In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 18-1277 & 18-1280 

ANNIE LAURIE GAYLOR, et al., 

Plaintiffs-Appellees, 

v. 

STEVEN T. MNUCHIN, et al., 

 Defendants-Appellants, 

and 

EDWARD PEECHER, et al., 

Intervening 

 Defendants-Appellants. 

 ____________________ 

Appeals from the United States District Court for the 

Western District of Wisconsin. 

No. 16-cv-215 — Barbara B. Crabb, Judge. 

____________________ 

ARGUED OCTOBER 24, 2018 — DECIDED MARCH 15, 2019 

____________________ 

Before BAUER, MANION, and BRENNAN, Circuit Judges. 

BRENNAN, Circuit Judge. Since the Founders crafted the Religion Clauses of the First Amendment, courts have grappled 
2 Nos. 18-1277 & 18-1280 

with the “play in the joints” between them. Walz v. Tax Comm. 

of City of N.Y., 397 U.S. 664, 669 (1970). This case calls us to do 

so once more. Freedom From Religion Foundation (“FFRF”) 

claims that a longstanding tax code exemption for religious 

housing, 26 U.S.C. § 107(2) of the Internal Revenue Code, violates the Establishment Clause. The district court agreed. 

The U.S. Treasury Department and several intervening religious organizations ask us to reinstate the exemption, asserting that the survival of many congregations hangs in the 

balance. We must decide whether excluding housing allowances from ministers’ taxable income is a law “respecting an 

establishment of religion” in violation of the First Amendment. 

I.

A. History of § 107(2)

The facts before us are not in dispute. The Sixteenth 

Amendment was ratified in 1913, authorizing Congress to 

levy an income tax. Congress imposed a federal income tax 

that same year and has levied one in various forms since. As 

a result, Congress and the Treasury Department needed to 

define taxable “income.” A rule defining income that survives 

today in the Internal Revenue Code is the “convenience-ofthe-employer” doctrine. Under that doctrine, housing provided to employees for the convenience of their employer is 

exempt from taxable income. Early examples of exclusions 

under the doctrine include housing provided to sailors living 

aboard ships, workers living in camps, and hospital employees. But the convenience-of-the-employer doctrine was not 
Nos. 18-1277 & 18-1280 3

made available to ministers.1 In 1921, the Treasury Department announced ministers would be taxed on the fair rental 

value of parsonages provided as living quarters. O.D. 862, 4 

C.B. 85 (1921). 

Congress reacted quickly and enacted a statute to exclude 

church-provided parsonages from the taxable income of ministers. The Treasury Department interpreted this statute to 

apply only to housing provided in-kind; cash housing allowances were included in income. I.T. 1694, C.B. II-1, at 79 (1923). 

This continued for decades until in the 1950s several ministers 

successfully challenged the limitation to in-kind housing.2

Congress then enacted 26 U.S.C. § 107, which provides: 

In the case of a minister of the gospel, gross 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 ... 

 

1 The text of the tax code refers specifically to “ministers of the gospel,” so we use that term. Courts have long held the provision applies to 

religious leaders of any denomination, regardless of formal title. See, e.g., 

Salkov v. Comm’r, 46 T.C. 190, 194 (1966) (holding a Jewish cantor was a 

“minister of the gospel”). 

2 See, e.g., Williamson v. Comm’r, 224 F.2d 377 (8th Cir. 1955); Conning 

v. Busey, 127 F. Supp. 958 (S.D. Ohio 1954); MacColl v. United States, 

91 F. Supp. 721 (N.D. Ill. 1950). 
4 Nos. 18-1277 & 18-1280 

Section 107(1) reauthorized the in-kind parsonage exemption 

in place since the 1920s. Section 107(2) authorized the IRS to 

also exempt cash allowances from ministers’ taxable income.3 

B. District Court Proceedings 

FFRF describes itself as a “nonprophet nonprofit” organization that “[t]akes legal action challenging entanglement of 

religion and government, government endorsement or promotion of religion.” What Does the Foundation Do?, FREEDOM 

FROM RELIGION FOUNDATION, https://ffrf.org/faq/item/15001-

what-does-the-foundation-do (last visited March 10, 2019). 

Seeking to challenge both § 107(1) and § 107(2), FFRF paid its 

co-presidents Annie Gaylor and Dan Barker a portion of their 

salaries in the form of a housing allowance. FFRF also paid 

this housing allowance to a former president of the organization, Anne Nicol Gaylor (“Nicol Gaylor”).4 FFRF, Gaylor, 

Barker, and Nicol Gaylor, none of whom meet the IRS’s definition of “minister,” then sued the Treasury Department, 

claiming § 107 violates the First Amendment because it conditions a tax benefit on religious affiliation. We dismissed this 

challenge for lack of standing because FFRF and its employees 

never applied for § 107(1) or § 107(2) exemptions, so they were 

 3 An amicus brief from the University of St. Thomas School of Law 

(Minnesota) estimates that of the United States’ 384,000 congregations, 

200,000 to 300,000 provide a housing allowance to their ministers under 

26 U.S.C. § 107(2). 

4 Nicol Gaylor, Annie Gaylor’s mother and co-founder of FFRF, 

passed away during the initial lawsuit filed by FFRF. Although the party 

to this lawsuit is technically the Estate of Anne Nicol Gaylor, we refer to 

her as “Nicol Gaylor” for brevity. 
Nos. 18-1277 & 18-1280 5

never denied them. Freedom From Religion Foundation, Inc. v. 

Lew, 773 F.3d 815, 825 (7th Cir. 2014) (“Lew”). 

In response, Gaylor and Barker filed amended tax returns 

for 2012 and 2013 claiming refunds for their housing allowances under § 107(2); Nicol Gaylor did the same for 2013. The 

IRS erroneously issued refunds to Gaylor and Barker for 2013 

but made no decisions on plaintiffs’ other claims. After more 

than six months without IRS action on plaintiffs’ claims, FFRF 

and its employees brought this suit. The IRS then denied the 

2012 refund claims because none of the claimants were ministers. 

