Atheist Group’s Challenge To Church Tax Exemption Is Tossed By Court

A federal court has denied a legal challenge by American Atheists (AA), in which the organization sought to end many of the privileges houses of worship receive under the tax code.

In an opinion issued for American Athe­ists Inc. v. Shulman May 19, U.S. Dis­trict Judge William O. Bertelsman seemed to agree with the thrust of Am­erican Atheists’ argument: that the generous tax exemptions church­es receive have no secular purpose and therefore “improperly endorse religion.”

Despite that ideological victory for AA, however, Bertelsman threw the case out on standing, concluding that AA has no right to sue over this issue because it is not significantly harmed by the tax benefits given to churches.

AA, which is a secular, tax-exempt organization, had claimed it was injured by being forced to submit an application for exemption or pay an application fee of up to $850 to gain its status. Churches are not required to do any of those things to achieve exemption.

At issue were a number of tax code provisions that allow churches, which are tax exempt under section 501(c)(3) of the Internal Revenue Code, to receive benefits beyond the standard exemption that other tax-exempt organizations have. Specifically, churches are not required to apply for tax-exempt status, churches do not have to file an annual tax return, ministers are eligible for a parsonage exemption, clergy salaries are exempt from withholding and FICA taxes and the Internal Revenue Service must meet special heightened rules before investigating a church for possible tax violations.

Responding to the lawsuit, the IRS asserted that American Atheists could have registered as a church. Bertelsman noted that the IRS “argues that the Atheists voluntarily choose to spend their time and money complying with the alleged discriminatory standards for tax-exempt organizations and their self-inflicted injury fails to rise to an injury in fact and is not traceable to Government action.”

On its website, American Atheists said it “is currently evaluating the decision and will determine the next steps shortly.”