United States District Court, W.D. Wisconsin
ANNIE LAURIE GAYLOR; DAN BARKER; IAN GAYLOR, personal representative of the estate of Anne Nicol Gaylor; and FREEDOM FROM RELIGION FOUNDATION, INC., Plaintiffs,
STEVE MNUCHIN, Secretary of the United States Department of Treasury; JOHN KOSKINEN, Commissioner of the Internal Revenue Service; and the UNITED STATES OF AMERICA, Defendants, and EDWARD PEECHER; CHICAGO EMBASSY CHURCH; PATRICK MALONE; HOLY CROSS ANGLICAN CHURCH; and the DIOCESE OF CHICAGO AND MID-AMERICA OF THE RUSSIAN ORTHODOX CHURCH OUTSIDE OF RUSSIA, Intervenor-Defendants.
OPINION AND ORDER
BARBARA B. CRABB DISTRICT JUDGE.
order dated October 6, 2017, I granted summary judgment to
plaintiffs Freedom from Religion Foundation, Annie Laurie
Gaylor, Dan Barker and Ian Gaylor as the personal
representative of the estate of Anne Nicol Gaylor, and
concluded that 26 U.S.C. § 107(2), which excludes from
the gross income of a “minister of the gospel” a
“rental allowance paid to him as part of his
compensation, ” is unconstitutional. Specifically, I
concluded that § 107(2) violates the establishment
clause of the First Amendment because it does not have a
secular purpose or effect and because a reasonable observer
would view the statute as an endorsement of religion. Dkt.
#87. I issued a declaration, stating that 26 U.S.C. §
107(2) violates the First Amendment, but I also directed the
parties to file supplemental materials regarding what
additional remedies are appropriate, if any. In addition, I
asked the parties to address the question whether relief
should be stayed pending a potential appeal. The parties'
supplemental briefing is now before the court.
parties agree that the court should not seek to expand §
107(2) in an attempt to make it constitutional. As I stated
in the summary judgment decision, I also do not think it
would appropriate for the court to issue either an injunction
expanding the scope of § 107(2) or an order directing
the Internal Revenue Service to do so, because there are
multiple ways that the statute could be rewritten and that
task should generally be left for Congress. Virginia v.
American Booksellers Association, Inc., 484 U.S. 383,
397 (1988) (“[W]e will not rewrite a state law to
conform it to constitutional requirements.”).
all parties agree that invalidating § 107(2) does not
require the court to invalidate § 107(1). I agree,
particularly because a statute similar to § 107(1)
existed without § 107(2) for more than 30 years.
Executive Benefits Insurance Agency v. Arkison, 134
S.Ct. 2165, 2173 (2014) (“We ordinarily give effect to
the valid portion of a partially unconstitutional statute so
long as it remains fully operative as a law, and so long as
it is not evident from the statutory text and context that
Congress would have preferred no statute at all.”)
(internal quotations and citations omitted).
respect to injunctive relief, both plaintiffs and defendants
state that the court should enter an injunction nullifying
§ 107(2) prospectively. In contrast, the intervenors
argue that the court should not enter an injunction because
declaratory relief would be least disruptive and would permit
the government to continue applying the statute. Dkt. #89 at
6. The intervenors' position is not persuasive, as they
are essentially arguing that the government should be
permitted to continue allowing ministers to take advantage of
§ 107(2), despite the court's holding that the
statute is discriminatory and unconstitutional. The
intervenors cite no authority to support such an argument.
Instead, they make the same arguments I considered and
rejected in deciding the merits of plaintiffs' claim.
Therefore, I agree with plaintiffs and defendants that an
injunction nullifying § 107(2) is an appropriate remedy
in this case.
plaintiffs ask that the IRS be ordered to partially refund
taxes they paid but which would have been reduced if they had
been permitted to claim a housing allowance as an exclusion
of income under § 107(2). I am denying this request. I
have determined that § 107(2) is unconstitutional and
should be nullified. Therefore, plaintiffs were not entitled
to claim a housing allowance under § 107(2) and they are
not entitled to receive a refund of taxes they paid because
they were denied the allowance. Because plaintiffs cite no
other basis for receiving a refund beyond § 107(2), they
have not shown they are entitled to a refund.
all parties agree that any injunction should be stayed
pending resolution of any appeals. Defendants and intervenors
ask that injunctive relief be stayed for 180 days after the
resolution of any appeals, while plaintiffs argue that the
injunction should be enforced immediately upon resolution of
any appeals. I agree with defendants and the intervenors that
in light of the substantial changes to tax policy and
administration that will occur upon enforcement of the
injunction, it is appropriate to stay injunctive relief until
180 days after the final resolution of all appeals. The
additional time will allow Congress, the IRS and affected
individuals and organizations to adjust to the substantial
is DECLARED that 26 U.S.C. § 107(2) violates the
establishment clause of the First Amendment to the United
Defendants Steve Mnuchin, John Koskinen and the United States
of America are ENJOINED from enforcing 26 U.S.C. §
107(2). The injunction shall take effect 180 days after the
conclusion of any appeals filed by defendants or
intervenor-defendants or the expiration of defendants' or
intervenor-defendants' deadline for filing an appeal,
whichever is later.
request for a tax refund made by plaintiff Freedom from
Religion Foundation, Annie Laurie Gaylor, Dan Barker and Ian
Gaylor as the personal ...