The Treasury Department moved to dismiss FFRF’s 

§ 107(1) challenge for lack of subject matter jurisdiction. The 

district court granted the motion for the same reasons we 

articulated in Lew: FFRF’s employees never claimed a § 107(1) 

exemption. FFRF does not appeal that ruling. Later, the district court permitted several pastors who receive housing 

allowances and their associated religious organizations to intervene to defend § 107(2).5 

The Treasury Department and intervenors moved for 

summary judgment. The district court denied their motions 

and instead granted summary judgment to FFRF and its employees. The court held that FFRF and its employees had 

standing to challenge § 107(2), and that that statute violates 

the Establishment Clause of the First Amendment. Gaylor v. 

 5 The intervening defendants are Bishop Edward Peecher, the Chicago 

Embassy Church, Father Patrick Malone, the Holy Cross Church, the 

Diocese of Chicago and Mid-America of the Russian Orthodox Church 

Outside of Russia, and Pastor Christopher Butler. Each of the intervenors 

receive or provide housing allowances under § 107(2). 
6 Nos. 18-1277 & 18-1280 

Mnuchin, 278 F. Supp. 3d 1081, 1104 (W.D. Wis. 2017). The 

court held that § 107(2) violated the secular purpose prong of 

the test set forth in Lemon v. Kurtzman, 403 U.S. 602 (1971), and 

ruled that the statute’s true purpose was to “provide aid to a 

group of religious persons.” Gaylor, 278 F. Supp. 3d at 1099. 

The court rejected the argument that § 107(2) avoids excessive 

government entanglement with religion, because in the 

court’s view “concerns about entanglement [do not] justify 

preferential treatment for religious persons.” Id. The Treasury 

Department and the intervenors appeal. 

II.

Neither the Treasury Department nor the intervenors 

dispute the district court’s ruling that FFRF has standing to 

challenge § 107(2). Nevertheless, even if the issue has not been 

raised, if there is no Article III standing our court must dismiss the suit. Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 

583, 588 (7th Cir. 2016). We evaluate standing to determine 

whether FFRF resolved the deficiencies we noted in Lew. 

To establish Article III standing, plaintiffs must show they 

have suffered “(1) a concrete and particularized ‘injury in fact’ 

(2) that is fairly traceable to the challenged action of the defendant, and that is (3) likely to be redressed by a favorable 

judicial decision.” Lew, 773 F.3d at 819 (citing Lujan v. 

Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). To challenge 

the constitutionality of a tax provision, a plaintiff must have 

“personally claimed and been denied the exemption.” Lew, 

773 F.3d at 821. 

An essential element of “injury in fact” is that the injury 

be “actual and imminent, not conjectural or hypothetical.” 
Nos. 18-1277 & 18-1280 7

Lujan, 504 U.S. at 561 (internal quotations and citations omitted). When FFRF filed this action, Gaylor and Barker had yet 

to be denied a refund from their 2012 tax returns, and Nicol 

Gaylor had still, by the time of the district court’s decision, 

received no answer to her 2013 refund request. Yet this does 

not necessarily mean FFRF lacked standing. Under 26 U.S.C. 

§ 6532(a)(1), an income tax refund suit may be filed no earlier 

than six months after the refund claim was submitted. A statute cannot “‘lower the threshold for standing below the minimum requirements imposed by the Constitution,’ but 

Congress does have the power to ‘enact statutes creating legal 

rights, the invasion of which creates standing, even though no 

injury would exist without the statute.’” Sterk v. Redbox 

Automated Retail, LLC, 770 F.3d 618, 623 (7th Cir. 2014) (quoting Kyles v. J.K. Guardian Sec. Servs., Inc., 222 F.3d 289, 294 (7th 

Cir. 2000)). 

The district court concluded it was reasonable to interpret 

§ 6532(a)(1) as rendering a claim “effectively denied if the IRS 

does not render a decision within six months.” Gaylor, 278 

F. Supp. 3d at 1087. We agree. As the district court noted, preventing a claimant from filing a refund suit until the IRS 

responded to the claim “would allow the IRS to deprive a 

party of standing indefinitely by withholding a decision.” Id.

at 1088. Several courts of appeals have cited the six-month filing requirement approvingly. See, e.g., Fletcher v. United States, 

452 Fed. App’x 547, 552 (5th Cir. 2011) (“[B]efore a taxpayer 

can bring a refund suit, he or she must ... wait until either the 

IRS denies the claim or six months have expired since filing 

the administrative claim.”); Dumont v. United States, 345 Fed. 

App’x 586, 590 (Fed. Cir. 2009) (“[A] suit ... cannot be instituted until either the IRS denies the claim or six months pass 

without its taking action.”); Sorenson v. Secʹy of Treasury of 
8 Nos. 18-1277 & 18-1280 

U.S., 752 F.2d 1433, 1438 (9th Cir. 1985), affʹd, 475 U.S. 851 

(1986) (“The former section prohibits the courts from entertaining any refund suit filed before the expiration of six 

months from the date the claim for refund is filed ... .”); see 

also Lew, 773 F.3d at 821 n.3 (“The plaintiffs could have ... paid 

income tax on their housing allowance, claimed refunds from 

the IRS, and then sued if the IRS rejected or failed to act upon

their claims.”) (emphasis added). 

Gaylor, Barker, and Nicol Gaylor have properly alleged a 

“concrete, dollars-and-cents injury.” Lew, 773 F.3d at 821. 

“[T]hey have incurred a cost or been denied a benefit on 

account of their religion [or lack thereof],” Arizona Christian 

Sch. Tuition Org. v. Winn, 536 U.S. 125, 130 (2011), which confers Article III standing. Because its members have standing 

and the contested issue is germane to its organizational purpose, FFRF has organizational standing to sue as well. See 

Sierra Club v. United States E.P.A., 774 F.3d 383, 388–89 (7th 

Cir. 2014) (“‘An organization has standing to sue if (1) at least 

one of its members would otherwise have standing; (2) the 

interests at stake in the litigation are germane to the organization’s purpose; and (3) neither the claim asserted nor the relief 

requested requires an individual member’s participation in 

the lawsuit.’”) (quoting Sierra Club v. Franklin Cty. Power of Ill. 

LLC, 546 F.3d 918, 924 (7th Cir. 2008)). 

III.

This case comes to us after a grant of summary judgment, 

so we assess the parties’ claims de novo. Freedom from Religion 

Found., Inc. v. Concord Cmty. Sch., 885 F.3d 1038, 1045 (7th Cir. 

2018) (“Concord”). 
Nos. 18-1277 & 18-1280 9

Currently, Establishment Clause jurisprudence incorporates a number of tests when evaluating the constitutionality 

of government action. Two are relevant to this case: the test 

announced in Lemon v. Kurtzman, 403 U.S. 602 (1971), and the 

“historical significance” test of Town of Greece v. Galloway, 572 

U.S. 565, 576 (2014).6 Because the Supreme Court has not clarified which should take precedence, we evaluate FFRF’s 

claims under both tests and associated case law. See Concord, 

885 F.3d at 1045 n.1 (“Indeed, there is debate among the Justices about the continuing validity of the endorsement 

test. ... For now, we do not feel free to jettison that test altogether ... .”).7 We consider this case under the Lemon test in 

 6 A third relevant to this challenge, the endorsement test, clarifies 

Lemon and is woven into our consideration of § 107(2) under the Lemon

test, particularly under the second prong. See, e.g., Freedom from Religion 

Found., Inc. v. City of Marshfield, Wis., 203 F.3d 487, 493 (7th Cir. 2000), as 

amended on denial of rehʹg and rehʹg en banc (Mar. 22, 2000) (“[T]he effect 

prong of [the Lemon] test has been analyzed under the ‘perception of endorsement’ test developed in Lynch v. Donnelly, 465 U.S. 668, 690 (1984) 

(O’Connor, J., concurring).”). 

7 An amicus brief filed by Wisconsin and fifteen other states notes the 

Supreme Court has not applied the Lemon test to a religious freedom case 

in many years. Even so, until the Supreme Court explicitly overturns 

Lemon we must apply it, as well as the other tests more recently relied 

upon by the Court. Other circuit courts also apply multiple tests when 

considering a challenge under the Establishment Clause. See, e.g., American 

Humanist Assoc. v. McCarty, 851 F.3d 521, 525–26 (5th Cir. 2017) (balancing 

the Lemon, endorsement, and coercion tests against the historical significance test in Town of Greece); Smith v. Jefferson Cty. Bd. of Sch. Comm’rs, 

788 F.3d 580, 586–87 (6th Cir. 2015) (setting forth Lemon, the endorsement 

test, and Town of Greece as the “three main jurisprudential threads” that 

must be woven together in assessing government action under the Establishment Clause). 
10 Nos. 18-1277 & 18-1280 

this Part of this opinion, and under the “historical significance” test in Part IV. 

Lemon summarized prior case law into a three-prong test: 

“[f]irst, the statute must have a secular legislative purpose; 

second, its principal or primary effect must be one that neither 

advances nor inhibits religion; finally, the statute must not 

foster an excessive government entanglement with religion.” 

403 U.S. at 612–13 (internal citations and quotations omitted). 

This test is not cumulative: if § 107(2) fails any of Lemon’s three 

prongs, it violates the Establishment Clause. 

A. Secular Legislative Purpose 

We first examine whether § 107(2) has a secular legislative 

purpose. “When the government acts with the ostensible and 

predominant purpose of advancing religion, it violates that 

central Establishment Clause value of official religious neutrality, there being no neutrality when the government’s ostensible object is to take sides.” McCreary Cty., Ky. v. Am. Civil 

Liberties Union of Ky., 545 U.S. 844, 860 (2005) (citing Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day 

Saints v. Amos, 483 U.S. 327, 330 (1987)). A statute is unconstitutional under this test “only when ... there [is] no question 

that the statute ... was motivated wholly by religious considerations.” Lynch v. Donnelly, 465 U.S. 668, 680 (1984). The 

Treasury Department and intervenors point to three secular 

legislative purposes of the statute: to eliminate discrimination 

against ministers, to eliminate discrimination between ministers, and to avoid excessive entanglement with religion. FFRF 

counters that § 107(2) was passed to confer a government benefit on religion, which necessarily violates the Establishment 

Clause. 
Nos. 18-1277 & 18-1280 11

We will defer to a government’s sincere articulation of secular purpose, so long as the plaintiffs have not proved that 

articulation of purpose is a sham. Edwards v. Aguillard, 482 

U.S. 578, 586–87 (1987) (“While the Court is normally deferential to a State’s articulation of a secular purpose, it is 

required that the statement of such purpose be sincere and 

not a sham.”); Cohen v. City of Des Plaines, 8 F.3d 484, 489 (7th 

Cir. 1993) (“We will defer to a municipality’s sincere articulation of a secular purpose.”). This does not mean “that the 

law’s purpose must be unrelated to religion ... .” Amos, 483 

U.S. at 335. Instead, “the government lacks a secular purpose 

under Lemon only when ‘there is no question that the statute 

or activity was motivated wholly by religious considerations.’” Milwaukee Deputy Sheriffs’ Ass’n v. Clarke, 588 F.3d 523, 

527–28 (7th Cir. 2009) (quoting Books v. Elkhart Cty., 401 F.3d 

857, 863 (7th Cir. 2005), in turn quoting Lynch, 465 U.S. at 680). 

