As you may know, there is ongoing litigation concerning the constitutionality of the housing allowance provision in the Internal Revenue Code. Below is a summary of recent rulings.
On October 6, 2017, the federal district court for the Western District of Wisconsin declared the tax-free housing allowance for clergy under Section 107(2) of the Internal Revenue Code unconstitutional. The case is named Annie Laurie Gaylor, Freedom From Religion Foundation et al v. Steve Mnuchin et al.
On December 13, 2017, the court entered its final order in the case, which enjoins the government from enforcing Code Section 107(2). However, the court stayed, i.e., delayed the effect of, the order until 180 days after the conclusion of all appeals. Therefore, it could take a few years before a final decision is reached. This decision does not impact the constitutionality of in-kind church-provided housing, often called a parsonage, manse or rectory [provided under Code Section 107(1).]