A group of clergy is appealing a court decision that struck down a law that exempted pastors from paying taxes on their housing allowances.
According to The Christian Post, the case over the clergy allowance was filed by the Freedom From Religion Foundation against U.S. Treasury Department Secretary Jacob Lew and IRS Commissioner Josh Koskinen in April 2016.
In October, U.S. District Judge Barbara Crabb in the Western District of Wisconsin had declared the law unconstitutional, arguing that the exemption provides a benefit to the religious person and no one else.
The group of clergy, represented by the Becket Fund, had filed an appeal in the case of Gaylor v. Mnuchin before the Seventh Circuit Court of Appeals on Thursday.
The Washington D.C.-based legal firm has warned that churches nationwide could experience a $1 billion increase in taxation if the repeal is upheld.
"Ending the housing allowance would discriminate against religious groups by treating them worse than many other secular employees who receive the same tax treatment. It would also harm poor communities by diverting scarce resources away from essential ministries. It could even force some small churches to close," the firm said in a press release, according to Courthouse News.
The 1954 law applies to a "minister of the gospel," which has been interpreted by the IRS to apply to certain religious leaders of Christianity and other faiths.
The FFRF argued that the law discriminates against secular employees in violation of the First Amendment's establishment clause as well as the equal protection provision of the Fifth Amendment.
The atheist organization also filed a similar lawsuit in 2013, and Crabb had ruled in its favor, but the decision was later vacated by the Seventh Circuit, which held that the group had no standing to sue.
Pastor Chris Butler of the Chicago Embassy Church, one of the appellants, had lamented that the repeal of the housing allowance would greatly harm his congregation's work.
"Our congregation's mission is to serve this city; to fight against injustice and oppression, to be a shoulder to cry on, and to give encouragement to folks in need," he said.
"It would have a devastating impact on small churches if suddenly a pastor had less time to devote to the community," he added.
After the law was struck down in October, Becket said that losing the allowance could force Butler to move out of his neighborhood or take up a second job. The legal firm also warned that the decision would also force other churches to close altogether.
Oral arguments on the case are expected to be heard by the Seventh Circuit later this year.