So we evaluate the purposes articulated by the Treasury Department to determine whether they are sincere, or whether 

the government’s “‘actual purpose is to endorse or disapprove of religion.’” Edwards, 482 U.S. at 585 (quoting Lynch, 

465 U.S. at 690 (O’Connor, J., concurring)). 

The Treasury Department first contends Congress passed 

§ 107 to put ministers on equal footing with secular employees receiving the same benefits; in other words, to eliminate 

discrimination against ministers. The Treasury Department 

points to its 1921 decision to not exclude parsonages from taxable income and Congress’s quick passage of the parsonage 

exemption, now codified at § 107(1), in response. The Treasury Department argues this is a secular purpose because it 

simply places religious employees on par with secular ones. 

FFRF counters that the benefits given to ministers under 

§ 107(2) are different—and better—than those the tax code 
12 Nos. 18-1277 & 18-1280 

gives to secular employees. FFRF argues putting ministers in 

a better position than secular employees promotes the dissemination of religious ideas and thus cannot be secular. 

To determine whether § 107(2) confers a special benefit, or 

simply integrates ministers into an existing tax system, we 

must delve into the convenience-of-the-employer doctrine. 

Though the doctrine was originally developed in Treasury 

Department regulations, it has since been codified in several 

places. The principal statute is 26 U.S.C. § 119(a)(2) and exempts meals and lodging furnished to employees if they meet 

five requirements: the meal or lodging is furnished (1) by an 

employer to an employee, (2) in kind (as opposed to in cash), 

(3) on the business premises of the employer, (4) for the convenience of the employer, and (5) as a condition of employment. See also 26 C.F.R. § 1.119-1(b) (2018). This exemption 

applies generally: any qualifying employee can rely on 

§ 119(a)(2), including religious employees.8

The express proof requirements of § 119(a)(2) are relaxed 

throughout the tax code for various types of employees. Section 119(c) exempts employees living in a foreign camp from 

needing to fulfill the “business premises” and “condition of 

employment” factors. Section 119(d) exempts certain teachers 

and university employees from the convenience-of-theemployer doctrine altogether, and allows them to exclude 

from taxable income the fair rental value of campus housing. 

Myriad provisions in Title 26 employ this categorical 

approach and exempt any form of housing benefits, whether 

 8 For additional history on the development of the convenience-of-theemployer doctrine, see Commissioner v. Kowalski, 434 U.S. 77, 84–96 (1977). 
Nos. 18-1277 & 18-1280 13

in cash or in kind: § 132 and § 162 exclude housing provided 

to an employee away on business for less than a year; § 134 

excludes housing provided to current or former members of 

the military; § 911 excludes housing above a certain level provided to citizens or residents living abroad; § 912 excludes 

housing provided to government employees living abroad; 

and, of course, § 107 excludes housing provided to ministers. 

These categorical exemptions allow hundreds of thousands of 

employees (including ministers) to receive tax-exempt 

housing every year without needing to satisfy the proof requirements of § 119(a)(2). 

These parallel provisions show an overarching arrangement in the tax code to exempt employer-provided housing 

for employees with certain job-related housing requirements. 

Congress has exempted certain categories of employees from 

complying with the specific requirements of § 119(a)(2) to 

simplify the application of the convenience-of-the-employer 

doctrine to those occupations. Section 107, including subsection (2), recognizes ministers often use their homes as part of 

their ministry. This provision thus eases the administration of 

the convenience-of-the-employer doctrine by providing a 

bright-line rule, instead of requiring that ministers and the 

IRS repeatedly engage with a fact-intensive standard. 

Reading § 107(2) in isolation from the other convenienceof-the-employer provisions, and then highlighting the term 

“minister,” could make the challenged statute appear to provide a government benefit exclusively to the religious. But 

reading it in context, as we must, we see § 107(2) is simply one 

of many per se rules that provide a tax exemption to employees with work-related housing requirements. See ANTONIN 
14 Nos. 18-1277 & 18-1280 

SCALIA & BRYAN A. GARNER, READING LAW 252 (2012) (“‘Several acts in pari materia, and relating to the same subject, are to 

be taken together, and compared in construction of them, because they are considered as having one object in view, and 

as acting upon one system.’”) (quoting 1 James Kent, Commentaries on American Law 433 (1826)); see also Mueller v. Allen, 463 

U.S. 388, 396 (1983) (upholding Minnesota tax deduction for 

tuition expenses, primarily used by parents of children at sectarian schools, in part because the deduction was “only one 

among many deductions—such as those for medical expenses ... and charitable contributions ... available under the 

Minnesota tax laws”). Congress’s policy choice to ease the administration of the convenience-of-the-employer doctrine by 

applying a categorical exclusion is a secular purpose, not 

“motivated wholly by religious considerations.” Lynch, 465 

U.S. at 680. 

FFRF argues considering the context of § 107(2) is inapt. 

To FFRF, the benefits the statute provides apply to a broader 

category of persons—any minister, as opposed to any minister that uses his or her home for religious purposes—than 

other categorical housing exclusions in the tax code. The district court agreed, and found that § 107(2) is not analogous to 

other bright-line housing benefit provisions in the tax code 

because, in comparison, it is overinclusive. Gaylor, 278 

F. Supp. 3d at 1095 (“[Sections 134, 911, and 912] relate to employees whose housing is necessarily affected by their 

jobs. ... Some ministers may be in a similar situation ... but by 

no means are all ministers so restricted ... .”) (emphasis in 

original). 

It is not immediately apparent that § 107(2) is broader than 

the other categorical exemptions for employee housing. For 
Nos. 18-1277 & 18-1280 15

example, under 26 U.S.C. § 911, any person living abroad is 

permitted to exclude or deduct housing expenses, regardless 

whether that person is living abroad at the behest of his or her 

employer. 

