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Freedom from Religion Foundation, Inc. v. Geithner

December 1, 2009

FREEDOM FROM RELIGION FOUNDATION, INC.; PAUL STOREY; BILLY FERGUSON; KAREN BUCHANAN; JOSEPH MORROW; ANTHONY G. ARLEN; ELISABETH STEADMAN; CHARLES AND COLLETTE CRANNELL; MIKE OSBORNE; KRISTI CRAVEN; WILLIAM M. SHOCKLEY; PAUL ELLCESSOR; JOSEPH RITTELL; WENDY CORBY; PAT KELLEY; CAREY GOLDSTEIN; DEBORAH SMITH; KATHY FIELDS; RICHARD MOORE; SUSAN ROBINSON; AND KEN NAHIGIAN, PLAINTIFFS,
v.
TIMOTHY GEITHNER, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE UNITED STATES DEPARTMENT OF THE TREASURY; DOUGLAS SHULMAN, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF THE INTERNAL REVENUE SERVICE; AND SELVI STANISLAUS, IN HER OFFICIAL CAPACITY AS EXECUTIVE OFFICER OF THE CALIFORNIA FRANCHISE TAX BOARD, DEFENDANTS, AND PASTOR MICHAEL RODGERS AND DOES 1-100, PROPOSED INTERVENORS-DEFENANTS



MEMORANDUM AND ORDER RE: MOTION TO INTERVENE

On October 16, 2009, the Freedom From Religion Foundation, Inc. ("FFRF") and named plaintiffs filed a Complaint in this court seeking a declaration that 26 U.S.C. §§ 107 and 265(a)(6) violate the Establishment Clause of the United States Constitution and injunctive relief. On October 22, 2009, Pastor Michael Rodgers moved to intervene as a defendant in this action.

I. Factual and Procedural Background

On October 16, 2009, the Freedom From Religion Foundation, Inc. ("FFRF") and named plaintiffs filed a Complaint in this court seeking a declaration that 26 U.S.C. §§ 107 and 265(a)(6) violate the Establishment Clause of the United States Constitution and injunctive relief. (Docket No. 1.) Sections 107 and 265(a)(6) provide preferential tax benefits to "ministers of the gospel," and are administered by the Internal Revenue Service ("IRS") and the Department of the Treasury ("Treasury").

Section 107 of the Internal Revenue Code ("IRC") allows "ministers of the gospel" to exclude their rental allowance or rental value of any home furnished to them as part of their compensation from gross income for income tax purposes. 26 U.S.C. § 107. The plaintiffs allege that the IRS requires that a minister of the gospel be "duly ordained, commissioned, or licensed" in order to be entitled to the tax benefit. (Compl. ¶ 43.) The plaintiffs further allege that the § 107 exclusion is available only when the minister is given use of the house or receives a housing allowance as compensation for services performed "in the exercise of" his ministry. Id. ¶ 45. Treasury regulations allegedly clarify the requirements to receive religious tax benefits. Id. ¶¶ 43-44, 46-49.

Section 265(a)(6) of the Internal Revenue Code allows a minister of the gospel to claim deductions under §§ 163 and 164 of the Internal Revenue Code for residential mortgage interest and property taxes. 26 U.S.C. § 265(a)(6). Plaintiffs allege that ministers of the gospel receive the deduction even though the money used to pay those expenses was received as a tax-exempt § 107 allowance, and that non-clergy taxpayers cannot make similar deductions. (Compl. ¶ 50.)

The plaintiffs further allege that sections 17131.6 and 17280(d)(2) of the California Revenue and Taxation Code violate the Establishment Clause of the United States and California Constitutions. Id. ¶¶ 37-38. These provisions allegedly mirror §§ 170 and 265(a)(6) of the Internal Revenue Code. Id.

Plaintiffs allege that all of the above tax provisions violate the Establishment Clause of the United States Constitution, which provides that "Congress shall make no law respecting an establishment of religion." U.S. Const. amend I. Plaintiffs further allege that the California Constitution contains a similarly worded Establishment Clause which is violated by the California Revenue and Taxation Code provisions. See Cal. Const. art. I § 4. Finally, plaintiffs allege that the above provisions of the California Revenue and Taxation Code violate Article 16, Section 5 of the California Constitution, which prohibits aid in support of "any religious sect, church, creed, or sectarian purpose." Cal. Const. art. XVI § 5.

On October 22, 2009, Pastor Michael Rodgers moved to intervene as a defendant in this action. Pastor Rodgers is a minister of the gospel in the Sacramento area who currently uses the ministerial tax exemption housing allowance challenged by plaintiffs in this action. Pastor Rodgers moves to intervene on behalf of himself and Does 1-100 ministers within the jurisdiction of the Eastern District of California.

II. Discussion

Pastor Rodgers seeks to intervene pursuant to Federal Rule of Civil Procedure 24(a)(2), or, alternatively, Rule 24(b)(1)(B). Rule 24 provides:

(a) Intervention of Right.

On timely motion, the court must permit anyone to intervene who:...

(2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

(b) Permissive Intervention.

On timely motion, the court may permit anyone to intervene who:...

(1) In General.

(B) has a claim or defense that shares with the main action a common ...


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