inc. v. Geithner, 715 F. Supp. 2d 1051 (E.D. Cal. 2010). However, the parties later agreed to dismissal of the case without prejudice under Fed. R. Civ. P. 41(a)(1)(A)(ii) after the Supreme Court decided Winn, reversing a decision from the Court of Appeals for the Ninth Circuit on which the district court had relied for its ruling on taxpayer standing. Case No. 2:09-2894-WBS-DAD (C.D. Cal.), dkt. ##87-88. Plaintiffs have not included a theory of taxpayer standing in their complaint or their brief in this case.
2. Ideological injuries Defendant raises a second argument for plaintiffs’ lack of standing, which is that
plaintiffs’ alleged injury is their disagreement with the government’s conduct, a claim that
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is not sufficient to confer standing. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 483 (1982); United States v. Richardson, 418 U.S. 166, 176-77 (1974). This is another strawman. It is undoubtedly true that plaintiffs object to § 107 because they believe it violates the establishment clause and that this may be the primary reason they filed the lawsuit, but that is not the injury plaintiffs are alleging for the purpose of showing standing.
3. Unequal treatment Plaintiffs identify their injury as the alleged unequal treatment they have received
from defendant: “ministers of the gospel” may receive a tax exemption for certain housing expenses, but plaintiffs may not. Thus, plaintiffs’ injury is not just that they object to the exemption that ministers of the gospel receive, but that plaintiffs are being denied the same benefit.
The parties agree that a person who is denied a tax exemption that others receive has suffered an injury in fact. That much is established by Supreme Court precedent. Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 7-8 (1989) (general interest magazine had standing to challenge state tax exemption received by religious publications); Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 224-25 (1987) (same). See also Winn, 131 S. Ct. at 1439 (“[P]laintiffs may demonstrate standing on the ground that they have incurred a cost or been denied a benefit on account of their religion. Those costs and benefits can result from alleged discrimination in the tax code, such as when the availability of a tax exemption
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is conditioned on religious affiliation.”). The question presented by defendant’s motion is whether a plaintiff’s injury arises from the allegedly discriminatory statute itself or not until the plaintiff claims the exemption and the Internal Revenue Service denies it. Texas Monthly and Arkansas Writers’ Project both involved plaintiffs that had been denied a tax refund by state authorities, but the Court did not say in either case whether seeking a refund was required to establish standing, so those cases do not help to resolve the dispute.
a. Is a pre-enforcement challenge appropriate in this case? Distilled, defendant’s objection is that plaintiffs do not have standing to bring a pre-
enforcement challenge to 26 U.S.C. § 107, but are limited to challenging the statute as applied to them. However, there is no categorical bar under federal standing doctrine from challenging a statute on its face before it is applied, although special concerns may apply. Brandt v. Village of Winnetka, Illinois, 612 F.3d 647, 649-50 (7th Cir. 2010) (“[P]re-enforcement challenges [to a potential First Amendment violation] are within Article III.”). See also Santa Fe Independent School District v. Doe, 530 U.S. 290, 313-14 (2000) (considering facial challenge under establishment clause to policy that had not yet been enforced); Virginia v. American Booksellers Association, Inc., 484 U.S. 383, 393 (1988) (concluding that plaintiffs had standing to bring preenforcement challenge); Owner-Operator Independent Drivers Association, Inc. v. Federal Motor Carrier Safety Administration, 656 F.3d 580, 586-87 (7th Cir. 2011) (same). In general, “[c]hallenges to statutes as written, without inquiring into their application, are appropriate when details of implementation are
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inconsequential.” Harp Advertising Illinois, Inc. v. Village of Chicago Ridge, Illinois, 9 F.3d 1290, 1291-92 (7th Cir. 1993). In other words, plaintiffs have standing to challenge a statute before it has been applied to them when the injury to their First Amendment rights is clear from the face of the statute. That is the situation in this case.
What purpose would it serve for plaintiffs to attempt to claim the exemption before challenging it in court? If the meaning of § 107 as applied to plaintiffs were in doubt, then defendant might have a valid point that plaintiffs’ claims of injury are premature. E.g., Warnke v. United States, 641 F. Supp. 1083, 1084-85 (E.D. Ky. 1986) (self employed minister sought refund under § 107, arguing that statute did not require him to be employed by third party). However, there is no plausible argument that plaintiffs could make that they qualify as “ministers of the gospel,” so it would be pointless to require plaintiffs to jump through the hoop of filing a claim to prove that they are not entitled to the exemption. Cf. California Medical Association v. Federal Electric Commission, 453 U.S. 182, 192 (1981) (concluding that plaintiffs had standing, noting that they “expressly challenge the statute on its face, and there is no suggestion that the statute is susceptible to an interpretation that would remove the need for resolving the constitutional questions raised”); American Civil Liberties Union of Illinois v. Alvarez, 679 F.3d 583, 593-94 (7th Cir. 2012) (“This is not a case in which the threat of prosecution hinges on a highly attenuated claim of speculative future events or unknowable details about the manner in which the statutory violation will be committed or enforced.”).
The purpose of standing rules is not to waste the plaintiffs’ and the government’s time
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and resources in unnecessary busy work that will lead to an obvious outcome. Just as courts have held that plaintiffs need not engage in conduct clearly prohibited by a statute before challenging the statute, e.g., Ezell v. City of Chicago, 651 F.3d 684, 695-96 (7th Cir. 2011); Schirmer v. Nagode, 621 F.3d 581, 586 (7th Cir. 2010), I see little reason to require plaintiffs to claim an exemption that they would have no good faith basis to claim, an act that could make plaintiffs vulnerable to civil sanctions. Mulcahy, Pauritsch, Salvador & Co., Ltd. v. Commissioner, 680 F.3d 867, 872 (7th Cir. 2012) (understatement of tax liability without good faith basis may subject taxpayer to monetary penalties).
In a footnote in its reply brief, defendant argues that it is “conceivable” that plaintiffs could qualify for the exemption under § 107 because the IRS does not require “that an individual maintain theistic beliefs in order to perform functions that may be considered the duties of a minister of the gospel.” Dft.’s Br., dkt. #23, at 10 n.3. It does not cite any regulations or decisions for this proposition, but rather a popular nonfiction book. Id. (citing Alain de Botton, Religion for Atheists (Pantheon ed., Mar. 6, 2012)). Regardless whether the statute requires “theistic beliefs” to qualify for the exemption, there is no reasonable interpretation of the statute under which the phrase “minister of the gospel” could be construed to include employees of an organization whose purpose is to keep religion out of the public square.
Nothing in the implementing regulations or decisions of the IRS or the federal courts suggests a different interpretation. Although the tax courts have construed § 107 expansively to include non-Christian religions, e.g., Silverman v. Commissioner, 57 T.C. 727, 731
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(1972); Salkov v. Commissioner, 46 T.C. 190, 194 (1966), a person does not qualify for the exemption unless his or her “ministry includes the ministration of sacerdotal functions and the conduct of religious worship, and the control, conduct, and maintenance of religious organizations (including the religious boards, societies, and other integral agencies of such organizations), under the authority of a religious body constituting a church or church denomination.” 26 C.F.R. § 1.1402(c)-5(b)(2). See also Carter v. United States, 973 F.2d 1479, 1481 (9th Cir. 1992) (§ 107 applies to “members of the clergy”); Flowers v. United States, 1981 WL 1928, *6 (N.D. Tex. 1981) (upholding denial of exemption because housing allowance was for educational rather than sacerdotal functions); Colbert v. Commissioner, 61 T.C. 449 (1974) (taxpayer did not qualify for exemption because his “primary emphasis . . . was in warning and awakening people to the dangers of communism and in educating them as to the principles of communism” rather than “religious instruction in the principles laid down by Christ”). A church is similarly defined as an organization with duties that “include the ministration of sacerdotal functions and the conduct of religious worship.” 26 C.F.R. § 1.511-2(a)(3). See also Whittington v. Commissioner, 2000 WL 1358652, *3 (U.S. Tax Ct. 2000) (“At a minimum, a church includes a body of believers or communicants that assembles regularly in order to worship.”).
Defendant does not address the language of the statute and implementing regulations, much less explain how the individual plaintiffs could meet the definition for “ministers” or the foundation could meet the definition for “church.” Thus, it seems that the only way that plaintiffs could receive an exemption for housing expenses would be for the IRS to flagrantly
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violate § 107 and disregard its own interpretative regulations. I decline to assume that this is a realistic possibility.
b. Other cases addressing a party’s standing to challenge tax exemptions Although neither the Supreme Court nor the Court of the Appeals for the Seventh
Circuit has addressed the particular question raised by defendant’s motion, the Court of Appeals for the Fourth Circuit has rejected the view that a plaintiff does not have standing to challenge a discriminatory tax exemption until she makes an unsuccessful attempt to claim the exemption. In Finlator v. Powers, 902 F.2d 1158 (4th Cir. 1990), the court stated, “[w]e do not believe that this additional requirement would improve the vigorousness or quality of the parties' advocacy, would enhance the posture of this case, would clarify the legal issues presented for review, would strengthen the justiciability of the appellants' claims, or would contribute in any way to our ability to decide a question presented and contested by parties having a demonstrated interest and stake in its resolution.” Id. at 11-62. The court reaffirmed this view in Planned Parenthood of South Carolina Inc. v. Rose, 361 F.3d 786, 791-92 (4th Cir. 2004), in which it concluded that plaintiffs objecting to a “Choose Life” license plate did not have to request a pro-choice license plate to obtain standing because the statute at issue made it clear that they would not be able to obtain one. See also Budlong v. Graham, 414 F. Supp. 2d 1222, 1227 (N.D. Ga. 2006) (plaintiffs had standing to challenge tax exemption; they were “forced to endure a tax because the literature they seek to purchase and sell does not meet state-imposed religion and content requirements”);
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Flamer v. City of White Plains, New York, 841 F. Supp. 1365, 1372 (S.D.N.Y. 1993) (plaintiff had standing to challenge resolution banning religious displays on public property even though he had not submitted personal request to erect display).
Defendant suggests that Finlator is no longer good law in light of Winn, but its argument is not persuasive. The question in Winn was whether taxpayers had standing to challenge a state statute granting a tax credit to individuals who made a contribution to a “student tuition organization.” The plaintiffs were not arguing that they were unable to qualify for the credit or that the credit itself was discriminatory. Id. at 1447 (“Respondents are likewise able to contribute to an STO of their choice, either religious or secular. And respondents also have the option of contributing to other charitable organizations, in which case respondents may become eligible for a tax deduction or a different tax credit.”). Rather, their argument was that they were injured because other taxpayers had the option of making a contribution to a religious student tuition organization, which meant that the credit had the effect of “us[ing] State income-tax revenues to pay tuition for students at religious schools.” Id. at 1441. In other words, the plaintiffs were objecting to the government’s use of their tax dollars. Because plaintiffs are not claiming taxpayer standing in this case, Winn is not instructive.
The only contrary case defendant cites is Apache Bend Apartments, Ltd. v. United States through IRS, 987 F.2d 1174 (5th Cir. 1993), a case in which the plaintiffs were challenging the constitutionality of the transition rules of the Tax Reform Act of 1986, which gave specified exemptions to a small number of taxpayers. In a split decision the
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majority held that “prudential concerns convince us that the plaintiffs have not alleged an injury that is appropriate for judicial resolution.” Id. at 1177. Although defendant’s reliance on this case is limited to a string citation, I will address the majority’s reasoning because it is the only similar case that supports defendant’s position and many of defendant’s and the majority’s arguments overlap.
The majority identified a number of reasons for its decision: (1) “the injury of inequality alleged by the plaintiffs essentially is nothing more than a claim to ‘an asserted right to have the Government act in accordance with law,’” id. at 1179 (citing Allen v. Wright, 468 U.S. 737, 754 (1984)); (2) only a small number of taxpayers could claim the tax exemption at issue, so the plaintiffs had a “generalized grievance . . . that they share with all taxpayers,” id. at 1178; (3) if the court “accept[ed] the plaintiffs' claim of standing [as sufficient] in this case, there would be no principled basis upon which to deny standing to any taxpayer wishing to challenge any of the countless provisions of the federal tax laws which treat some taxpayers more favorably than others,” id. at 1180; (4) “Congress has erected a complex structure to govern the administration and enforcement of the tax laws, and has established precise standards and procedures for judicial review of tax matters,” id. at 1177; and (5) “the relief the plaintiffs seek, if granted, would seriously disrupt the entire revenue collection process.” Id.
I have already addressed the first reason: plaintiffs’ allegation of discriminatory treatment is distinct from a simple disagreement with the government’s conduct. In none of the cases cited by the court in Apache Bend or by defendants did the plaintiffs identify
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as their injury the denial of a benefit provided to a similarly situated third party. E.g., Whitmore v. Arkansas, 495 U.S. 149, 160 (1990) (injury was “the public interest protections of the Eighth Amendment”); Richardson, 418 U.S. at176-77 (rejecting claim of taxpayer standing); Ex parte Levitt, 302 U.S. 633, 634 (1937) (injury was disagreement with Justice Black's appointment to Supreme Court); Hein v. Freedom from Religion Foundation, Inc., 551 U.S. 587 (2007) (rejecting claim of taxpayer standing); Freedom from Religion Foundation, Inc. v. Obama, 641 F.3d 803 (7th Cir. 2011) (injury was “offense at the behavior of the government”).
The strongest objection is the second, which is that plaintiffs’ injury is simply a “generalized grievance” because it is widely shared with other taxpayers. Defendant repeats this argument in its briefs. Like the dissenting judges in Apache Bend, plaintiffs argue that the denial of a tax benefit is not a generalized grievance because their injury is shared only by others who are similarly situated, which plaintiffs identify in this case as employees who are provided a home or a housing allowance as part of their compensation for their employment. Apache Bend, 987 F.2d at 1182 (Goldberg, C.J., dissenting) (“class of aggrieved taxpayers is limited to those taxpayers who are similarly situated to the taxpayers who are treated more favorably”). This would be one way to limit the class of plaintiffs with standing, though it is not clear whether it is consistent with Supreme Court precedent because it suggests that a plaintiff does not have standing unless she can show that she would be successful in obtaining the benefit in the absence of the challenged provision. E.g., Northeastern Florida Chapter of Associated General Contractors of America v. City of
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Jacksonville, Florida, 508 U.S. 656, 665-66 (1993) (“The ‘injury in fact’ in an equal protection case of this variety is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the benefit.”).
Regardless whether standing is limited as plaintiffs suggest, I disagree with defendant that plaintiffs lack standing because they have a “generalized grievance.” The Supreme Court has rejected the view that a plaintiff does not suffer an injury in fact simply because it is “widely shared.” Massachusetts v. EPA, 549 U.S. 497, 522 (2007) (“That these climate-change risks are ‘widely shared’ does not minimize Massachusetts' interest in the outcome of this litigation”); Federal Election Commission v. Akins, 524 U.S. 11, 24 (1998) ("[W]here a harm is concrete, though widely shared, the Court has found ‘injury in fact' "). Rather, the question is whether plaintiffs’ injury is sufficiently “concrete.” As noted above, the parties agree that the denial of a tax benefit meets that standard. Further, requiring taxpayers to seek a refund would not limit the potential class of people who would have standing to sue; it would simply put an arbitrary barrier in their way. To the extent that a large number of taxpayers have standing to challenge § 107, that is due less to the nature of the injury and more to the small number of people that receive the tax benefit. Under defendant’s view, if the government gave a tax exemption limited to Caucasians of Norwegian descent, taxpayers with other ancestries could not challenge the exemption simply because they greatly outnumber the favored group.
The third objection is related to the second: the majority noted that the tax code contains many exemptions for many different groups of people, so it would cause judicial
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chaos to allow disfavored groups to sue to challenge those exemptions. However, simply because a person has standing to sue does not mean that his lawsuit is likely to follow. It is well established that any conceivable rational basis is enough to justify most government classifications, Nordlinger v. Hahn, 505 U.S. 1, 15 (1992), so the vast majority of lawsuits challenging allegedly discriminatory tax exemptions would be frivolous on their face. Many people may have standing to challenge a wide variety of laws affecting a large number of people, such as traffic regulations or state insurance requirements, but challenges to such laws are few and far between, presumably because the government’s authority to enact them is clear.
The fourth objection, that allowing plaintiffs to sue would “disrupt” the operation of the government, seems to be misguided. First, the case cited for this proposition, Louisiana v. McAdoo, 234 U.S. 627 (1914), was about sovereign immunity; it had nothing to do with standing. Second, if plaintiffs prevailed on their claims, it would not place any additional burdens on the government; it would eliminate a tax exemption. Thus, the primary effect would be to increase the funds retained by the federal government. Budlong, 414 F. Supp. 2d at 1227 (“Were it to enjoin the enforcement of such tax exemptions, this Court would actually enrich the State of Georgia's coffers, not deplete them.”).
The fifth objection is that Congress has enacted a number of procedures for challenging provisions of the tax code. Again, that is not an objection to standing. More important, defendant cites no statute that prohibits plaintiffs from bringing this action. As defendant acknowledges, the Anti-Injunction Act, 26 U.S.C. § 7421, bars suits that seek to
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enjoin the government from assessing or collecting a tax, not from eliminating an exemption, so it does not apply to this case. Cf. Hibbs v. Winn, 542 U.S. 88, 107-08 (2004) (challenge to state tax exemption not barred by Tax Injunction Act, which is state corollary to AntiInjunction Act). Defendant suggests that the Declaratory Judgment Act may be read as forbidding all lawsuits related to taxes, but it acknowledges that the Court of Appeals for the Seventh Circuit has interpreted that act as being coextensive with the Anti-Injunction Act. Tomlinson v. Smith, 128 F.2d 808, 811 (7th Cir. 1942).
It is true that the tax code provides particular mechanisms for challenging deficiencies and seeking refunds, but neither the majority in Apache Bend Beedn nor defendant cited any authority for the proposition that a court may refuse to exercise jurisdiction over a claim because Congress has limited federal jurisdiction over a different claim. Although there may be good reasons for requiring litigation related to any tax statute to be brought in tax court, that does not mean that courts may limit their own jurisdiction when Congress declined to do so. Rather, the general rule is that federal courts must exercise jurisdiction over cases arising under federal law unless it is unmistakably clear that Congress intended to withdraw that jurisdiction. Mims v. Arrow Financial Services, LLC, 132 S. Ct. 740, 748-49 (2012) (when “the claim arises under federal law, . . . federal-question jurisdiction under § 1331 . . . endures unless Congress divests federal courts of their § 1331 adjudicatory authority”).
Finally, although neither side raises this issue, one might argue that plaintiffs do not have standing to challenge their alleged unequal treatment unless they allege that in fact they would claim the exemption in the absence of the “minister of the gospel” limitation. Cf.
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Friends of the Earth, Inc. v. Laidlaw Environmental Services, Inc., 528 U.S. 167, 182-83 (2000) (plaintiffs had standing to challenge defendant’s discharge of pollutants into river by alleging that they would use river but for defendant’s conduct); Babbitt v. United Farm Workers National Union, 442 U.S. 289 (1979) (plaintiff challenging statute before enforcement establishes standing by "alleg[ing] an intention to engage in a course of conduct . . . proscribed by a statute"). Plaintiffs do not allege explicitly that they would apply for the exemption if they qualified for it, but I may reasonably infer at this stage that they would from their allegations that plaintiff Barker claimed the exemption in the past when he was a minister and that the remaining individual defendants believe they would qualify but for the religious limitation. E.g., Ord v. District of Columbia, 587 F.3d 1136, 1143 (D.C. Cir. 2009) (inferring intent to engage in conduct from allegation that plaintiff had engaged in conduct in past but cannot do so now because of restriction). However, at summary judgment, plaintiffs may need to come forward with more specific evidence on this point.
B. Redressability With respect to the other requirements of standing, there does not seem to be any genuine dispute that plaintiffs’ injury may be traced to § 107 and defendant’s implementation of it and that plaintiffs’ injury could be redressed by invalidating § 107. In its opening brief, defendant argued that plaintiffs’ alleged injury was not redressable because they cannot obtain a refund in this lawsuit or an injunction stopping the government from collecting a tax. However, in its reply brief, defendant acknowledges that nullifying § 107
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Case: 3:11-cv-00626-bbc Document #: 30 Filed: 08/29/12 Page 19 of 20
would be an appropriate remedy. This is consistent with several cases in which the Supreme Court has held that the government’s denial of a benefit to the plaintiff does not have to be redressed by awarding the benefit to the plaintiff; rather, the injury may be redressed by eliminating preferential treatment to others. Heckler v. Mathews, 465 U.S. 728, 740, (1984) ("We have often recognized that the victims of a discriminatory government program may be remedied by an end to preferential treatment for others."). Accord Texas Monthly, 489 U.S. at 7-8; Orr v. Orr, 440 U.S. 268, 271-72 (1979).
C. Sovereign Immunity At the end of its brief in chief, defendant argues that plaintiffs’ claims are barred by sovereign immunity, but it does not deny that 5 U.S.C. § 702 waives immunity for claims seeking prospective relief. Rather, its immunity argument is that plaintiffs cannot bring a claim under § 702 because they lack standing to sue. Because I have rejected defendant’s standing argument, its sovereign immunity argument necessarily fails as well.
ORDER IT IS ORDERED that 1. Defendant United States of America’s motion to dismiss, dkt. #16, is DENIED. 2. The motion to amend the caption of the complaint filed by plaintiffs Freedom from Religion Foundation, Inc., Annie Laurie Gaylor, Anne Nicol Gaylor and Dan Barker, dkt. #26, is GRANTED. The caption is AMENDED to include Timothy Geithner and
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Case: 3:11-cv-00626-bbc Document #: 30 Filed: 08/29/12 Page 20 of 20
Douglas Shulman in their official capacities. 3. Because the deadlines in this case have been stayed pending this order, the clerk
of court is directed to set up a new scheduling conference with the magistrate judge. Entered this 29th day of August, 2012. BY THE COURT: /s/ BARBARA B. CRABB District Judge
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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FREEDOM FROM RELIGION FOUNDATION, INC., ANNIE LAURIE GAYLOR and DAN BARKER,
OPINION AND ORDER Plaintiffs,
11-cv-626-bbc v. JACOB LEW and DANIEL WERFEL,
Defendants.1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Plaintiff Freedom from Religion Foundation, Inc. and its two co-presidents, plaintiffs Annie Laurie Gaylor and Dan Barker, brought this lawsuit under the Administrative Procedure Act, 5 U.S.C. § 702, contending that certain federal income tax exemptions received by “ministers of the gospel” under 26 U.S.C. § 107 violate the establishment clause of the First Amendment and the equal protection component of the Fifth Amendment. Defendants Timothy Geithner and Douglas Schulman (now succeeded by Jacob Lew and Daniel Werfel) have filed a motion for summary judgment, dkt. #40, which is ready for review.
In their complaint, plaintiffs challenged both § 107(1) and § 107(2), but in response
1 Initially, plaintiffs sued Timothy Geithner and Douglas Schulman in their official capacities as Secretary of the Treasury Department and Commissioner of the Internal Revenue Service. Pursuant to Fed. R. Civ. P. 25(d), I have substituted the new Secretary, Jacob Lew, and the Acting Commissioner, Daniel Werfel.
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to defendants’ motion for summary judgment, plaintiffs narrowed their claim to § 107(2), which excludes from gross income a minister’s “rental allowance paid to him as part of his compensation.” (Section 107(1) excludes “the rental value of a home furnished to [the minister] as part of his compensation.”) Because plaintiffs have not opposed defendants’ argument that plaintiffs lack standing to challenge § 107(1), I will grant defendants’ motion as to that aspect of plaintiffs’ claim.
With respect to plaintiffs’ challenge to § 107(2), I adhere to my conclusion in the order denying defendants’ motion to dismiss, dkt. #30, that plaintiffs have standing to sue because it is clear from the face of the statute that plaintiffs are excluded from an exemption granted to others. With respect to the merits, I conclude that § 107(2) violates the establishment clause under the holding in Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989), because the exemption provides a benefit to religious persons and no one else, even though doing so is not necessary to alleviate a special burden on religious exercise. This conclusion makes it unnecessary to consider plaintiffs’ equal protection argument.
Although plaintiffs did not file their own motion for summary judgment, “[d]istrict courts have the authority to enter summary judgment sua sponte as long as the losing party was on notice that it had to come forward with all its evidence.” Ellis v. DHL Exp. Inc. (USA), 633 F.3d 522, 529 (7th Cir. 2011). In this case, the parties have fully briefed the relevant issues, which are primarily legal rather than factual. Further, plaintiffs asked the court to enter judgment in their favor in their brief in opposition to defendants’ motion for summary judgment. Dkt. #52 at 66. Although defendants objected to this request in their
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reply brief, dkt. #53 at 3, it was on the same grounds that defendants believe that they are entitled to summary judgment. Defendants do not suggest that they would have raised any other arguments or presented any additional facts if plaintiffs had filed their own motion. Under these circumstances, I conclude that it is appropriate to deny defendants’ motion for summary judgment and grant summary judgment in plaintiffs’ favor with respect to § 107(2).
In concluding that § 107(2) violates the Constitution, I acknowledge the benefit that the exemption provides to many ministers (and the churches that employ them) and the loss that may be felt if the exemption is withdrawn. Clergy Housing Allowance Clarification Act of 2002, 148 Cong. Rec. H1299-01 (Apr. 16, 2002) (statement of Congressman Jim Ramstad) (in 2002, estimating that § 107 would relieve ministers of $2.3 billion in taxes over next five years). However, the significance of the benefit simply underscores the problem with the law, which is that it violates the well-established principle under the First Amendment that “[a]bsent the most unusual circumstances, one's religion ought not affect one's legal rights or duties or benefits.” Board of Education of Kiryas Joel Village School Disrict v. Grumet, 512 U.S. 687, 715 (1994) (O’Connor, J., concurring in part and concurring in the judgment). Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility.
It is important to remember that the establishment clause protects the religious and nonreligious alike. Linnemeir v. Board of Trustees of Purdue University, 260 F.3d 757, 765 (7th Cir. 2001) (“The Supreme Court has consistently described the Establishment Clause
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as forbidding not only state action motivated by a desire to advance religion, but also action intended to ‘disapprove,’ ‘inhibit,’ or evince ‘hostility’ toward religion.”). If a statute imposed a tax solely against ministers (or granted an exemption to everyone except ministers) without a secular reason for doing so, that law would violate the Constitution just as § 107(2) does. Stated another way, if the government were free to grant discriminatory tax exemptions in favor of religion, then it would be free to impose discriminatory taxes against religion as well. Under the First Amendment, everyone is free to worship or not worship, believe or not believe, without government interference or discrimination, regardless what the prevailing view on religion is at any particular time, thus “preserving religious liberty to the fullest extent possible in a pluralistic society.” McCreary County, Kentucky v. American Civil Liberties Union of Kentucky, 545 U.S. 844, 882 (2005) (O'Connor, J., concurring).
OPINION A. Standing As they did in their motion to dismiss, defendants argue that plaintiffs do not have standing to challenge § 107(2). To obtain standing, plaintiffs must show that they suffered an injury in fact that is fairly traceable to defendants’ conduct and capable of being redressed by a favorable decision from the court. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Plaintiffs Gaylor’s and Barker’s alleged injury is the unequal treatment they receive under § 107(2):
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In the case of a minister of the gospel, gross income does not include— * * *
(2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities. In particular, plaintiffs argue that “ministers of the gospel” receive a tax exemption under § 107(2) that Gaylor and Barker do not, even though a portion of the salary Gaylor and Barker receive from Freedom from Religion Foundation is designated as a housing allowance. Plts.’ PFOF ¶ 2, dkt. #50; Dfts.’ Resp. to Plts.’ PFOF ¶ 2, dkt. #55. In addition, plaintiffs argue that an order enjoining § 107(2) would redress their injury because it would eliminate the unequal treatment. The parties agree that Gaylor and Barker are both members of the foundation and that the purpose of the foundation is related to the claims in this case, so if the individual plaintiffs have standing, then the foundation does as well. Sierra Club v. Franklin County Power of Illinois, LLC, 546 F.3d 918, 924 (7th Cir. 2008). Defendants do not deny that a person who is denied a tax exemption that others receive has suffered an injury in fact. Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 7-8 (1989) (general interest magazine had standing to challenge state tax exemption received by religious publications); Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 224-25 (1987) (same). See also Arizona Christian School Tuition Organization v. Winn, — U.S. —, 131 S. Ct. 1436, 1439 (2011) (“[P]laintiffs may demonstrate standing on the ground that they have incurred a cost or been denied a benefit on account of their religion. Those costs and benefits can result from alleged discrimination in the tax code, such as when the
5

availability of a tax exemption is conditioned on religious affiliation.”). In addition, defendants do not deny that a discriminatory tax exemption may be redressed by eliminating the exemption for everyone. Heckler v. Mathews, 465 U.S. 728, 740, (1984) ("We have often recognized that the victims of a discriminatory government program may be remedied by an end to preferential treatment for others."). However, defendants argue that the lawsuit is premature because plaintiffs have never tried to claim the exemption. Until the Internal Revenue Service denies a claim, defendants say, plaintiffs have not suffered an injury.
As an initial matter, it is not clear whether plaintiffs would have standing to challenge § 107(2) in the context of a proceeding to claim the exemption. In several cases, courts have rejected establishment clause challenges to tax exemptions brought by parties who filed claims for the exemption that were denied. In each of those cases, the court held that the party could not receive the exemption if the court declared it to be unconstitutional, so a favorable decision could not redress their injury. Templeton v. Commissioner of Internal Revenue, 719 F.2d 1408, 1412 (7th Cir. 1983); Ward v. Commissioner of Internal Revnue, 608 F.2d 599, 601 (5th Cir. 1979); Kirk v. Commissioner of Internal Revenue, 425 F.2d 492, 495 (D.C. Cir. 1970). Thus, if accepted, defendants’ view could insulate § 107 from challenge by anyone.
In any event, I considered and rejected defendants’ argument in the context of denying their motion to dismiss. Dkt. #30. In particular, I concluded that plaintiffs' alleged injury is clear from the face of the statute and that there is no plausible argument that the individual plaintiffs could qualify for an exemption as “ministers of the gospel,” so it would
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serve no legitimate purpose to require plaintiffs to claim the exemption and wait for the inevitable denial of the claim. Finlator v. Powers, 902 F.2d 1158, 1162 (4th Cir. 1990) (concluding that nonexempt taxpayers had standing to challenge exemption without first claiming exemption because plaintiffs’ “injury is created by the very fact that the [law] imposes additional [tax] burdens on the appellants not placed on” those entitled to exemption). See also California Medical Association v. Federal Electric Commission, 453 U.S. 182, 192 (1981) (concluding that plaintiffs had standing, noting that they “expressly challenge the statute on its face, and there is no suggestion that the statute is susceptible to an interpretation that would remove the need for resolving the constitutional questions raised”); Harp Advertising Illinois, Inc. v. Village of Chicago Ridge, Illinois, 9 F.3d 1290, 1291–92 (7th Cir. 1993) (“Challenges to statutes as written, without inquiring into their application, are appropriate when details of implementation are inconsequential.”).
The Supreme Court has not addressed this question explicitly, but in Walz v. Tax Commission of City of New York, 397 U.S. 664, 666-67 (1970), the plaintiff was an owner of real estate in New York City who objected to the issuance of “property tax exemptions to religious organizations.” Although there was no indication in the opinion that the owner requested an exemption for himself before bringing his lawsuit, the Court reached the merits of his claim under the establishment clause. In Winn, 131 S. Ct. at 1449, the Court acknowledged that it had omitted a discussion of standing from the decision in Walz but suggested that the plaintiff could have relied on the alleged discriminatory treatment among different property owners to demonstrate standing to sue.
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In their motion for summary judgment, defendants do not ask the court to reconsider the conclusion that plaintiffs have standing to challenge § 107(2) if it is clear from the face of the statute that they are not entitled to the exemption. Instead, defendants expand an argument that was relegated to a footnote in their motion to dismiss, dkt. #23 at 10 n.3, which is that it is not clear from the face of the statute and the implementing regulations that plaintiffs are ineligible for the exemption under § 107(2). Rather, defendants say that it is “conceivable” that atheists such as Gaylor and Barker could qualify as “ministers of the gospel” under § 107, so they should be required to claim the exemption before challenging the statute.
Although defendants devote a substantial amount of their briefs to this argument, it is difficult to take it seriously. Under no remotely plausible interpretation of § 107 could plaintiffs Gaylor and Barker qualify as “ministers of the gospel.” However, for the sake of completeness, I will address the primary arguments that defendants raise in their briefs on this issue.
Much of defendants’ argument rests on Kaufman v. McCaughtry, 419 F.3d 678, 682 (7th Cir. 2005), in which the court concluded that atheism could qualify as a religion under the free exercise clause in the context of a claim brought by an atheist prisoner who wanted to start an atheist study group. (The court went on to reject the prisoner’s claim because he could not show that the absence of an atheist study group imposed a substantial burden on his religious exercise, id. at 683, without explaining how an atheist could make that showing in a different case.) However, the issue in this case is not the scope of the free exercise clause
8

of the First Amendment as interpreted in the context of one case decided in 2005, but the proper interpretation of the phrase “ministers of the gospel” in a statute enacted in 1954, so cases such as Kaufman provide little guidance.
Alternatively, defendants says that the IRS regulations promulgated under § 107 do not discriminate against “nontheistic beliefs” and that the IRS does not evaluate the “content” of a claimant’s professed religion, but these arguments are red herrings as well. As I noted in the order denying defendants’ motion to dismiss, the IRS has interpreted § 107 liberally to include members of non-Christian faiths. E.g., Salkov v. Commissioner of Internal Revenue, 46 T.C. 190, 194 (1966) (approving tax exemption for Jewish cantor after rejecting interpretation of term “gospel” as being limited to books of New Testament and instead construing term to mean “glad tidings or a message, teaching, doctrine, or course of action having certain efficacy or validity”). However, even if I assume that IRS would continue to stretch the plain meaning of § 107, there is a difference between non-theistic faiths such as Buddhism and having no faith at all. Torcaso v. Watkins, 367 U.S. 488, 495 (1961) (distinguishing “those religions based on a belief in the existence of God,” “those religions founded on different beliefs” and “non-believers”). Defendants point to no regulations or decisions suggesting that a person who did not subscribe to any faith could qualify for an exemption under § 107(2).
Regardless whether the IRS might recognize atheism as a religion, this does not answer the question whether it would recognize an atheist “minister,” which is the only question that matters. Defendants cite no evidence that atheists have “ministers” as that
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term is used in § 107, which is sufficient reason to reject an argument that an atheist could qualify for an exemption under that statute.
Even if I assume that there are atheists ministers, neither plaintiff Gaylor nor plaintiff Barker could qualify as one. Under the federal regulations, the key question is whether the claimant is seeking an exemption for “services performed by a minister [that] are performed in the exercise of his ministry.” 26 C.F.R. § 1.1402(c)-5(b)(2). The tax court has struggled to come up with a consistent framework to answer that question, applying different tests in cases such as Good v. Commissioner of Internal Revenue, 104 T.C.M. (CCH) 595 (T.C. 2012), Mosley v. Commissioner of Internal Revenue, 68 T.C.M. (CCH) 708 (T.C. 1994), and Lawrence v. Commissioner of Internal Revenue, 50 T.C. 494 (1968), but both sides in this case cite Knight v. Commissioner of Internal Revenue, 92 T.C. 199, 205 (1989), as identifying all the relevant factors. In Knight, the court considered whether the claimant: (1) performs sacerdotal functions under the tenets and practices of the particular religious body constituting his church or church denomination; (2) conducts worship services; (3) performs services in the control, conduct, and maintenance of a religious organization that operates under the authority of a church or church denomination; (4) is ordained, commissioned, or licensed; and (5) is considered to be a spiritual leader by his religious body.
Plaintiffs do not come close to meeting any of these factors. Defendants cite no persuasive evidence that either Gaylor or Barker is ordained, that they perform “sacerdotal” functions or conduct “worship” services, that anyone in the foundation considers Gaylor and Barker to be “spiritual” leaders or that the foundation is under the authority of a “church.”
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Again, even assuming that atheism is a religion, the Freedom from Religion Foundation is not an “atheist” organization in the sense that the purpose of the group is to “practice” atheism like the prisoner in Kaufman. Rather, the foundation is open to nonatheists, Barker Decl. ¶ 19, dkt. #48, and the purpose of the foundation, according to its bylaws, is to advocate and educate. Gaylor Decl., dkt. #47 exh. 1 at 1 (purpose of foundation is to promote “the constitutional principle of separation of church and state and to educate the public on matters related to non-theistic beliefs”). Defendants do not identify a single “religious” belief espoused by the foundation. In fact, defendants admit that the foundation is not a church or a religious organization operating under the authority of a church, that plaintiffs Gaylor’s and Barker’s roles as co-presidents of the foundation do not constitute an ordination, commissioning or licensing as ministers and that the foundation does not engage in worship. Dfts.’ Resp. to Plts.’ PFOF ¶¶14, 22, 29, dkt. #55.
Although some of Gaylor’s and Barker’s work may relate to religious issues, this is in the context of political and legal advocacy, similar to organizations such as the American Center for Law and Justice or the Anti-Defamation League. Tanenbaum v. Commissioner of Internal Revenue, 58 T.C. 1, 8 (1972) (denying exemption for employee of American Jewish Committee because he “was not hired to perform ‘sacerdotal functions’ or to conduct ‘religious worship’; rather, his job is to encourage and promote understanding of the history, ideals, and problems of Jews by other religious groups”). See also Flowers v. United States, No. CA 4-79-376-E, 1981 WL 1928, *6 (N.D. Tex. Nov. 25, 1981) (upholding denial of exemption because housing allowance was for educational rather than sacerdotal functions);
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Colbert v. Commissioner, 61 T.C. 449 (1974) (taxpayer did not qualify for exemption because his "primary emphasis . . . was in warning and awakening people to the dangers of communism and in educating them as to the principles of communism" rather than "religious instruction in the principles laid down by Christ"). In other words, even if I were to assume that the foundation is an “atheist organization,” that is not enough to qualify plaintiffs as ministers because they do not engage in the activities that a minister performs. Kirk, 425 F.2d at 495 (affirming denial of claim under § 107 by church employee in part because “all the services performed by petitioner in this case were of secular nature”).
Defendants argue that plaintiff Barker engages in a number of activities that could be classified as “sacerdotal,” such as performing “de-baptisms,” lecturing, performing marriages, counseling, promoting free thought and writing “free thought” songs. (The regulations do not define the term “sacerdotal” except to say that it “depends on the tenets and practices of the particular religious body constituting [a claimant’s] church or church denomination.” 26 C.F.R. § 1.1402(c)—5(b)(2)(i).) Defendants’ argument is a nonstarter because it does not apply to Gaylor, only to Barker; defendants admit that Gaylor is not a minister. Dfts.’ Resp. to Plts.’ PFOF ¶ 14, dkt. #55. “Where at least one plaintiff has standing, jurisdiction is secure and the court will adjudicate the case whether the additional plaintiffs have standing or not.” Ezell vs. City of Chicago, 651 F.3d 684, 696 (7th Cir. 2011).
In any event, none of this evidence provides any support for a view that Barker could qualify as a minister of the gospel. As an initial matter, defendants do not deny that Barker
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engaged in some of the activities (such as writing songs and books) before working for the foundation, Dfts.’ Rep. to Plts.’ Resp. to Dfts.’ PFOF ¶ 6, dkt. #54, and that any marriages he officiates are done on his own time, not as an employee of the foundation. Barker Decl. ¶ 24, dkt. #48. See also Tanenbaum, 58 T.C. at 8 (refusing to consider “[a]ny other functions [the claimant] may perform . . . by virtue of his own personal desires but are not cause for remuneration by the” employer). The counseling Barker performs relates to issues such as “how to deal with religious relatives,” “how to start an FFRF chapter” and “how to teach children about morality without religion.” Dfts.’ PFOF ¶ 6(a), dkt. #41 (emphasis added). The "debaptismal certificate" can be downloaded by anyone off the internet and will be signed by Barker for five dollars. Dkt. #42-15. Each certificate includes the saying "With soap, baptism is a good thing." Id. Barker describes the certificates as “a tongue-in-cheek way to bring attention to opting out of religion.” Barker Decl. ¶ 25, dkt. #48. I do not see how any of this conduct could relate “to the tenets and practices” of a particular religious body and defendants do not even attempt to develop an argument on this point.
In their reply brief, defendants argue that it “does not matter whether Ms. Gaylor or Mr. Barker would or would not be eligible for the exclusion provided in § 107 if they claimed it. What matters is that an atheist may lawfully make a claim for the exclusion.” Dkt. #53 at 6. This argument is puzzling because it rests on a premise that a plaintiff’s own experience is irrelevant to the question of standing. That is obviously incorrect. A plaintiff’s standing to sue is determined not by asking whether some hypothetical third party is being injured, but by whether the plaintiff is being injured. Kowalski v. Tesmer, 543 U.S. 125,
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129 (2004) ("We have adhered to the rule that a party generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.") (internal quotations omitted). Defendants seem to concede now that plaintiffs have been injured because they cannot qualify for the exemption. Defendants do not explain why that injury “does not matter” so long as it would be possible for some atheist to qualify under some set of circumstances, but they seem to be confusing standing with the merits. To the extent defendants are arguing that § 107(2) is constitutional if it would allow an exemption for an “atheist minister” in the abstract, that argument has nothing to do with standing.
Defendants make a related argument in their reply brief that plaintiffs’ alleged injury would not be fairly traceable to any “religious discrimination” by defendants if § 107 were interpreted as encompassing an “atheist minister.” Dfts.’ Br., dkt. #53, at 12. Again, this argument rests on a misunderstanding of standing requirements. The question is whether the plaintiff’s injury is fairly traceable to the defendant’s conduct, Massachusetts v. EPA, 549 U.S. 497, 536 (2007), not whether the plaintiff will be able to prove that the injury was caused by a violation of a particular right, which is another question on the merits. Arreola v. Godinez, 546 F.3d 788, 794-95 (7th Cir. 2008) (“Although the two concepts unfortunately are blurred at times, standing and entitlement to relief are not the same thing.”).
Accordingly, I conclude that plaintiffs have standing to bring a facial challenge to § 107(2) because the statute denies them an exemption that others receive, the injury is fairly
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traceable to the conduct of defendants as those responsible for implementing the tax code and plaintiff’s injury is redressable by a declaration that § 107(2) is unconstitutional and an order enjoining its enforcement.
Finally, defendants raise other arguments about whether the case is ripe for adjudication and whether the Administrative Procedure Act waives the government’s sovereign immunity under the facts of this case, but both of these arguments are contingent on a finding that § 107(2) does not harm plaintiffs. Because I have rejected that argument, I need not address defendants’ other arguments separately.
B. Merits 1. Standard of review
The First Amendment to the United States Constitution states that “Congress shall make no law respecting an establishment of religion. . . .” U.S. Const., Amend. I. The first question in every case brought under the establishment clause is the proper standard of review.
The test applied most commonly by courts was articulated first in Lemon v. Kurtzman, 403 U.S. 602 (1971). Under Lemon, government action violates the establishment clause if (1) it has no secular purpose; (2) its primary effect advances or inhibits religion; or (3) it fosters an excessive entanglement with religion. Although individual justices have criticized the test, e.g., Santa Fe Independent School District v. Doe, 530 U.S. 290, 319 (2000) (Rehnquist, C.J., dissenting); Tangipahoa Parish Board of
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Education v. Freiler, 530 U.S. 1251 (2000) (Scalia, J., dissenting from denial of certiorari), the Supreme Court as a whole continues to apply it. E.g., McCreary County, Kentucky v. American Civil Liberties Union of Kentucky, 545 U.S. 844, 859-67 (2005). Further, it is the test the Court of Appeals for the Seventh Circuit has employed in recent cases brought under the establishment clause. E.g., Doe ex rel. Doe v. Elmbrook School District, 687 F.3d 840, 849 (7th Cir. 2012); Sherman ex rel. Sherman v. Koch, 623 F.3d 501, 507 (7th Cir. 2010); Milwaukee Deputy Sheriffs' Association v. Clarke, 588 F.3d 523, 527 (7th Cir. 2009); Vision Church v. Village of Long Grove, 468 F.3d 975, 991-92 (7th Cir. 2006).
In Lynch v. Donnelly, 465 U.S. 668, 691 (1984), Justice O’Connor offered what she later described as a “refinement” of the first two parts of the Lemon test, under which the court asks “whether the government's purpose is to endorse religion and whether the statute actually conveys a message of endorsement,” Wallace v. Jaffree, 472 U.S. 38, 69 (1985) (O’Connor, J., concurring), viewed from the perspective of a “reasonable observer.” Elk Grove Unified School District v. Newdow, 542 U.S. 1, 34 (2004) (O’Connor, J., concurring in the judgment). The Supreme Court has applied Justice O’Connor’s test in several subsequent cases, e.g., McCreary County, 545 U.S. at 866; Zelman v. Simmons-Harris, 536 U.S. 639, 654-55 (2002); County of Allegheny v. American Civil Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573, 620 (1989), as has the Court of Appeals for the Seventh Circuit. Clarke, 588 F.3d at 529; Linnemeir v. Board of Trustees of Purdue University, 260 F.3d 757, 764 (7th Cir. 2001); Freedom from Religion Foundation, Inc. v. City of Marshfield, Wisconsin, 203 F.3d 487, 493 (7th Cir. 2000). See also Salazar v. Buono, 559
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U.S. 700, 721 (2010) (assuming that “reasonable observer” test applied). Although the Supreme Court has articulated other tests as well over the years, e.g.,
Lee v. Weisman, 505 U.S. 577 (1992); Marsh v. Chambers, 463 U.S. 783, 787 (1983), the parties rely on the modified version of the Lemon test, so I will do the same.
2. Texas Monthly, Inc. v. Bullock Consideration of the question whether § 107(2) violates the establishment clause
must begin with Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989), the only case in which the Supreme Court has addressed the constitutionality of a tax exemption granted solely to religious persons. In Texas Monthly, the statute at issue exempted from the state sales tax “[p]eriodicals that are published or distributed by a religious faith and that consist wholly of writings promulgating the teaching of the faith and books that consist wholly of writings sacred to a religious faith.”
The justices in the plurality opinion (Justices Brennan, Marshall and Stevens) and those concurring in the judgment (Justices Blackmun and O’Connor) agreed that the statute violated the establishment clause. The plurality applied the familiar test under Lemon, 403 U.S. at 612, as well as the endorsement test. In concluding that the statute did not have a secular purpose or effect and conveyed a message of religious endorsement, the plurality emphasized that the exemption provided a benefit to religious publications only, without a corresponding showing that the exemption was necessary to alleviate a significant burden on free exercise:
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Every tax exemption constitutes a subsidy that affects nonqualifying taxpayers, forcing them to become indirect and vicarious “donors.” Insofar as that subsidy is conferred upon a wide array of nonsectarian groups as well as religious organizations in pursuit of some legitimate secular end, the fact that religious groups benefit incidentally does not deprive the subsidy of the secular purpose and primary effect mandated by the Establishment Clause. However, when government directs a subsidy exclusively to religious organizations that is not required by the Free Exercise Clause and that either burdens nonbeneficiaries markedly or cannot reasonably be seen as removing a significant state-imposed deterrent to the free exercise of religion, as Texas has done, it provides unjustifiable awards of assistance to religious organizations and cannot but convey a message of endorsement to slighted members of the community.
Id. 14-15 (internal quotations, citations and alterations omitted). In addition, the plurality
stated that the statute seemed “to produce greater state entanglement with religion than the
denial of an exemption” because the statute required the government to “evaluat[e] the
relative merits of differing religious claims” in order to determine whether a publication
qualified for the exemption. Id. at 20.
In the concurring opinion, Justices Blackmun and O’Connor concluded that “a tax
exemption limited to the sale of religious literature by religious organizations violates the
Establishment Clause” because it results in “preferential support for the communication of
religious messages.” Id. at 28. They added that “[a] statutory preference for the
dissemination of religious ideas offends our most basic understanding of what the
Establishment Clause is all about and hence is constitutionally intolerable.” Id.
Because no single opinion garnered at least five votes in Texas Monthly, “the holding
of the Court may be viewed as that position taken by those Members who concurred in the
judgments on the narrowest grounds.” Marks v. United States, 430 U.S. 188, 193 (1977)
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(internal quotation marks omitted). Although the rule in Marks likely would make Justice Blackmun’s opinion controlling, the differences between the plurality and concurring opinions in Texas Monthly are minimal for the purpose of this case. Under either opinion, a tax exemption provided only to religious persons violates the establishment clause, at least when the exemption results in preferential treatment for religious messages. Haller v. Commissioner of the Dept. of Revenue, 728 A.2d 351, 354-55 (Pa. 1999) (“[A] majority of the Court in Texas Monthly clearly recognized that tax exemptions that include religious organizations must have an overarching secular purpose that equally benefits similarly situated nonreligious organizations.”).
Because a primary function of a “minister of the gospel” is to disseminate a religious message, a tax exemption provided only to ministers results in preferential treatment for religious messages over secular ones. Accordingly, I conclude that Texas Monthly controls the outcome of this case. Although this case involves an income tax exemption instead of a sales tax exemption, neither the plurality nor the concurrence placed any importance on the type of tax involved and defendants do not provide any grounds for distinguishing the two types. Even Justice Scalia in his dissent in Texas Monthly stated that § 107 is a “tax exemptio[n] of the type the Court invalidates today.” Texas Monthly, 489 U.S. at 33 (Scalia, J., dissenting).
3. Accommodation of religion Tellingly, defendants make little effort to distinguish Texas Monthly. They make a
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fleeting reference to the plurality’s statement that preferential treatment for religious groups may be permissible if it “remov[es] a significant state-imposed deterrent to the free exercise of religion,” Texas Monthly, 489 U.S. at 14, but they do not explain how that statement might apply to this case. Of course, “[a]ny [government action] pertaining to religion can be viewed as an ‘accommodation’ of free exercise rights,” Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 347 (1987) (O'Connor, J., concurring in the judgment), but the “principle that government may accommodate the free exercise of religion does not supersede the fundamental limitations imposed by the Establishment Clause.” Lee, 505 U.S. at 587.
Although it is undoubtedly true that taxes impose a burden on ministers, the same is true for all taxpayers. Defendants do not identify any reason why a requirement on ministers to pay taxes on a housing allowance is more burdensome for them than for the many millions of others who must pay taxes on income used for housing expenses. In any event, the Supreme Court has rejected the view that the mere payment of a generally applicable tax may qualify as a substantial burden on free exercise. Jimmy Swaggart Ministries v. Board of Equalization of California, 493 U.S. 378, 391 (1990) (“[T]o the extent that imposition of a generally applicable tax merely decreases the amount of money appellant has to spend on its religious activities, any such burden is not constitutionally significant.”).
Defendants cite several cases in which courts have found that 26 U.S.C. § 1402(e) and (g), which give exemptions to certain religious persons from paying taxes related to
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Social Security, are permissible accommodations of religion. E.g., Droz v. Commissioner of Internal Revenue, 48 F.3d 1120, 1121 (9th Cir. 1995); Hatcher v. Commissioner of Internal Revenue, 688 F.2d 82, 84 (10th Cir. 1979). See also Templeton, 719 F.2d at 1413-14 (rejecting equal protection challenge to same provisions). However, the exemptions in § 1402 are limited to those who have a religious objection to receiving public insurance and belong to a religion that will provide the assistance that others ordinarily would receive under Social Security. Thus, § 1402 is distinguishable from § 107 because § 1402 limits the exemption to those whose religious exercise would be substantially burdened. In addition, there is no preferential treatment to religious persons because the exemption is limited to those who will receive from their religious sect (rather than the government) the benefits the tax is designed to provide. Droz, 48 F.3d at 1121 (§ 1402(g) is a permissible accommodation because it is “an exemption narrowly drawn to maintain a fiscally sound Social Security system and to ensure that all persons are provided for, either by the Social Security system or by their church”); Hatcher, 688 F.2d at 84 (“That the principal purpose of the legislation is not to advance or inhibit religion is evident in the mandate that those who receive the exemption forego the benefit of the program. To further assure that one claiming the exemption does not become a public charge Congress required that the exemption only be given to persons belonging to organizations that make provision for dependent members.”).
Along the same lines, the cases in which the Supreme Court has upheld religious accommodations are in contexts that otherwise would result in severe restrictions on free
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exercise. Board of Education of Kiryas Joel Village School District v. Grumet, 512 U.S. 687, 705 (1994) (“The Constitution allows the State to accommodate religious needs by alleviating special burdens.”) (emphasis added). For example, in Amos, 483 U.S. at 335, the Court upheld a religious exemption in an antidiscrimination law that otherwise would have required religious groups to violate their own religious beliefs, such as by requiring Catholic churches to ordain women as priests. And in Cutter v. Wilkinson, 544 U.S. 709 (2005), the Court concluded that a law requiring administrators to provide religious accommodations to persons housed in state institutions was justified by the reality of institutionalization, which is “severely disabling to private religious exercise.” Id. at 720-21. Thus, in both situations, the accommodations are best described not as singling out religious persons for more favorable treatment, but as an attempt to prevent inequality caused by governmentimposed burdens. School District of Abington Township v. Schempp, 374 U.S. 203, 299 (1963) (Brennan, J., concurring) (“[H]ostility, not neutrality, would characterize the refusal to provide chaplains and places of worship for prisoners and soldiers cut off by the State from all civilian opportunities for public communion.”).
As noted above, in this case, the burden of taxes is borne equally by everyone who pays them, regardless of religious affiliation, so concerns about free exercise do not justify a special exemption. In 1984, the Treasury Secretary himself recognized this point in a memorandum in which he recommended the repeal of § 107 because “[t]here is no evidence that the financial circumstances of ministers justify special tax treatment. The average minister's compensation is low compared to other professionals, but not compared to
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taxpayers in general.” U.S. Dept. of Treasury, Tax Reform for Fairness, Simplicity, and Economic Growth: The Department Report to the President, vol. II 49 (1984). In fact, the Secretary argued that § 107 “provides a disproportionately greater benefit to relatively affluent ministers, due to the higher marginal tax rates applicable to their incomes.” Id. (The Treasury Department withdrew the recommendation after many members of the clergy objected to it. Gabriel O. Aitsebaomo, Challenges to Federal Income Tax Exemption of the Clergy and Government Support of Sectarian Schools through Tax Credits Device and the Unresolved Questions after Arizona v. Winn, 28 Akron Tax J. 1, 15 (2013).) Under these circumstances, I see no basis for concluding that § 107(2) may be justified as an accommodation of religion.
4. Walz v. Tax Commission of City of New York Instead of Texas Monthly, defendants rely on Walz, 397 U.S. 664, in which the
Supreme Court rejected a challenge under the establishment clause to a statute that gave a tax exemption to property used for “religious, educational or charitable purposes.” Id. at 666-67. The obvious distinction between Walz and this case is that the statute in Walz was not a tax exemption benefiting religious persons only, but a wide variety of nonprofit endeavors. See also Schempp, 374 U.S. at 301-02 (1963) (Brennan, J., concurring) (no establishment clause violation when “certain tax deductions or exemptions . . . incidentally benefit churches and religious institutions, along with many secular charities and nonprofit organizations” because, in that situation “religious institutions simply share benefits which
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government makes generally available to educational, charitable, and eleemosynary groups”). Defendants argue that the broader scope of the statute in Walz “was not dispositive
for the majority,” Dfts.’ Br., dkt. #44, at 42, but that view is contradicted by the opinion itself as well as later decisions applying it. In concluding that the purpose of the exemption was not to advance religion, the Court observed that the state “has not singled out one particular church or religious group or even churches as such; rather, it has granted exemption to all houses of religious worship within a broad class of property owned by nonprofit, quasi-public corporations which include hospitals, libraries, playgrounds, scientific, professional, historical, and patriotic groups.” Walz, 397 U.S. at 673. It went on to say that the statute applies to groups that have “beneficial and stabilizing influences in community life” as opposed to “private profit institutions.” Id. See also id. at 687, 689 (Brennan, J., concurring) (“These organizations are exempted because they, among a range of other private, nonprofit organizations contribute to the well-being of the community in a variety of nonreligious ways, and thereby bear burdens that would otherwise either have to be met by general taxation, or be left undone, to the detriment of the community. . . . Government may properly include religious institutions among the variety of private, nonprofit groups that receive tax exemptions, for each group contributes to the diversity of association, viewpoint, and enterprise essential to a vigorous, pluralistic society.”); id. at 697 n.1 (Harlan, J., concurring) (tax exemption does not violate establishment clause “because New York has created a general class so broad that it would be difficult to conclude that religious organizations cannot properly be included in it”).
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In Texas Monthly, 489 U.S. at 11, the plurality stated that “[t]he breadth of New York's property tax exemption was essential to our holding [in Walz] that it was not aimed at establishing, sponsoring, or supporting religion, but rather possessed the legitimate secular purpose and effect of contributing to the community's moral and intellectual diversity and encouraging private groups to undertake projects that advanced the community's well-being and that would otherwise have to be funded by tax revenues or left undone.” Further, the plurality reviewed other cases in which the Court had upheld benefits to religious organizations and concluded that they too involved a broader array of groups. “[W]ere those benefits confined to religious organizations, they could not have appeared other than as state sponsorship of religion; if that were so, we would not have hesitated to strike them down for lacking a secular purpose and effect.” Texas Monthly, 489 U.S. at 10-11 (plurality opinion) (citing Widmar v. Vincent, 454 U.S. 263 (1981); Mueller v. Allen, 463 U.S. 388 (1983); and Walz, 397 U.S.664). See also Grumet, 512 U.S. at 704 (“We have frequently relied explicitly on the general availability of any benefit provided religious groups or individuals in turning aside Establishment Clause challenges,” including in Walz.).
To support their argument that the holding in Walz was not limited to exemptions that include nonreligious groups, defendants cite the statement by the Court that it was “unnecessary to justify the tax exemption on the social welfare services or ‘good works' that some churches perform for parishioners and others-family counselling, aid to the elderly and the infirm, and to children.” Walz, 397 U.S. at 674. However, defendants are taking the statement out of context. The Court went on to explain that it did not want the government
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to have to evaluate whether a religious body’s good works were “good enough” to qualify because that could “produc[e] a kind of continuing day-to-day relationship which the policy of neutrality seeks to minimize.” Id. Thus, the Court’s observation is best read as an attempt to avoid a justification for an exemption that would lead to greater entanglement between church and state. The Court did not suggest that the government was free to provide tax exemptions to religious entities without including other groups.
Defendants also rely on Walz for the proposition that a “tax exemption does not implicate the same constitutional concerns as a direct subsidy,” Dfts.’ Br., dkt. #44, at 43, quoting the Court’s statement that “[t]he 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. Taken to its logical conclusion, an argument relying on a distinction between exemptions and subsidies would permit the government to eliminate all taxes for religious organizations, an extreme position that defendants do not advance. However, in the absence of a categorical approach, it is not clear how exemptions could be treated differently from subsidies and defendants do not provide any suggestions.
In any event, to the extent that Walz suggested a different analysis for exemptions, that view is inconsistent with both the plurality and concurring opinions in Texas Monthly, neither of which made a distinction between the two types of support. It was rejected explicitly by the plurality, which stated that “[e]very tax exemption constitutes a subsidy that affects nonqualifying taxpayers, forcing them to become ‘indirect and vicarious ‘donors.’”
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Texas Monthly, 489 U.S. at 14 (quoting Bob Jones University v. United States, 461 U.S. 574, 591 (1983)). The Court has resisted the distinction in other opinions as well. Ragland, 481 U.S. at 236 (“Our opinions have long recognized—in First Amendment contexts as elsewhere—the reality that tax exemptions, credits, and deductions are a form of subsidy that is administered through the tax system.”) (internal citations omitted); Regan v. Taxation With Representation of Washington, 461 U.S. 540, 544 (1983) (“Both tax exemptions and tax-deductibility are a form of subsidy that is administered through the tax system.”). See also Walz, 397 U.S. at 701 (Douglas, J., dissenting) (“[O]ne of the best ways to ‘establish' one or more religions is to subsidize them, which a tax exemption does.”); Adler, The Internal Revenue Code, The Constitution, and the Courts: The Use of Tax Expenditure Analysis in Judicial Decision Making, 28 Wake Forest L. Rev. 855, 862 n.30 (1993) (“[T]he large body of literature about tax expenditures accepts the basic concept that special exemptions from tax function as subsidies.”), quoted with approval in Rosenberger v. Rector & Visitors of University of Virginia, 515 U.S. 819, 861 (1995) (Thomas, J., concurring).
Defendants cite Winn, 131 S. Ct. at 1439, as an example of a recent case in which the Court distinguished between exemptions and subsidies. However, Winn was a case about determining a plaintiff’s injury for the purpose of taxpayer standing, a doctrine the Court has taken great effort to cabin. Id. at 1445 (emphasizing “the general rule against taxpayer standing”). The Court did not rely on Walz for the distinction it made between exemptions and subsidies in the standing context and defendants do not explain how the distinction in Winn applies to a case about the substantive scope of the establishment clause.
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In sum, I conclude that defendants cannot rely on Walz or Winn to preserve § 107(2).
5. Other cases In addition to Texas Monthly, there are other cases in which the Supreme Court has
held that it violates the establishment clause to single out religious beliefs for preferential treatment without providing a similar benefit to secular individuals or groups. For example, in Community for Public Education v. Nyquist, 413 U.S. 756, 793 (1973), the Court concluded that tax exemptions for parents of children in sectarian schools violated the establishment clause, reasoning that “[s]pecial tax benefits . . . cannot be squared with the principle of neutrality established by the decisions of this Court.” And in Estate of Thornton v. Caldor, Inc., 472 U.S. 703 (1985), in an opinion by Chief Justice Burger (the author of Walz), the Court held that it violated the establishment clause to give employees an “unqualified” right not to work on the Sabbath because it meant “that Sabbath religious concerns automatically control over all secular interests at the workplace” and “the statute takes no account of the convenience or interests of the employer or those of other employees who do not observe a Sabbath.” Id. at 709. See also Grumet, 512 U.S. at 708-09 (“[A] statute [may] not tailor its benefits to apply only to one religious group.”).
In addition to these Supreme Court cases, there are several cases in which other courts have concluded that tax exemptions violated the establishment clause when they benefited religious groups only. E.g., Finlator, 902 F.2d at 1162 (striking down sales tax exemption for Bibles); Haller, 728 A.2d at 355 (striking down sales tax exemption for
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“religious publications”); Appeal of Springmoor, Inc., 498 S.E.2d 177 (N.C. 1998) (striking down property tax exemption for nursing homes “owned, operated and managed by a religious or Masonic organization”); Thayer v. South Carolina Tax Commission, 413 S.E.2d 810, 813 (S.C. 1992) (striking down sales tax exemption for “religious publications”). See also American Civil Liberties Union Foundation of Louisiana v. Crawford, CIV.A. 00-1614, 2002 WL 461649 (E.D. La. Mar. 21, 2002) (granting preliminary injunction against tax exemption provided to places of accommodation “operated by religious organizations for religious purposes”). Defendants cite no cases to the contrary, with the exception of cases involving § 1402, which are distinguishable for the reasons explained above.
6. Purpose and effect of § 107(2) In an attempt to show that neither the purpose nor the effect of § 107(2) is to
advance or endorse religion, defendants argue that the provision actually eliminates discrimination among different religions and between religious and nonreligious persons. In support of this view, defendants say that the impetus for both § 107(1) and § 107(2) can be traced to the “convenience of the employer” doctrine, under which employees would not be taxed under certain circumstances on the value of housing provided by their employer. Commissioner of Internal Revenue v. Kowalski, 434 U.S. 77, 85-86 (1977). The Treasury Department began applying the doctrine in 1919, shortly after the federal government began collecting income tax, using the rationale that housing should not be viewed as compensation if it is provided by the employer to enable an employee to do his job properly. Id. at 84-90.
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Examples of employees who received the exemption included seamen and hospital workers who were required to be on call 24 hours a day. Id. at 84, 86. In 1954, Congress codified the exemption in 26 U.S.C. § 119, which allows an employee to exclude from his gross income “the value of any . . . lodging furnished to him, . . . but only if . . . the employee is required to accept such lodging on the business premises of his employer as a condition of his employment.”
According to defendants, in 1921 the Treasury Department refused to apply the convenience of the employer doctrine to ministers who lived in church-provided housing. (Plaintiffs dispute that view, but I need not resolve that dispute for the purpose of this opinion.) Defendants say that, in response, Congress passed § 213(b)(11) of the Revenue Act of 1921, which allowed ministers of the gospel to exclude from their gross income the rental value of housing they received as part of their compensation. (That exemption later became § 107(1).) Finally, defendants say that the purpose of § 107(2) when it was enacted in 1954 was to eliminate discrimination against ministers who could not claim the already existing exemption for ministers who lived in parsonages. In particular, defendants say that § 107(2) was needed to help “less-established and less wealthy religions [that] were not able to provide housing for their spiritual leaders.” Dfts.’ Br., dkt. #44, at 33. Defendants cite a committee report from the House of Representatives in support of their view:
Under present law, the rental value of a home furnished a minister of the gospel as a part of his salary is not included in his gross income. This is unfair to those ministers who are not furnished a parsonage, but who receive larger salaries (which are taxable) to compensate them for expenses they incur in supplying their own home.
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Your committee has removed the discrimination in existing law by providing that the present exclusion is to apply to rental allowances paid to ministers to the extent used by them to rent or provide a home. H.R. Rep. No. 1337, at 15, available in U.S. Code Congressional and Administrative News, 83rd Congress, Second Session, at 4040 (1954). Plaintiffs challenge defendants’ view that the purpose of § 107(2) was to eliminate religious discrimination by quoting a statement from Representative Peter Mack, the sponsor of the 1954 law, : Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this. Certainly this is not too much to do for these people who are caring for our spiritual welfare. Hearings Before the H. Comm. on Ways & Means, 83rd Cong. 1, at 1574-75(June 9, 1953) (statement of Peter F. Mack, Jr ), dkt. #51-9. Plaintiffs argue that Mack’s statement shows that § 107(2) “was deliberately intended to send a message of support for religion during the Cold War.” Plts.’ Br., dkt. #52, at 52. The difference between plaintiffs’ and defendants’ view of the purpose of § 107(2) is more semantic than substantive. Under either view, the point of the law was to assist a subset of religious groups, which, as I will explain below, is not a secular purpose under the establishment clause. Because the validity of § 107(1) is not before the court, I must assume for the purpose of this case that Congress did not violate the establishment clause by granting a tax exemption on the rental value of a home provided to a minister as part of his compensation.
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However, by defendants’ own assertion, the purpose of § 107(1) was to eliminate discrimination between secular and religious employees by giving ministers a similar exemption to the one now codified in 26 U.S.C. § 119 for housing provided to an employee for the convenience of the employer. Assuming this is correct, it does little to help justify the later enactment of § 107(2), which expanded the exemption to include not just the value of any housing provided but also the portion of the minister’s salary designated for housing expenses. Defendants say that § 107(2) was needed to eliminate discrimination against certain religious sects, particularly those that were “less wealthy and less established,” but there are multiple problems with that argument.
To begin with, defendants are wrong to suggest that § 107(2) was needed to eliminate religious discrimination. Section 107(1) is not discriminatory in the sense that it singles out certain religions for more favorable treatment; rather, it gives a benefit to ministers who meet certain housing criteria, just as § 119 gives a benefit to employees who meet certain housing criteria. Although not all ministers can qualify for the exemption, the same is true for secular employees under § 119. In other words, § 107(1) no more “discriminates” against ministers who purchase their own housing than § 119 “discriminates” against secular employees who purchase their own housing. Because the distinction made in both statutes relates to the type of housing the employee has rather than religious affiliation, there is no religious discrimination. Under defendants’ view, if one religious person received a tax exemption, then Congress would be compelled to give every religious person the same exemption, even if the exemption had nothing to do with religion.
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Further, to the extent that § 107(1) discriminates among religions, § 107(2) does not eliminate that discrimination but merely shifts it. In particular, § 107(2) discriminates against those religions that do not have ministers. Erwin Chemerinsky, The Parsonage Exemption Violates the Establishment Clause and Should Be Declared Unconstitutional, 24 Whittier L. Rev. 707, 723 (2003) (“[S]ection 107(2) itself discriminates among religions: It offers a huge financial benefit to those religions and churches that have clergy as compared to those which do not. Moreover, it discriminates among clergy based on the specific tasks they are performing.”); Thomas E. O'Neill, A Constitutional Challenge to Section 107 of the Internal Revenue Code, 57 Notre Dame L. Rev. 853, 865-66 (1982) (“Section 107(2) may unconstitutionally prefer certain religions over others. For example, a congregational religion with no permanent or specifically designated ministers would not receive section 107(2)'s financial benefits as would a centralized religion with a designated ministry.”). In addition, § 107(2) creates an imbalance even with respect to those ministers who benefit from § 107(1) because ministers who get an exemption under § 107(2) can use their housing allowance to purchase a home that will appreciate in value and still can deduct interest they pay on their mortgage and property taxes, resulting in a greater benefit than that received under § 107(1). Chemerinsky, 24 Whittier L. Rev. at 712; 26 U.S.C. § 265(a)(6) (“No deduction shall be denied under this section for interest on a mortgage on, or real property taxes on, the home of the taxpayer by reason of the receipt of an amount as. . . (B) a parsonage allowance excludable from gross income under section 107”).
In any event, even if I assume that the exemption in § 107(2) applies equally to all
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religions, that would not solve the problem because the provision applies to religious persons only. Congress did not incorporate an exemption for secular employees into § 107(2) or expand § 119 to accomplish a similar result. Kowalski, 434 U.S. at 84-96 (rejecting interpretation of § 119 that would extend it to cash allowances). A desire to assist disadvantaged churches and ministers is not a secular purpose and it does not produce a secular effect when similarly disadvantaged secular organizations and employees are excluded from the benefit. Nyquist, 413 U.S. at 788-89 (law motivated by desire to help “low-income parents” send children to sectarian schools “can only be regarded as one ‘advancing' religion”). The establishment clause requires neutrality not just among the various religious sects but between religious and secular groups as well. McCreary County, 545 U.S. at 875-76 (“[T]he government may not favor one religion over another, or religion over irreligion, religious choice being the prerogative of individuals under the Free Exercise Clause.”); Nyquist, 413 U.S. at 771 (“[I]t is now firmly established that a law may be one ‘respecting an establishment of religion’ even though its consequence is not to promote a ‘state religion,’ and even though it does not aid one religion more than another but merely benefits all religions alike.”) (internal citation omitted); Gillette v. United States, 401 U.S. 437, 450 (1971) (“[T]he Establishment Clause prohibits government from abandoning secular purposes . . . to favor the adherents of any sect or religious organization.”). Under defendants’ view, there would be no limit to the amount of support the government could provide to religious groups over secular ones.
Alternatively, defendants cite provisions in the tax code granting housing allowance
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exemptions for nonreligious reasons as evidence that § 107(2) does not advance religion. First, under 26 U.S.C. § 134, members of the military may exclude from their gross income any “qualified military benefit,” which includes a housing allowance. 37 U.S.C. § 403. Second, under 26 U.S.C. § 911, United States citizens who live abroad may deduct a portion of their housing expenses from their gross income. Finally, under 26 U.S.C. § 912, certain federal employees who live abroad may exclude from their gross income “foreign area allowances,” which may include housing expenses.
In Texas Monthly, 489 U.S. at 14, the plurality acknowledged that a tax exemption benefiting sectarian groups could survive a challenge under the establishment clause if the exemption was “conferred upon a wide array of nonsectarian groups as well.” However, the Court rejected the argument that it was enough to point to a small number of secular groups that could receive a similar exemption for a different reason:
The fact that Texas grants other sales tax exemptions (e.g., for sales of food, agricultural items, and property used in the manufacture of articles for ultimate sale) for different purposes does not rescue the exemption for religious periodicals from invalidation. What is crucial is that any subsidy afforded religious organizations be warranted by some overarching secular purpose that justifies like benefits for nonreligious groups. Texas Monthly, 489 U.S. at 15 n.4. In this case, defendants have not identified an “overarching secular purpose” that justifies both § 107(2) and the other exemptions they cite. Defendants suggest vaguely that all of the recipients have “unique housing needs,” Dfts.’ Br., dkt. #44, at 39, but they never identify how the needs of ministers who do not live in employer housing are different from those of any other taxpayer. In their reply brief, defendants say that § 107 is like the other
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statutes in that all of them involve “[p]eople whose housing is dictated by their work,” Dfts.’ Br., dkt. #53, at 20, but that argument is disingenuous because it applies only to § 107(1), which is not at issue in this case. Section 107(2) does not include any limitations on the type or location of housing that a minister purchases or rents, so it cannot be described as being related to the convenience of the employer doctrine.
Each of the other statutes defendants cite involving exemptions for secular employees was motivated by a purpose specific to the particular group involved. For example, the purpose of § 911 is to protect American business people living overseas from double taxation, Brewster v. Commissioner of Internal Revenue, 473 F.2d 160, 163 (D.C. Cir. 1972), and the purpose of § 912 is to insure that “federal civilian employees should be adequately reimbursed for additional expenses necessarily incurred because of their overseas services.” Anderson v. United States, 16 Cl. Ct. 530, 534 (1989). Thus, both of these statutes are less about giving a particular group preferential treatment and more about attempting to avoid penalizing particular taxpayers for engaging in work that provides a benefit to the United States.
Although I did not uncover a discussion of the purpose of § 134 in the case law, it seems obvious that it would be a mistake to rely on any benefit members of the military receive as providing an “overarching secular purpose” for giving a similar benefit to ministers or anyone else. Because members of the military are unique in the level of service they give to the government and the sacrifices they make, it is not surprising that they receive certain benefits not available to the general public. A housing allowance is only one of many
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“qualified military benefits” that may be excluded from gross income. Defendants say that § 912 (relating to federal civilian employees living overseas) is
similar to § 107 in that its original scope was limited to employees who lived in housing provided by the government, but Congress expanded the exemption to cover housing allowances as well. Anderson, 16 Cl. Ct. at 534-35. This argument is a nonstarter because it does not change the fact that, unlike § 107(2), the purpose of both exemptions in § 912 is to alleviate special burdens experienced by certain taxpayers as a result of their living situation. In any event, any superficial similarity between § 107 and § 912 is irrelevant because a decision by the federal government to expand the scope of an exemption to more of its own employees as it did in § 912 does not implicate the establishment clause as does an exemption that singles out religious persons for more favorable treatment.
In sum, defendants cite no evidence that the concerns that motivated § 134, § 911 and § 912 have anything to do with § 107(2). Accordingly, I agree with plaintiffs that § 107(2) does not have a secular purpose or effect and that a reasonable observer would view § 107(2) as an endorsement of religion.
7. Applicability of § 107(2) to atheists As discussed above, defendants argued in the context of addressing plaintiffs’ standing
to sue that it is “conceivable” that an atheist could qualify as a “minister of the gospel” under § 107. Dfts.’ Br., dkt. #44, at 10. In the context of discussing the merits in their reply brief, defendants make a similar statement that an atheist could “make a claim” that he or she is
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a minister of the gospel under § 107. Dfts.’ Br., dkt. #53, at 27. In support of an argument that construing § 107(2) to include atheists would defeat plaintiffs’ claim, defendants cite a passage in Justice Blackmun’s concurring opinion in Texas Monthly that the tax exemption at issue in that case “might survive Establishment Clause scrutiny” if it included “atheistic literature distributed by an atheistic organization.” Texas Monthly, 489 U.S. at 49 (Blackmun, J., concurring in the judgment). However, defendants never go so far as to argue that the phrase “minister of the gospel” § 107 could be interpreted reasonably as applying to an atheist. In fact, they decline expressly to take a position on that issue. Dfts.’ Br., dkt. #44, at 10 (“The United States is not taking the position that any particular person would, in fact, qualify to claim the exclusion under § 107(2).”).
I am not aware of any decision in which a majority of the Supreme Court considered whether a claim under the establishment clause would be defeated if the particular benefit at issue were granted to atheists, but still excluded secular groups. At least in the context of this case, there is a plausible argument that the claim would survive. Under Lemon, the question is whether the government has “advanced religion.” Thus, if atheism were included under the umbrella of “religion,” § 107(2) still would advance religion over secular interests, even if the provision applied to atheists, because secular taxpayers still would be excluded from the benefit. Further, regardless whether § 107(2) could be read to include an “atheist minister,” the statute still discriminates against religions that do not employ ministers, as noted above.
Regardless, to the extent defendants mean to argue that § 107(2) is constitutional
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because of an abstract possibility that an atheist could qualify as a minister of the gospel, I disagree. Defendants are correct that courts must construe statutes to “avoid constitutional difficulties,” Clark v. Martinez, 543 U.S. 371, 381-382 (2005), but that canon applies only if the statute is “readily susceptible to such a construction.” Reno v. American Civil Liberties Union, 521 U.S. 844, 884 (1997). A court may not “rewrite a . . . law to conform it to constitutional requirements." Id. at 884-885.
In this case, no reasonable construction of § 107 would include atheists. In the concurring opinion in Texas Monthly that defendants cite, Justice Blackmun rejected as “facially implausible” an argument that atheistic literature could be included as part of “[p]eriodicals that are published or distributed by a religious faith and that consist wholly of writings promulgating the teaching of the faith and books that consist wholly of writings sacred to a religious faith.” Texas Monthly, 489 U.S. at 29 (Blackmun, J., concurring in the judgment). Defendants do not explain why they believe interpreting § 107 to include atheists is any more plausible. Hearings Before the H. Comm. on Ways & Means, 83rd Cong. at 1574-75 (sponsor of § 107(2) stating that purpose of law was to help ministers who are “fight[ing] against” a “godless and anti-religious world movement”).
The only authority defendants cite is Kaufman, 419 F.3d at 682, in which the court concluded that atheism could qualify as a religion under the free exercise clause for the purpose of that case. However, the question under § 107 is not whether atheism is a religion but whether an atheist can be a “minister of the gospel,” a very different question. In Kaufman, the court cited Reed v. Great Lakes Cos., 330 F.3d 931, 934 (7th Cir. 2003), for
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the proposition that religion under the free exercise could be defined simply as “taking a position on divinity,” Kaufman, 419 F.3d at 682, but, as discussed above, qualifying as a “minister of the gospel” is much more complicated. Defendants cite no evidence that an “atheist minister” exists (a term that many might view as an oxymoron), let alone an atheist that satisfies the IRS’s criteria for a “minister of the gospel,” by performing “sacerdotal” functions, conducting “worship” services or acting as a “spiritual” leader under the authority of a “church.”
8. Entanglement With respect to the question whether § 107(2) fosters excessive entanglement
between church and state, I see little distinction between this case and Texas Monthly, in which the plurality concluded that the Texas statute “appear[ed], on its face, to produce greater state entanglement with religion than the denial of an exemption” because granting the exemption required the government to “evaluat[e] the relative merits of differing religious claims” and created “[t]he prospect of inconsistent treatment and government embroilment in controversies over religious doctrine.” Texas Monthly, 489 U.S. at 20 (plurality opinion). Defendants argue that “it is constitutionally permissible for a government to determine whether a person’s belief is ‘religious’ and sincerely held,” Dfts.’ Br., dkt. #53, at 25, but, as discussed above, § 107 and its implementing regulations go well beyond a determination whether a belief is “religious,” involving a complex and inherently ambiguous multifactor test. Compare Kaufman, 419 F.3d at 682 (concluding in four
40

paragraphs that atheism could qualify as a religion under free exercise clause) with Foundation of Human Understanding v. United States, 88 Fed. Cl. 203 (Fed. Cl. 2009) (32page decision devoted entirely to question whether organization qualified as “church” under tax code). See also Justin Butterfield, Hiram Sasser and Reed Smith, The Parsonage Exemption Deserves Broad Protection, 16 Tex. Rev. L. & Pol. 251, 264 (2012) (arguing in favor of the constitutionality of § 107, but acknowledging that “there is an entanglement problem” with the implementing regulations).
More persuasive is defendants’ reliance on Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, — U.S. —, 132 S. Ct. 694, 699 (2012), in which the Supreme Court concluded that a “minister” could not sue a church for employment discrimination under Title VII. Although the Court did not consider expressly whether a “ministerial” exception to Title VII created excessive entanglement, the Court applied the exception to the facts of the case without expressing any reservations.
Hosanna-Tabor is not on all fours with this case because, like Amos, it involved countervailing concerns that a contrary rule would lead to interference with “a religious group's right to shape its own faith and mission through its appointments.” Hosanna-Tabor, 132 S. Ct. at 706. In any event, because I have concluded that § 107(2) does not have a secular purpose or effect, I need not decide whether the provision fosters excessive entanglement between church and state. Doe, 687 F.3d at 851 n. 15 ("Since we conclude that the District acted unconstitutionally on other grounds, we need not . . . consider the District's actions under Lemon's entanglement prong.").
41