But to the extent § 107(2) may be overinclusive, that alone 

does not render the statute unconstitutional. FFRF’s argument is a critique of categorical rules generally, rather than of 

§ 107(2) specifically. “Read literally, rules are generally overinclusive and underinclusive if assessed by references to their 

purposes. There is always a gap between the justification for 

a rule ... and the rule itself.” Cass R. Sunstein, Problems with 

Rules, 83 CALIF. L. REV. 953, 990–91 (1995). No rule will perfectly address the concerns to which it is addressed, because 

“[a]ll generalizations ... are to some degree invalid, and hence 

every rule of law has a few corners that do not quite fit.” Antonin Scalia, The Rule of Law as a Law of Rules, 56 U. CHI. L.REV. 

1175, 1177 (1989). Categorical rules sacrifice precision of result 

for administrative ease and equality of result. So it is not surprising that § 107(2) covers some housing allowances that 

may be excluded under a case-by-case discretionary standard. 

In this respect, § 107(2) is not an outlier. 

Important to our consideration, any imprecision does not 

make § 107(2) any less analogous to other “convenience-ofthe-employer” related provisions in the tax code. Each covers 

a different subset of eligible taxpayers and activities, but they 

all serve a common purpose: excluding from taxable income 

certain employment-related expenses. The constitutionality 

of § 107(2) does not turn on which ministers the statute includes or excludes. See, e.g., Kowalski, 434 U.S. at 95–96 

(“[A]rguments of equity have little force in construing the 

boundaries of exclusions and deductions from income many 
16 Nos. 18-1277 & 18-1280 

of which, to be administrable, must be arbitrary.”); Delong v. 

Depʹt of Health & Human Servs., 264 F.3d 1334, 1343 (Fed. Cir. 

2001) (“Like all bright line rules, [the statute] is both overinclusive and under-inclusive, but the imprecision of the statute does not make it unconstitutional.”). 

The second secular legislative purpose cited by the Treasury Department is elimination of discrimination between

ministers. The government argues Congress passed § 107(2) 

because providing the tax exemption only to ministers given 

in-kind housing tended to exclude ministers of smaller or 

poorer denominations. FFRF argues this is a sham and the 

true justification was to subsidize religion, based on a statement made in the early 1950s by § 107(2)’s sponsoring representative Peter Mack: “Certainly, in these times when we are 

being threatened by a godless and antireligious world movement we should correct this discrimination against certain 

ministers who are carrying on such a courageous fight against 

this foe.” Hearings Before the Committee on Ways and Means: 

Statement of Hon. Peter F. Mack, Jr., on H.R. 4275, Concerning the 

Taxability of a Cash Allowance Paid to Clergymen in Lieu of 

Furnishing Them a Dwelling, 83d. Cong. 1, at 1576 (June 9, 

1953). The Treasury Department and intervenors respond by 

quoting other statements by Representative Mack from the 

same hearing, such as that the bill was proposed because 

“present tax laws are discriminatory among our clergy,” id. at 

1574–75, and because he believed “a serious injustice [was] 

being done to those ministers who must provide their own 

home,” id. at 1576. 

This smattering of legislative history does not establish 

Representative Mack’s motives in proposing the bill. Even if 
Nos. 18-1277 & 18-1280 17

his first quote above did so, the motivation of one representative in a House of 435 does not definitively reveal the impetus 

behind the bill’s passage. At the same hearing, other representatives stated different motives. Speaking on the same proposed provision, Representative Ray G. McKennan said the 

changes were proposed to “create an equitable condition for 

ministers similarly situated, and would probably eliminate 

court action [by ministers suing for discrimination].” Id. at 

1574. 

The legislative record does not establish a singular motive 

behind § 107(2). Conflicting statements among members of 

Congress—even by the same member—reveal the unreliability of this legislative history. Certainly, these statements do 

not render “a sham” the Treasury Department’s proffered 

purpose of avoiding discrimination among religions. Cf. 

Edwards, 482 U.S. at 586–87. As such, we take the government 

at its word, which resolves this question. “The clearest command of the Establishment Clause is that one religious 

denomination cannot be officially preferred over another.” 

Larson v. Valente, 456 U.S. 228, 244 (1982). Avoidance of discrimination against certain religions in favor of others is a permissible secular legislative purpose. 

The third secular legislative purpose cited by the Treasury 

Department is to avoid excessive entanglement with religion. 

To the government, Congress’s decision to exempt ministers 

from the proof requirements of § 119(a)(2) prevents the IRS 

from conducting intrusive inquiries into how religious organizations use their facilities. See, e.g., Amos, 483 U.S. at 339 

(“avoid[ing] ... intrusive inquiry into religious belief ...” prevents entanglement). FFRF responds that § 107(2) does not 
18 Nos. 18-1277 & 18-1280 

avoid such entanglement because the IRS must still administer a test to determine whether a taxpayer qualifies as a minister. FFRF argues this is as fact-intensive an audit as the 

inquiry administered for the generally applicable statutory 

exemption, § 119(a)(2). 

On this entanglement question, two Supreme Court decisions are particularly instructive. In Walz v. Tax Comm. of City 

of N.Y., the Court upheld a New York property tax exemption 

for properties owned by churches and used exclusively for religious worship. Walz disagreed with the lower court’s examination of churches’ contribution to the social welfare to 

determine whether the tax exemption had a secular purpose: 

To give emphasis to so variable an aspect of the 

work of religious bodies would introduce an 

element of governmental evaluation and standards as to the worth of particular social welfare 

programs, thus producing a kind of continuing 

day-to-day relationship which the policy of 

neutrality seeks to minimize. 

397 U.S. at 674. Similarly, in Amos v. Corporation of the Presiding 

Bishop of the Church of Jesus Christ of Latter-day Saints, the 

Supreme Court upheld a categorical exemption for religious 

organizations from the provisions of Title VII of the Civil 

Rights Act of 1964. The opinion noted that, under Lemon, “it 

is a permissible legislative purpose to alleviate significant 

governmental interference with the ability of religious organizations to define and carry out their religious missions.” 

