Minister Cannot Intervene to Defend Parsonage Tax Exemption

Michael Stephan

The Ninth Circuit answered an important tax law question involving the Establishment Clause and civil procedure this week in Freedom from Religion Foundation v. Rodgers.  In short, the appellate court considered whether an individual who claims federal tax exemptions may intervene as of right in an action challenging the constitutionality of those exemptions.  Besides raising a pressing constitutional question about tax exceptions for ministers, Rodgers shows prospective litigants what it takes to intervene as of right on the side of the government.

The Freedom from Religion Foundation sued the IRS and the Secretary of the Treasury, alleging that the “parsonage exemption” violates the Establishment Clause of the United States Constitution.  This exemption allows “minister[s] of the gospel” to exclude and deduct various home-rental values and property payments from their gross incomes.  The Foundation sought a declaration deeming the exemption unconstitutional, as well as an injunction barring the government from allowing the exemption.

Michael Rodgers, a minister who regularly claims federal and state parsonage exemptions, moved to intervene as a defendant so that he could defend the constitutionality of the exemption himself.  Rodgers argued that the federal defendants didn’t share his ultimate objective of upholding the constitutionality of the exemption, and thus that he should be allowed to intervene as of right.  He argued that the federal defendants were actually interested in having the exemption struck down because of their interest in maximizing federal tax revenues.  Such an interest, alleged Rodgers, would lead the defendants to abandon key arguments in defense of the exemption and to decline to appeal an adverse ruling.

The district court disagreed, and it denied Rodgers’s petition.  On Monday, the Ninth Circuit affirmed.  The unanimous Ninth Circuit panel held that Rodgers “presented no evidence that would lead [it] to doubt that the federal defendants’ ultimate objective is to uphold the challenged statutes.”  Rodgers also presented no evidence that the federal defendants intended to botch their defense of the exemption or were unwilling to appeal an adverse ruling.  In sum, Rodgers’s conjectures as to the defendants’ interests and intentions were too speculative to warrant intervention as of right.

Despite this holding, however, Rodgers might still be allowed to join the suit as a defendant if the district court grants his motion for permissive intervention.


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