C. Conclusion Although I conclude that § 107(2) violates the establishment clause and must be enjoined, this does not mean that the government is powerless to enact tax exemptions that benefit religion. “[P]olicies providing incidental benefits to religion do not contravene the Establishment Clause.” Capitol Square Review & Advisory Board v. Pinette, 515 U.S. 753, 768 (1995) (plurality opinion). In particular, because “[t]he nonsectarian aims of government and the interests of religious groups often overlap,” the government is not “required [to] refrain from implementing reasonable measures to advance legitimate secular goals merely because they would thereby relieve religious groups of costs they would otherwise incur.” Texas Monthly, 489 U.S. at 10 (plurality opinion). Thus, if Congress believes that there are important secular reasons for granting the exemption in § 107(2), it is free to rewrite the provision in accordance with the principles laid down in Texas Monthly and Walz so that it includes ministers as part of a larger group of beneficiaries. Haller, 728 A.2d at 356 (noting that Texas amended statute at issue in Texas Monthly to grant sales tax exemption to broader range of groups). As it stands now, however, § 107(2) is unconstitutional.
ORDER IT IS ORDERED that 1. The motion for summary judgment filed by defendants Timothy Geithner and Douglas Schulman (now succeeded by Jacob Lew and Daniel Werfel), dkt. #40, is
42