Amos, 483 U.S. at 335. 

Any financial interaction between religion and government—like taxing a church, or exempting it from tax—entails 
Nos. 18-1277 & 18-1280 19

some degree of entanglement. But only excessive entanglement violates the Establishment Clause. See Walz, 307 U.S. at 

674 (“We must also be sure that the end result—the effect—is 

not an excessive government entanglement with religion.”) 

Crucial to our evaluation, the Supreme Court has already permitted the level of entanglement incurred under § 107(2). In

Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 

565 U.S. 171 (2012), the Court inquired into the facts underlying Hosanna-Tabor’s employment to determine whether she 

was a minister. Id. at 190–92. The IRS does the same under 

§ 107(2) to determine whether a taxpayer qualifies as a minister. The Court would not have so inquired if it violated the 

Establishment Clause. 

In contrast, the application of § 119(a)(2) to ministers 

would entangle church and state far more than under 

§ 107(2). For example, to determine what constitutes the business premises of the employer under § 119(a)(2), the IRS 

would have to determine what the “business” of the church is 

and where and how far the “premises” of the church extend. 

See EDWARD A. ZELINSKY, TAXING THE CHURCH 168–69 (2017). 

To do so, the IRS would need to interrogate ministers on the 

specifics of their worship activities, even determine which 

activities constitute “worship.” Such government inquiries 

into the internal affairs of churches to determine their eligibility for tax relief have been rejected as excessive entanglement. 

See, e.g., Serbian E. Orthodox Diocese for U.S. of Am. & Canada v. 

Milivojevich, 426 U.S. 696, 708–20 (1976) (holding civil courts 

cannot interfere with the rulings of ecclesiastical tribunals on 

church affairs); Schleicher v. Salvation Army, 518 F.3d 472, 475 

(7th Cir. 2008) (“Congress does not want courts to interfere in 

the internal management of churches ... .”). 
20 Nos. 18-1277 & 18-1280 

Worse, if subject to § 119(a)(2), congregations might alter 

their religious activities to attempt to conform with its requirements. Congress enacted § 107(2) in part to avoid that. 

And congressional action “to minimize governmental interference with the decision-making process in religions ... does 

not violate the Establishment Clause.” Amos, 483 U.S. at 336 

(internal citations and quotations omitted). 

The categorical nature of § 107(2) also avoids excessive 

entanglement by providing ministers and their churches certainty as to whether their housing allowances will be exempt 

from tax. In Amos, the Supreme Court held “it is a significant 

burden on a religious organization to require it, on pain of 

substantial liability, to predict which of its activities a secular 

court will consider religious.” Amos, 483 U.S. at 336. 

Recognizing the potentially excessive entanglement 

threatened by the application of § 119(a)(2) to ministers, Congress enacted a less-entangling tax exemption. Seeking to 

avoid government entanglement is a secular legislative purpose under Lemon. See, e.g., Medina v. Catholic Health Initiatives, 

877 F.3d 1213, 1231 (10th Cir. 2017) (“[T]he Supreme Court has 

expressly held that a purpose of avoiding government entanglement does not violate the Establishment Clause.”) (citing 

Amos, 483 U.S. at 335). Because the government has articulated not one, but three secular purposes, we conclude the 

first prong of Lemon is satisfied. 

B. Primary Effect of Advancing or Inhibiting Religion

The second prong of the Lemon test requires that a statute 

have a “principal or primary effect ... that neither advances 

nor inhibits religion.” Lemon, 403 U.S. at 612. “For a law to 

have forbidden ‘effects’ under Lemon, it must be fair to say 
Nos. 18-1277 & 18-1280 21

that the government itself has advanced religion through its 

own activities and influence.” Amos, 483 U.S. at 337 (emphasis 

in original). This entails “sponsorship, financial support, and 

active involvement of the sovereign in religious activity.” 

Walz, 297 U.S. at 668. 

FFRF contends the Supreme Court’s holdings in Amos and 

Walz were superseded by Justice Brennan’s plurality opinion 

in Texas Monthly, Inc. v. Bullock, 489 U.S. 1 (1989). That case 

resolved an Establishment Clause challenge to a state tax exemption for religious publications. To determine whether 

Justice Brennan’s opinion controls, we examine the grounds 

for decision in Texas Monthly’s various concurrences. See 

Marks v. United States, 430 U.S. 188, 193 (1977) (“When a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, the holding of 

the Court may be viewed as that position taken by those 

Members who concurred in the judgments on the narrowest 

grounds.”). 

In Texas Monthly, Justice Brennan authored an opinion 

joined by Justice Marshall and Justice Stevens and announced 

the result of the case; Justice White concurred in the result and 

wrote separately; Justice Blackmun concurred in the result 

and wrote for himself and Justice O’Connor; and Justice Scalia 

filed a dissenting opinion, joined by Chief Justice Rehnquist 

and Justice Kennedy. Justice Brennan’s opinion concluded 

that the tax exemption for religious publications violated the 

Establishment Clause because “[e]very tax exemption constitutes a subsidy that affects nonqualifying taxpayers.” Texas 

Monthly, 489 U.S. at 14 (Brennan, J., plurality opinion). He 

stated any subsidy directed “exclusively to religious organi-
22 Nos. 18-1277 & 18-1280 

zations that is not required by the Free Exercise Clause ... cannot but convey a message of endorsement to slighted members of the community.” Id. at 15 (internal citations and 

quotations omitted). 

The other opinions in Texas Monthly were narrower in 

scope. Justice White’s concurrence reached the same result, 

but on an independent ground, the Press Clause. Justice 

Blackmun’s concurrence agreed that the tax exemption violated the Establishment Clause, but did not adopt many of 

Justice Brennan’s sweeping statements. Justice Blackmun 

urged that the case be resolved narrowly and concluded only 

that “a tax exemption limited to the sale of religious literature 

by religious organizations violates the Establishment Clause.” 

