Filed in 2009, the Freedom from Religion Foundation sought to end the favorable tax treatment granted to U.S. clergy with regard to their church-provided housing or housing allowance. 

The advocacy group Church Alliance reports the defendants in this case filed motions several weeks ago to dismiss on the basis of standing in light of the U.S. Supreme Court's decision earlier this year in Arizona Christian School Tuition Organization v. Winn, 131 S.Ct. 1436 (2011).

The plaintiffs have now agreed to dismiss the case.

Church of the Nazarene Pensions and Benefits Director Don Walter says the decision preserves for now a historic benefit for U.S. clergy. 

“It makes it possible for the churches and church organizations which employ clergy to leverage limited ministry resources due to the tax favored status of this clergy benefit,” he said. 

“While raising relatively little tax revenue for the United States Treasury, the additional tax liabilities which would have been incurred by the loss of this benefit would have had a substantial impact on nearly all pastors. Sometimes the only compensation a local congregation can provide is in the form of housing. While ministers pay Social Security taxes on that benefit, it has historically been free from income tax liability.”

Walter represents the Church of the Nazarene as a member of the Church Alliance, a consortium of church pension and benefit executives that cooperates on legal and legislative issues relevant to church benefit plans.

“We are grateful that during these still challenging economic times we did not have to witness an additional tax burden for ministers and their church employers,” Walter said, speaking on behalf of the U.S. congregations and their pastors he represents.