GRANTED with respect to plaintiffs’ Freedom from Religion Foundation, Inc.’s, Annie Laurie Gaylor’s and Dan Barker’s challenge to 26 U.S.C. § 107(1). Plaintiff’s complaint is DISMISSED as to that claim for lack of standing.
2. Defendants’ motion for summary judgment is DENIED as to plaintiffs’ challenge to 26 U.S.C. § 107(2). On the court’s own motion, summary judgment is GRANTED to plaintiffs as to that claim.
3. It is DECLARED that 26 U.S.C. § 107(2) violates the establishment clause of the First Amendment to the United States Constitution.
4. Defendants are ENJOINED from enforcing § 107(2). The injunction shall take effect at the conclusion of any appeals filed by defendants or the expiration of defendants' deadline for filing an appeal, whichever is later.
5. The clerk of court is directed to enter judgment in favor of plaintiffs and close this case.
Entered this 21st day of November, 2013. BY THE COURT: /s/ BARBARA B. CRABB District Judge
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 11/4/2017

ECF Western District of Wisconsin
U.S. District Court Western District of Wisconsin (Madison) CIVIL DOCKET FOR CASE #: 3:11-cv-00626-bbc

CLOSED

Freedom From Religion Foundation, Inc. et al v. Geithner, Timothy Date Filed: 09/12/2011

et al

Date Terminated: 01/06/2015

Assigned to: District Judge Barbara B. Crabb

Jury Demand: None

Referred to: Magistrate Judge Stephen L. Crocker

Nature of Suit: 440 Civil Rights: Other

Case in other court: Seventh Circuit, 14-01152

Jurisdiction: Federal Question

Cause: 28:1331 Federal Question: Other Civil Rights

Plaintiff Freedom From Religion Foundation, Inc.

represented by Richard L. Bolton Boardman & Clark LLP 1 South Pinckney Street, 4th Floor P.O. Box 927 Madison, WI 53701-0927 608-283-1789 Fax: 608-283-1709 Email: rbolton@boardmanclark.com ATTORNEY TO BE NOTICED

Plaintiff Annie Laurie Gaylor

represented by Richard L. Bolton (See above for address) ATTORNEY TO BE NOTICED

Plaintiff
Anne Nicol Gaylor TERMINATED: 06/18/2013

represented by Richard L. Bolton (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Dan Barker

represented by Richard L. Bolton (See above for address) ATTORNEY TO BE NOTICED

V. Defendant Timothy Geithner Secretary of the United States Department of the Treasury TERMINATED: 11/07/2011
https://ecf.wiwd.uscourts.gov/cgi-bin/DktRpt.pl?491957568452776-L_1_0-1

represented by Erin Healy Gallagher U.S. Department of Justice, Tax Division P.O. Box 7238 Ben Franklin Station Washington, DC 20044 202-353-2452 Fax: 202-514-6770 Email: erin.healygallagher@usdoj.gov LEAD ATTORNEY
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ATTORNEY TO BE NOTICED

Defendant
Douglas Shulman Commissioner of the Internal Revenue Service TERMINATED: 11/07/2011

Richard Adam Schwartz United States Department of Justice, Tax Division P.O. Box 7238 Washington, DC 20044 202-307-6322 Email: richard.a.schwartz@usdoj.gov ATTORNEY TO BE NOTICED
represented by Erin Healy Gallagher (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Defendant United States of America

Richard Adam Schwartz (See above for address) ATTORNEY TO BE NOTICED
represented by Erin Healy Gallagher (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Leslie K. Herje U.S. Attorney's Ofﬁce 222 W. Washington Ave. Suite 700 Madison, WI 53703 608-264-5158 Fax: 608-264-5724 Email: leslie.herje@usdoj.gov ATTORNEY TO BE NOTICED

Defendant
Timothy Geithner in his ofﬁcial capacity as Secretary of the Department of the Treasury

Richard Adam Schwartz (See above for address) ATTORNEY TO BE NOTICED
represented by Erin Healy Gallagher United States Department of Justice, Tax Division P.O. Box 7238 Washington, DC 20044 LEAD ATTORNEY ATTORNEY TO BE NOTICED

Erin Healy Gallagher (See above for address) LEAD ATTORNEY

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Defendant Douglas Shulman in his ofﬁcial capacity as the Commissioner of the Internal Revenue Service

ECF Western District of Wisconsin
ATTORNEY TO BE NOTICED
Leslie K. Herje (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Richard Adam Schwartz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Erin Healy Gallagher (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Erin Healy Gallagher (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Leslie K. Herje (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Richard Adam Schwartz (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Date Filed 09/13/2011
09/14/2011 09/14/2011
09/14/2011 09/19/2011

# Docket Text
1 COMPLAINT against Timothy Geithner, Douglas Shulman. ( Filing fee $ 350 receipt number 0758-836319.), ﬁled by Freedom From Religion Foundation, Inc., Annie Laurie Gaylor, Dan Barker, Anne Nicol Gaylor. (Attachments: # 1 JS-44 Civil Cover Sheet, # 2 Summons) (Bolton, Richard) (Entered: 09/13/2011)
Case randomly assigned to Magistrate Judge Stephen L. Crocker. (krj) (Entered: 09/14/2011)
Standard attachments for Magistrate Judge Stephen L. Crocker required to be served on all parties with summons or waiver of service: Brieﬁng Guidelines, Corporate Disclosure Statement, Order Regarding Assignment of Civil Cases, Notice of Assignment to a Magistrate Judge and Consent/Request for Reassignment, Order on Dispositive Motions. (krj) (Entered: 09/14/2011)
2 Summons Issued as to Timothy Geithner, Douglas Shulman. (krj) (Entered: 09/14/2011)
3 Corporate Disclosure Statement by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor (Bolton, Richard) (Entered:

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09/19/2011)

ECF Western District of Wisconsin

11/07/2011

4 Joint Motion to Substitute Party by Defendants Timothy Geithner, Douglas Shulman. Response due 11/14/2011. (Attachments: # 1 Text of Proposed Order) (Healy Gallagher, Erin) (Entered: 11/07/2011)

11/07/2011

5 Unopposed Motion for Extension of Time to File Answer re 1 Complaint, by Defendants Timothy Geithner, Douglas Shulman. Response due 11/14/2011. (Attachments: # 1 Text of Proposed Order) (Healy Gallagher, Erin) (Entered: 11/07/2011)

11/07/2011

6 ** TEXT ONLY ORDER ** ORDER granting 4 Motion to Substitute Party. United States of America added. Timothy Geithner and Douglas Shulman terminated. Signed by Magistrate Judge Stephen L. Crocker on 11/7/11. (krj) (Entered: 11/07/2011)

11/07/2011

7 ** TEXT ONLY ORDER ** ORDER granting 5 Motion for Extension of Time to Answer. United States of America answer due 12/23/2011. Signed by Magistrate Judge Stephen L. Crocker on 11/7/11. (krj) (Entered: 11/07/2011)

11/07/2011

Set Telephone Pretrial or Status Conference: Telephone Pretrial Conference set for 11/29/2011 at 02:00 PM before Magistrate Judge Stephen L. Crocker. Counsel for Plaintiff responsible for setting up the call to chambers at (608) 264-5153. [Standing Order Governing Preliminary Pretrial Conference attached] (krj) (Entered: 11/07/2011)

11/08/2011

Case randomly reassigned to District Judge Barbara B. Crabb and Magistrate Judge Stephen L. Crocker. (lak) (Entered: 11/08/2011)

11/22/2011

8 Notice of Appearance ﬁled by Richard Adam Schwartz for Defendant United States of America (Schwartz, Richard) (Entered: 11/22/2011)

11/23/2011

9 Preliminary Pretrial Conference Report by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor, Defendant United States of America (Bolton, Richard) (Entered: 11/23/2011)

11/29/2011

Minute Entry for proceedings held before Magistrate Judge Stephen L. Crocker: Telephone Preliminary Pretrial Conference held on 11/29/2011 [:10] (cak) (Entered: 11/29/2011)

12/01/2011

10 Pretrial Conference Order - Amendments to Pleadings due 2/3/2012. Dispositive Motions due 9/7/2012. Settlement Letters due 12/21/2012. Court Trial set for 2/4/2013 at 09:00 AM. Signed by Magistrate Judge Stephen L. Crocker on 11/30/11. (krj) (Entered: 12/01/2011)

12/23/2011

11 MOTION TO DISMISS by Defendant United States of America. Brief in Opposition due 1/13/2012. Brief in Reply due 1/23/2012. (Healy Gallagher, Erin) (Entered: 12/23/2011)

12/23/2011

12 Brief in Support of 11 Motion to Dismiss by Defendant United States of America (Healy Gallagher, Erin) (Entered: 12/23/2011)

01/13/2012

13 AMENDED COMPLAINT against United States of America, ﬁled by Freedom From Religion Foundation, Inc., Annie Laurie Gaylor, Dan Barker, Anne Nicol Gaylor. (Bolton, Richard) (Entered: 01/13/2012)

01/18/2012

14 Motion for Extension of Time to Answer or Otherwise Respond to the Amended Complaint by Defendant United States of America. Motions referred to Magistrate Judge Stephen L. Crocker. Response due 1/25/2012. (Attachments: # 1 Text of Proposed Order) (Healy Gallagher, Erin) (Entered: 01/18/2012)

01/20/2012 15 ** TEXT ONLY ORDER ** ORDER granting 14 Motion for Extension of Time. Response to amended complaint due

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02/24/2012 02/24/2012 03/23/2012
03/23/2012
03/29/2012 04/04/2012
04/05/2012 04/20/2012 06/28/2012
07/16/2012
07/16/2012 07/18/2012 07/23/2012 08/03/2012

ECF Western District of Wisconsin
2/24/12. Signed by Magistrate Judge Stephen L. Crocker on 1/19/12. (krj) (Entered: 01/20/2012)
16 MOTION TO DISMISS Amended Complaint by Defendant United States of America. Brief in Opposition due 3/16/2012. Brief in Reply due 3/26/2012. (Healy Gallagher, Erin) (Entered: 02/24/2012)
17 Brief in Support of 16 Motion to Dismiss Amended Complaint by Defendant United States of America (Healy Gallagher, Erin) (Entered: 02/24/2012)
18 Unopposed Motion for Extension of Time for Leave to File Response Brief by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor. Motions referred to Magistrate Judge Stephen L. Crocker. (Bolton, Richard) (Entered: 03/23/2012)
19 ** TEXT ONLY ORDER ** ORDER granting 18 Motion for Extension of Time. Brief in Opposition due 3/29/2012. Brief in Reply due 4/9/2012. Signed by Magistrate Judge Stephen L. Crocker on 3/23/12. (krj) (Entered: 03/23/2012)
20 Brief in Opposition by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 16 Motion to Dismiss ﬁled by United States of America (Bolton, Richard) (Entered: 03/29/2012)
21 Unopposed Motion for Extension of Time to Reply in Further Support of its Motion to Dismiss Plaintiffs' Amended Complaint by Defendant United States of America. Motions referred to Magistrate Judge Stephen L. Crocker. (Healy Gallagher, Erin) (Entered: 04/04/2012)
22 ** TEXT ONLY ORDER ** ORDER granting 21 Motion for Extension of Time. Brief in Reply due 4/20/2012. Signed by Magistrate Judge Stephen L. Crocker on 4/4/2012. (lak) (Entered: 04/05/2012)
23 Brief in Reply by Defendant United States of America in Support of 16 Motion to Dismiss Amended Complaint (Healy Gallagher, Erin) (Entered: 04/20/2012)
24 ORDER that plaintiffs have until 7/16/12 to show cause why case should not be dismissed on ground that 5 U.S.C. 702 does not waive defendant's sovereign immunity; defendant response due 7/23/12. Signed by District Judge Barbara B. Crabb on 6/28/12. (krj) (Entered: 06/28/2012)
25 Declaration of Richard L. Bolton ﬁled by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 24 Order, (Attachments: # 1 Exhibit A - IRS Website Material) (Bolton, Richard) Modiﬁed exhibit on 7/17/2012 (mmo). (Entered: 07/16/2012)
26 Motion to Amend and Response to 24 Order by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor. (Bolton, Richard) Modiﬁed event text on 7/17/2012 (mmo). (Entered: 07/16/2012)
Set/Reset Brieﬁng Deadlines as to 26 Motion to Amend and response to 24 order. Response due 7/23/2012. (krj) (Entered: 07/18/2012)
27 Response to Order to Show Cause by Defendant United States of America (Healy Gallagher, Erin) (Entered: 07/23/2012)
28 Unopposed Motion to Stay Deadlines Pending Decision on Motion to Dismiss by Defendant United States of America. (Schwartz, Richard) Modiﬁed on 8/6/2012 (krj). (Entered: 08/03/2012)

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29 ** TEXT ONLY ORDER ** The parties' agreed motion to stay deadlines pending a decision on the motion to dismiss 28 is granted. If further scheduling is needed after the court decides the motion, then the court will convene a telephonic scheduling conference. Signed by Magistrate Judge Stephen L. Crocker on 8/6/12. (krj) (Entered: 08/06/2012)

08/29/2012

30 ORDER granting 26 Motion to Amend Caption of complaint; denying 16 Motion to Dismiss. Signed by District Judge Barbara B. Crabb on 8/29/12. (krj) (Entered: 08/29/2012)

08/29/2012

Set/Reset Hearings: Telephone Scheduling Conference set for 9/20/2012 at 02:30 PM before Magistrate Judge Stephen L. Crocker. Counsel for Plaintiff responsible for setting up the call to chambers at (608) 264-5153. (krj) (Entered: 08/29/2012)

09/10/2012

31 Unopposed Motion for Extension of Time to File Answer re 30 Order on Motion to Amend/Correct, Order on Motion to Dismiss, 13 Amended Complaint by Defendants Timothy Geithner, Timothy Geithner, Douglas Shulman, Douglas Shulman, United States of America. Motions referred to Magistrate Judge Stephen L. Crocker. (Attachments: # 1 Text of Proposed Order) (Schwartz, Richard) (Entered: 09/10/2012)

09/11/2012

32 ** TEXT ONLY ORDER ** ORDER granting 31 Motion for Extension of Time to Answer. Answer due 9/21/2012. Signed by Magistrate Judge Stephen L. Crocker on 9/11/12. (krj) (Entered: 09/11/2012)

09/20/2012

Minute Entry for proceedings held before Magistrate Judge Stephen L. Crocker: Telephone Scheduling Conference held on 9/20/2012 [:10] (cak) (Entered: 09/20/2012)