Id. at 28 (Blackmun, J., concurring) (emphasis in original). Because Justice Blackmun decided the case on Establishment 

Clause grounds,9 and on a narrower basis than Justice 

Brennan’s opinion, under the Marks rule Justice Blackmun’s 

concurrence sets the rule of decision of Texas Monthly. His 

concurrence did not comment on what constitutes a forbidden effect under Lemon, so Texas Monthly does not alter our 

analysis of this second prong. 

 9 Even if Justice White’s opinion were based on narrower grounds 

than Justice Blackmun’s opinion, it reached the same result under a different constitutional clause. “Marks applies ‘only when one opinion is a logical subset of other, broader opinions.’” Gibson v. American Cyanamid Co., 

760 F.3d 600, 619 (7th Cir. 2014) (quoting King v. Palmer, 950 F.2d 771, 781 

(D.C. Cir. 1991) (en banc)). Justice Blackmun’s opinion provided the fourth 

and fifth votes in Texas Monthly and shared the “common denominator” 

of resolving the issue under the Establishment Clause, so it controls. Gibson, 760 F.3d at 619 (quoting United States v. Heron, 564 F.3d 879, 884 (7th 

Cir. 2009)).
Nos. 18-1277 & 18-1280 23

With Walz and Amos still in effect, we evaluate forbidden 

effects under their framework. FFRF contends a tax exemption for religion is identical to a government subsidy for religion. In economic terms, a subsidy and a tax exemption may 

have the same practical impact. See, e.g., Adam Chodorow, 

The Parsonage Allowance, 51 U.C. DAVIS L. REV. 849, 854 (2018) 

(“The claim that exemptions differ from direct subsidies for 

Establishment Clause purposes simply ignores economic reality.”). But the Supreme Court has already found a constitutionally significant difference between the two on taxing 

religion. “The grant of a tax exemption is not sponsorship 

since the government does not transfer part of its revenue to 

churches but simply abstains from demanding that the 

church support the state.” Walz, 397 U.S. at 675.10 

Under Walz and Amos, then, § 107(2) does not advance religion on behalf of the government. Providing a tax exemption 

does not “connote[] sponsorship, financial support, and active 

involvement of the [government] in religious activity” under 

Walz, 397 U.S. at 668; see also Amos, 483 U.S. at 337 (“[W]e do 

not see how any advancement of religion achieved by the [exempt religious organization] can be fairly attributed to the 

Government, as opposed to the Church.”). 

Under these precedents, the primary effect of § 107(2) is 

not to advance religion on behalf of the government, but to 

 10 The Supreme Court tacitly reaffirmed this approach in its standing 

discussion in Arizona Christian Sch. Tuition Org. v. Winn, 536 U.S. 125 

(2011). There, it held taxpayers had no standing to challenge a tax credit 

directed primarily towards sectarian schools because “[w]hen the government declines to impose a tax, ... there is no ... connection between dissenting taxpayer and alleged establishment.” Id. at 142. 
24 Nos. 18-1277 & 18-1280 

“allow[] churches to advance religion, which is their very purpose.” Amos, 483 U.S. at 337 (emphasis in original). So § 107(2) 

passes the second prong of Lemon. 

C. Excessive Entanglement with Religion 

The third prong of the Lemon test is whether the state “foster[s] ‘an excessive government entanglement with religion.’” 

Lemon, 403 U.S. at 613 (quoting Walz, 397 U.S. at 674). We have 

addressed this prong in Part III.A above. Because some level 

of church-state interaction is unavoidable, “[e]ntanglement is 

a question of kind and degree.” Lynch, 465 U.S. at 684. 

Section 107(2) avoids government inquiry into the use of a 

minister’s home, but it still requires the IRS to determine who 

qualifies as a minister eligible for the exemption. Even if the 

IRS’s test for who qualifies as a minister involves entanglement, it is of a nature approved by the Supreme Court in 

Hosanna-Tabor. See Hosanna-Tabor, 565 U.S. at 190–95 (engaging in a fact-bound analysis to determine whether the petitioner qualified as a minister). The alternative would be to 

force ministers to comply with the far more detailed and particular, and thus more entangling, requirements of § 119(a)(2). 

In answer to these concerns, Congress chose to enact 

§ 107(2). Legislative determinations about the Establishment 

Clause, while not binding, are entitled to deference. “We in 

the Judiciary must be wary of interpreting [the Religion] 

Clauses in a manner that negates the legislative role altogether.” Texas Monthly, 489 U.S. at 28 (Blackmun, J., concurring). Legislative deference is particularly great for 

classifications in tax legislation. See, e.g., Regan v. Taxation with 

Representation of Washington, 461 U.S. 540, 547 (1997) (“Legislatures have especially broad latitude in creating classifications and distinctions in tax statutes.”); Madden v. Kentucky, 
Nos. 18-1277 & 18-1280 25

309 U.S. 83, 88 (1940) (holding that for tax classifications challenged under the Fourteenth Amendment, “the presumption 

of constitutionality can be overcome only by the most explicit 

demonstration that a classification is a hostile and oppressive 

discrimination against particular persons and classes”). 

Congress decided § 107(2) is the less entangling option, so we 

will not disturb it. 

We conclude § 107(2) has a secular legislative purpose, its 

principal effect is neither to endorse nor to inhibit religion, 

and it does not cause excessive government entanglement. 

Here, “[t]here is no genuine nexus between tax exemption 

and establishment of religion.” Walz, 397 U.S. at 675. Section 

107(2), then, does not violate the Establishment Clause under 

the Lemon test. 

IV.

