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A federal appeals court on Friday rejected an “atheists’ challenge” to the IRS deduction that allows ministers to have a housing allowance that is not taxable as income.

It was the 7th U.S. Circuit Court of Appeals that overturned a lower court’s decision that found the deduction unconstitutional.

It was a major victor pastors, who could have, together, faced an additional tax liability of $1 billion.

The non-profit Becket, which represented Pastor Chris Butle of Chicago, said it was the Freedom From Religion Foundation, an atheist group, that sued the IRS to end the deduction to ministers for their housing expenses.

The allowance enables ministers to live in the communities they serve. It originally started out as a housing allowance for company employees who were required to be in residence, such as sailors on a ship or employees at a hospital.

Pastors were added several years later.

“This ruling is a victory not just for my church but for the needy South Side Chicago community we serve – our youth, our single mothers, our homeless, our addicted, and our victims of gang violence,” said Butler, who works with members of the Chicago Embassy Church.

“I am grateful that I can continue serving them and living side by side with them to make our neighborhood a safer, more peaceful place.”

Becket said Butler “is the leader of a predominantly African-American congregation, and devotes his life to mentoring at-risk youth, decreasing neighborhood crime, and caring for the homeless in Chicago’s poorest neighborhoods.”

“His church can’t afford to pay him a full salary, but it offers him a small housing allowance, so he can afford to live near his church and the community he serves. For over 60 years, federal law has recognized that housing allowances shouldn’t be taxed as income under the same tax principle that exempts housing allowances for hundreds of thousands of secular workers – including teachers, business leaders, military service members, and many more. This tax exemption also keeps the IRS from becoming entangled in religious matters.”

The Freedom from Religions Foundation sued in 2016, and a year later, a district judge ruled the allowance was unconstitutional.

However, Becket argued on appeal to the 7th Circuit that it was one of many rules that “allow hundreds of thousands of employees (including ministers) to receive tax-exempt housing every year.”

“The tax code treats ministers the same as hundreds of thousands of nonreligious workers who receive tax-exempt housing for their jobs – that’s not special treatment, it’s equal treatment,” said Luke Goodrich, senior counsel at Becket. “The court rightly recognized that striking down the parsonage allowance would devastate small, low-income houses of worship in our neediest neighborhoods and would cause needless conflict between church and state.”

WND reported when Judge Barbara Crabb, who has a reputation for hostility to faith, ordered such a benefit allowable for secular employees but not religious ministers.

Among others eligible are hotel managers, nurses, fishermen, construction workers, apartment caretakers, museum directors, oil executives, non-profit presidents, teachers, school superintendents, diplomats, peace corps volunteers, state governors, prison wardens and soldiers.

“FFRF claims [the law] renders unto God that which is Caesar’s. But this tax provision falls into the play between the joints of the Free Exercise Clause and the Establishment Clause: neither commanded by the former, nor proscribed by the latter,” the court said.

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