09/21/2012

33 AMENDED Scheduling Order: Dispositive Motions due 6/28/2013. Settlement Letters due 11/22/2013. Court Trial set for 1/6/2014 at 09:00 AM. Signed by Magistrate Judge Stephen L. Crocker on 9/20/12. (krj) (Entered: 09/21/2012)

09/21/2012

34 ANSWER to Amended Complaint by Defendants Timothy Geithner, Douglas Shulman, United States of America. (Schwartz, Richard) Modiﬁed docket text on 9/21/2012 (mmo). (Entered: 09/21/2012)

06/17/2013 35 Disregard - reﬁled as entry 36 ; Modiﬁed on 6/17/2013; wrong caption/case number on document. (mmo). (Entered: 06/17/2013)

06/17/2013

36 STIPULATION of Dismissal [of Plaintiff Anne Nicol Gaylor - Corrected] by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor, Defendants Timothy Geithner, Timothy Geithner, Douglas Shulman, Douglas Shulman, United States of America. (Bolton, Richard) (Entered: 06/17/2013)

06/18/2013

Party Anne Nicol Gaylor terminated pursuant to Fed. R. Civ. P. 41(a)(1) without further order of the court. (krj) (Entered: 06/18/2013)

06/28/2013 37 Deposition of Annie Laurie Gaylor taken on Apr. 23, 2013 (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013 38 Deposition of Dan Barker taken on Apr. 23, 2013 (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013 39 Deposition of Freedom From Religion Foundation, Inc. (30(b)(6)) taken on Apr. 24, 2013 (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013

40 MOTION FOR SUMMARY JUDGMENT by Defendants Timothy Geithner, Douglas Shulman, United States of America. Brief in Opposition due 7/19/2013. Brief in Reply due 7/29/2013. (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013 41 Proposed Findings of Fact ﬁled by Defendants Timothy Geithner, Douglas Shulman,

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ECF Western District of Wisconsin
United States of America re: 40 Motion for Summary Judgment (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013

42 Declaration of Barbara Cantrell ﬁled by Defendants Timothy Geithner, Douglas Shulman, United States of America re: 40 Motion for Summary Judgment (Attachments: # 1 Exhibit 3 - Plaintiffs Annie Laurie Gaylor and Dan Barker's Answers to Defendant United States of America's First Set of Written Interrogatories, # 2 Exhibit 5 - Plaintiff Freedom From Religion Foundation Inc.'s Answers to Defendant United States of America's First Set of Written Interrogatories, # 3 Exhibit 30 - Publication 1828: Tax Guide for Churches and Religious Organizations: Beneﬁts and Responsibilities Under the Federal Tax Law, # 4 Exhibit 31 - Ministers Audit Techniques Guide, # 5 Exhibit 32 - Publication 517: Social Security and Other Information for Members of the Clergy and Religious Workers, # 6 Exhibit 33 - Form 4361: Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, # 7 Exhibit 34 - I.R.M. § 4.19.6: Examining Process/Liability Determination/SSA Correspondence, Minister Waivers, and Application for Exemption from Social Security, # 8 Exhibit 36 - I.R.M. § 1.11.6, Using and Researching the Internal Revenue Manual (IRM, # 9 Exhibit 37 - I.R.M. § 4.76.7: Examining Process/Exempt Organizations Examination Guidelines/Church Tax Inquiries and Examinations - IRC § 7611, # 10 Exhibit 38 - I.R.M. § 7.25.3: Rulings and Agreements/Exempt Organizations Determinations Manual/Religious, Charitable, Educational, Etc. Organizations, # 11 Exhibit 40 - I.R.M. § 4.76.6: Examining Process/Exempt Organizations Examination Guidelines/Religious Organizations, # 12 Exhibit 41 - Solstice Tribute, # 13 Exhibit 42 - Losing Faith In Faith: From Preacher To Atheist, # 14 Exhibit 43 - Faith-free Clergy Struggle to Escape Pulpit, # 15 Exhibit 44 - DeBaptismal Certiﬁcate, # 16 Exhibit 45 - Just Pretend: A Freethought Book for Children, # 17 Exhibit 46 - Friendly Neighborhood Atheist 2 CD Album, # 18 Exhibit 47 - Beware of Dogma CD, # 19 Exhibit 48 - Adrift on a Star: Irreverent Songs by Dan Barker, # 20 Exhibit 49 - Dan Barker's Ordination Certiﬁcate, # 21 Exhibit 50 - In Defense of "Godlessness", # 22 Exhibit 51 - Secular Memorials and Funerals Without God, # 23 Exhibit 52 - "Let's Dispense with Christian Funerals") (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013

43 Declaration of Dean James Hudnut-Beumler ﬁled by Defendants Timothy Geithner, Douglas Shulman, United States of America re: 40 Motion for Summary Judgment (Attachments: # 1 Exhibit A - CV, # 2 Exhibit B - Publications, # 3 C - Bibliography) (Healy Gallagher, Erin) (Entered: 06/28/2013)

06/28/2013 44 Brief in Support of 40 Motion for Summary Judgment by Defendants Timothy Geithner, Douglas Shulman, United States of America (Healy Gallagher, Erin) (Entered: 06/28/2013)

07/17/2013

45 Unopposed Motion for Extension of Time for Plaintiffs To Respond To Defendants' Motion For Summary Judgment by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor. Motions referred to Magistrate Judge Stephen L. Crocker. (Bolton, Richard) (Entered: 07/17/2013)

07/18/2013 46 ** TEXT ONLY ORDER **

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07/26/2013
07/26/2013 07/26/2013 07/26/2013
07/26/2013 08/12/2013 08/12/2013 08/12/2013

ECF Western District of Wisconsin
ORDER granting 45 Motion for Extension of Time. Brief in Opposition due 7/26/2013. Brief in Reply due 8/12/2013. Signed by Magistrate Judge Stephen L. Crocker on 7/17/13. (krj) (Entered: 07/18/2013)
47 Declaration of Annie Laurie Gaylor ﬁled by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 40 Motion for Summary Judgment (Attachments: # 1 Exhibit 001, FFRF Bylaws, # 2 Exhibit 002, FFRF 2012 Year In Review, # 3 Exhibit 003, FFRF FAQ Page, # 4 Exhibit 004, FFRF Website Page, # 5 Exhibit 005, FFRF DeBaptismal Certiﬁcate) (Bolton, Richard) (Entered: 07/26/2013)
48 Declaration of Dan Barker ﬁled by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 40 Motion for Summary Judgment (Attachments: # 1 Exhibit 001, FFRF Bylaws, # 2 Exhibit 002, FFRF Year In Review, # 3 Exhibit 003, FFRF FAQ Page, # 4 Exhibit 004, FFRF Website Page, # 5 Exhibit 005, DeBaptismal Certiﬁcate) (Bolton, Richard) (Entered: 07/26/2013)
49 Response to Proposed Findings of Fact ﬁled by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 40 Motion for Summary Judgment (Bolton, Richard) (Entered: 07/26/2013)
50 Proposed Findings of Fact by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Annie Laurie Gaylor (Bolton, Richard) (Entered: 07/26/2013)
51 Afﬁdavit of Richard L. Bolton ﬁled by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 40 Motion for Summary Judgment (Attachments: # 1 Exhibit 001, Erwin Chemerinsky Article, # 2 Exhibit 002, Texas Monthly Decision, # 3 Exhibit 003, Report Staff of Joint Committee, # 4 Exhibit 004, Crt. of Appeals 9th Cir. - Motion for Leave, # 5 Exhibit 005, Lloyd Mayer Article, # 6 Exhibit 006, Tax Court Decision, # 7 Exhibit 007, Eighth Circuit Decision, # 8 Exhibit 008, IRS Letter, # 9 Exhibit 009, Rep. Mark Comments) (Bolton, Richard) Modiﬁed exhibit description on 7/29/2013 (mmo). (Entered: 07/26/2013)
52 Brief in Opposition by Plaintiffs Dan Barker, Freedom From Religion Foundation, Inc., Anne Nicol Gaylor, Annie Laurie Gaylor re: 40 Motion for Summary Judgment ﬁled by Douglas Shulman, Timothy Geithner, United States of America (Bolton, Richard) (Entered: 07/26/2013)
53 Brief in Reply by Defendants Timothy Geithner, Douglas Shulman, United States of America in Support of 40 Motion for Summary Judgment (Healy Gallagher, Erin) (Entered: 08/12/2013)
54 Reply in Support of Proposed Findings of Fact ﬁled by Defendants Timothy Geithner, Douglas Shulman, United States of America re: 40 Motion for Summary Judgment (Healy Gallagher, Erin) (Entered: 08/12/2013)
55 Response to Proposed Findings of Fact ﬁled by Defendants Timothy Geithner, Douglas

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ECF Western District of Wisconsin
Shulman, United States of America re: 40 Motion for Summary Judgment (Healy Gallagher, Erin) (Entered: 08/12/2013)
56 ORDER granting in part and denying in part 40 Motion for Summary Judgment by defendants Timothy Geithner and Douglas Schulman, now succeeded by Jacob Lew and Daniel Werfel. The motion is GRANTED with respect to plaintiffs' challenge to 26 U.S.C. § 107(1); plaintiffs' complaint is dismissed as to that claim for lack of standing. The motion is DENIED as to plaintiffs' challenge to 26 U.S.C. § 107(2). On the court's own motion, summary judgment is GRANTED to plaintiffs as to that claim. It is DECLARED that 26 U.S.C. § 107(2) violates the establishment clause of the First Amendment and defendants are ENJOINED from enforcing § 107(2). The injunction shall take effect at the conclusion of any appeals ﬁled by the defendants. Signed by District Judge Barbara B. Crabb on 11/21/2013. (arw) (Entered: 11/22/2013)
57 JUDGMENT entered in favor of Defendants Jacob Lew and Daniel Werfel dismissing plaintiffs' claim challenging the constitutionality of 26 U.S.C. § 107(1); entered in favor of plaintiffs Annie Laurie Gaylor, Dan Barker and Freedom from Religion Foundation, Inc. on their claim challenging the constitutionality of 26 U.S.C. § 107(2). It is declared that 26 U.S.C. § 107(2) violates the establishment clause of the First Amendment. Defendants are enjoined from enforcing 26 U.S.C. § 107(2). The injunction shall take effect at the conclusion of any appeals ﬁled by defendants or the expiration of defendants' appeal deadline. (BBC/LAK) (arw) (Entered: 11/26/2013)
58 NOTICE OF APPEAL by Defendants Timothy Geithner, Timothy Geithner, Douglas Shulman, Douglas Shulman, United States of America as to 57 Judgment. Appeal ﬁled by USA. Docketing Statement ﬁled. (Attachments: # 1 Docketing Statement) (Healy Gallagher, Erin) (Entered: 01/24/2014)
59 Appeal Information Packet. (krj) (Entered: 01/24/2014)
60 Transmission of Notice of Appeal, Docketing Statement, Appeal Information Sheet, Docket Sheet and Judgment to Seventh Circuit Court of Appeals re 58 Notice of Appeal. (Attachments: # 1 appeal information sheet, # 2 docketing statement, # 3 judgment, # 4 docket sheet) (krj) (Entered: 01/24/2014)
USCA Case Number 14-1152 for 58 Notice of Appeal, ﬁled by Douglas Shulman, Timothy Geithner, United States of America. (krj) (Entered: 01/24/2014)
61 Designation of Record on Appeal by Defendants Timothy Geithner, Timothy Geithner, Douglas Shulman, Douglas Shulman, United States of America re 58 Notice of Appeal, (Healy Gallagher, Erin) (Entered: 01/31/2014)
62 Transcript Request Form by Defendants Timothy Geithner, Timothy Geithner, Douglas Shulman, Douglas Shulman, United States of America re 58 Notice of Appeal, (Healy Gallagher, Erin) (Entered: 01/31/2014)
63 Court Reporter Certiﬁcation of Seventh Circuit Transcript Information Sheet re 58 Notice of Appeal, (jat) (Entered: 02/03/2014)
64 Certiﬁed and Transmitted Record on Appeal to US Court of Appeals re 58 Notice of Appeal, (Attachments: # 1 Certiﬁcation) (lak) (Entered: 07/29/2014)
65 JUDGMENT from USCA vacating the judgment of the district court and remanding with instructions to dismiss the complaint for want of jurisdiction as to 58 Notice of Appeal,

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ECF Western District of Wisconsin
ﬁled by Douglas Shulman, Timothy Geithner, United States of America. No record to be returned. (Attachments: # 1 Mandate, # 2 Appellate Opinion, # 3 Bill of Costs) (jat) (Entered: 01/05/2015)
66 ORDER: Judgment entered on November 24, 2013 is VACATED in its entirety and this case is DISMISSED without prejudice for lack of jurisdiction. Signed by District Judge Barbara B. Crabb on 1/6/15. (jat) (Entered: 01/06/2015)
67 AMENDED JUDGMENT dismissing the case without prejudice for lack of jurisdiction. (jat) (Entered: 01/06/2015)

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 UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

Everett McKinley Dirksen United States Courthouse Room 2722 - 219 S. Dearborn Street Chicago, Illinois 60604

Office of the Clerk Phone: (312) 435-5850 www.ca7.uscourts.gov

November 13, 2014

FINAL JUDGMENT

Before:

JOEL M. FLAUM, Circuit Judge ILANA DIAMOND ROVNER, Circuit Judge DAVID F. HAMILTON, Circuit Judge

No.: 14-1152

FREEDOM FROM RELIGION FOUNDATION, INCORPORATED, et al., Plaintiffs - Appellees
v.

JACOB J. LEW, in his official capacity as Secretary of the Treasury, et al., Defendants - Appellants
Originating Case Information:
District Court No: 3:11-cv-00626-bbc Western District of Wisconsin District Judge Barbara B. Crabb

The judgment of the District Court is VACATED, with costs, and the case is REMANDED with instructions to dismiss the complaint for want of jurisdiction.
The above is in accordance with the decision of this court entered on this date.