We next examine whether § 107(2) passes the historical 

significance test.11 The Supreme Court has held “the Establishment Clause must be interpreted ‘by reference to historical practices and understandings.’” Town of Greece v. Galloway, 

572 U.S. 565, 576 (2014) (quoting Cty. of Allegheny v. Am. Civil 

 11 FFRF and amici curiae supporting appellees’ position offer no arguments under the historical significance test, except to assert the test applies only to legislative prayer. We find no such limitation. Though Town 

of Greece addressed legislative prayer, it stated that “the Establishment 

Clause must be interpreted ‘by reference to historical practices and understandings.’” 572 U.S. at 576 (quoting Cty. of Allegheny, 492 U.S. at 670 

(Kennedy, J., concurring in judgment in part and dissenting in part)). This 

language does not limit the application of the Town of Greece standard to 

constitutional challenges to legislative prayer. As this part discusses, other 

Supreme Court cases have examined relevant history as to monuments as 

well as the ministerial exception. 
26 Nos. 18-1277 & 18-1280 

Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573, 670 

(1989) (Kennedy, J., concurring in judgment in part and dissenting in part)). This fact-bound test was developed in three 

cases. First, in Van Orden v. Perry, 545 U.S. 677 (2005) (plurality 

opinion), the Court considered whether a monument 

inscribed with the Ten Commandments on Texas government 

property violated the Establishment Clause. Van Orden criticized the Lemon test for ignoring the “strong role played by 

religion and religious traditions throughout our Nation’s 

history.” Id. at 683. Instead, the Court reviewed a number of 

historical examples of governments referencing God and displaying the Ten Commandments without issue. On that basis, 

the Court held the monument did not violate the Establishment Clause. Id. at 692. 

Next, in Hosanna-Tabor, a unanimous Supreme Court held 

that the Establishment Clause prevents governments from interfering with the decision of a religious group to terminate 

one of its ministers. In so deciding, the opinion explored the 

history of church-state relations in the United States and England, back to the Magna Carta. Hosanna-Tabor, 565 U.S. at 182. 

From that history, the Court determined that the First 

Amendment was adopted in part to prevent “the new Federal 

Government—unlike the English Crown—[from a] role in filling ecclesiastical offices.” Id. at 184. This determination 

formed the basis of the Court’s decision. 

Finally, in Town of Greece the Supreme Court applied the 

historical significance test when it held legislative prayer does 

not violate the Establishment Clause. The Court held that 

“[a]ny test the Court adopts [for the Establishment Clause] 
Nos. 18-1277 & 18-1280 27

must acknowledge a practice that was accepted by the Framers and has withstood the critical scrutiny of time and political 

change.” Town of Greece, 572 U.S. at 577. 

We now apply the historical significance test to this case. 

FFRF offers no evidence that provisions like § 107(2) were historically viewed as an establishment of religion. The government and intervenors, and amici curiae supporting their 

position, have provided substantial evidence of a lengthy 

tradition of tax exemptions for religion, particularly for 

church-owned properties. For over two centuries, the states 

have implemented church property tax exemptions in various 

forms. See John Witte, Jr., Tax Exemption of Church Property: 

Historical Anomaly or Valid Constitutional Practice?, 64 S. CAL.

L.REV. 363, 380 (1991) (“The colonial law exemption of church 

property continued largely uninterrupted in the early decades of the American republic.”); see also id. at 389–95 (detailing state protections for religious tax exemptions from the late 

19th to early 20th centuries). When challenged on establishment grounds, such tax exemptions typically have been upheld. See, e.g., Trustees of Griswold College v. State, 46 Iowa 275, 

282 (1877) (ruling the state constitution’s Establishment 

Clause “does not [implicate] the exemption from taxation of 

such church property as the legislature may think proper”). 

Congress has enacted federal tax exemptions for religious 

organizations as far back as 1802, when it permitted the 

County of Alexandria (then under federal control) to exempt 

church property from taxation, see 7 Cong. Ch. 53, May 3, 

1802, 2 Stat. 194, and as recently as 2002, the last time § 107 

was amended. See Clergy Housing Allowance Clarification 

Act of 2002, Pub. L. No. 107–181, 116 Stat. 583. As early as 
28 Nos. 18-1277 & 18-1280 

1885, the U.S. Supreme Court acknowledged and accepted religious property tax exemptions in Gibbons v. District of 

Columbia, 116 U.S. 404 (1886), “reflecting more than a century 

of our history and uninterrupted practice.” Walz, 397 U.S. at 

680. Today, more than 2,600 federal and state tax laws provide 

religious exemptions. NINA J. CRIMM & LAURENCE H. WINER,

POLITICS, TAXES, AND THE PULPIT: PROVOCATIVE FIRST 

AMENDMENT CONFLICTS 43 (2011). 

The district court distinguished § 107(2) from this long 

and continuing historical tradition of property tax exemptions by noting the statute is an income tax exemption. We 

find this too fine a distinction, as it ignores the impact of the 

Sixteenth Amendment. Before 1913, Congress could not constitutionally tax housing provided to ministers as part of their 

income. See Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601, 

637 (1895) (invalidating a state income tax). Within a few 

years of income becoming taxable, Congress moved to 

exclude parsonages from income, and a few decades later excluded cash housing allowances as well. Congress was continuing its “historical practice[]” of exempting certain church 

resources from taxation. Town of Greece, 572 U.S. at 576. This 

endeavor limits entanglement between church and state, see 

supra at Part III.C. Given this history, we conclude § 107(2) 

does not violate the Establishment Clause under the historical 

significance test. 

V.

FFRF claims § 107(2) renders unto God that which is 

Caesar’s. But this tax provision falls into the play between the 

joints of the Free Exercise Clause and the Establishment 

Clause: neither commanded by the former, nor proscribed by 
Nos. 18-1277 & 18-1280 29

the latter. We conclude § 107(2) is constitutional. The 

judgment of the district court is REVERSED.