The income tax exclusion of the housing allowance for ministers of the gospel per I.R.C. section 107: First Amendment establishment of religion or free exercise thereof - where should the Warren court have gone?

South Dakota Law Review, Summer, 2009 by John R. Dorocak

The Ninth Circuit majority denied Professor Chemerinsky's motion to intervene under Federal Rules of Civil Procedure 24(a) and 24(b). (31) The court held that the intervenor had not demonstrated an entitlement to intervene under 24(a) in that he had no "significant protectable interest" but instead had a "larger but more generalized interest." (32) The court indicated that the intervenor could raise the issue through a separate lawsuit and that denial of the intervention would not impair his ability to protect his generalized interest as a taxpayer. (33) The court also held that the intervenor "fail[ed] to articulate a compelling basis for permissive intervention" under rule 24(b) and reasoned that he needed to show "a separate and independent basis for jurisdiction" and that "failure to adjudicate ... will result only in unnecessary delay." (34) The court refused to find that its enunciated standard was met where the intervenor could "bypass a lower court altogether and raise new claims for the first time in an existing appeal." (35) The court reasoned the "constitutional arguments ... are better suited for consideration in the first instance in a traditional procedural posture before a district court." (36) Judge Tallman filed a concurring opinion regarding the circuit court's second order, reasoning that because the parties had stipulated to a dismissal, the motion to intervene was moot. He stated, "Nothing more need be said." (37)

After the Ninth Circuit's order of March 5, 2002, and before its order of August 28, 2002, (38) Congress moved to amend section 107(2) and prospectively adopt the I.R.S.'s position in the original Tax Court case that the parsonage allowance was limited to fair rental value. (39) The Ninth Circuit took notice in its second order of the bill: "Its sponsors explained that this bill was designed to prevent this Court from reaching the constitutionality of [section]107(2)." (40)

IV. UNANIMOUS CONGRESSIONAL RESPONSE--ANOTHER ATTEMPT TO STIPULATE AWAY THE CONSTITUTIONAL QUESTION?

One leading tax publisher explained the seeming politics of the Clergy Housing Allowance Clarification Act of 2002 amending section 107(2) as follows: "A little more than five weeks after its introduction in the House, President Bush on May 20 signed legislation clarifying the amount that 'ministers of the gospel' may exclude from gross income...." (41) As previously mentioned, the Warren court took notice of this legislative attempt to avoid litigation of the constitutional question. (42) Apparently, the political solution was to amend section 107(2) to include the I.R.S.'s position as litigant in the Warren case at the Tax Court, and to apply that solution prospectively only. (43)

Judge Reinhart's concurrence in the Ninth Circuit's first order very explicitly said that it would not permit parties to stipulate in order to avoid litigating a constitutional question. Judge Reinhardt quoted at length from United States National Bank v. Independent Insurance Agents of America, Inc., wherein the court stated: