Iowa taxpayers challenged a pastor's unfair tax exemptions. A new law got in their way.

Iowa's Religious Freedom Restoration Act is allowing a pastor to get away with paying no property taxes on his McMansion

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The Religious Freedom Restoration Act prohibits the government from interfering with someone’s religious practices unless there’s a really good reason for it. Seems like a sensible policy, but in practice, RFRA has been weaponized by religious groups (almost always Christian groups) to allow them to ignore laws they don’t like since all they have to do is yell “Jesus” really loudly. Among other things, those laws have been used by pharmacists to avoid filling birth control prescriptions, by employers to fire workers in same-sex relationships, by parents who won’t vaccinate their kids, and by the people who run Hobby Lobby.

Earlier this year, the Republican governor of Iowa signed a state version of RFRA into law, and now a judge has cited that law in favor of a pastor who doesn’t want to pay property taxes on his personal $765,000 home.

Here’s what happened, according to the initial complaint signed by nine Iowa residents living in and around the town of Marion. (The document includes a lot of personal information, so I’m not posting it here.)

A few years ago, Jeremy and Brooke Higgins purchased property in Marion. They “sold” that property to the church they run, Calvary Community Church, for $1. The “church” then constructed the home for approximately $765,000—”We assume no sales tax was paid on construction costs,” the complaint said—then provided the Higgins with a mortgage… which was “forgiven” by the church months later.

Brooke and Jeremy Higgins (via Calvary Community Church)

To put it another way, all the necessary paperwork between two parties—the paperwork you might sign when you buy a home and get a mortgage through a bank—was really one dude writing contracts for himself, then signing them. He bought a home but acted like it was church property so he could get away with not paying any property taxes on it. The church didn’t even technically pay for the house! “They personally loaned the money for their house to their own nonprofit,” said one of the petitioners, Dustin Brooks.

And if the argument was that this was church property regardless of the paperwork shenanigans, the complaint also alleged that there was no evidence this was anything but a single-family home. It’s not like the “church” even hosted events there.

Jeremy and Brooke Higgins reside in this single-family home with their 3 children, one of whom is at least 23 years old. There is an expensive privacy fence, along with a hard basketball court in the backyard. According to neighbors, rarely does anyone visit the home and they have never seen any parties, events, or gatherings at the home. There is no signage indicating it is church property or a rectory. We confirmed with the Linn County Assessor’s office that Calvary Chapel Iowa owns the property, land and dwelling, and that the property is fully tax exempt on the basis of a “pastor’s residence”…

Even if that might be legal in certain situations, the complaint said, Higgins wasn’t even a pastor. He was the self-appointed “president” of the church, therefore “he should not be considered ecclesiastical personnel.”

Under no circumstances, said the petitioners, should his home be tax-exempt. The Higgins bought a home in the community but they’re not paying for local schools, roads, parks, or emergency personnel—all because they’re pretending this is church-owned property.

That’s not all. If the courts needed any more proof this was not a church facility, the same address was being used by other family members as the base for their for-profit companies:

To support that even further, there are two registered, active for-profit LLC’s operating from [the address]. One LLC, “The Coffee Pusher LLC”, is registered to Brooke Higgins, the wife of Jeremy Higgins claiming the exemption, and the other, 68eleven Productions LLC, is registered to their adult son, Devon Higgins, who also resides at this property. The Coffee Pusher, LLC has been active since at least May of 2020, operating from this tax-exempt property. 68eleven Productions LLC is active and was formed in February of 2023 at this tax-exempt property.

The bottom line is that if this was a church-owned home, the tax exemption would be legal. But if this was a single-family home, it wouldn’t be.

The question was whether this home really deserved to be categorized as church-owned because it sure as hell looked like this was just a regular-ass home owned by a family that happened to run a church. If the church, for any reason, ended up shutting down, what do you think would happen to the home? Nothing! The Higgins would still be living in it because it’s their home, not the church’s!

The problems didn’t end there either. The petitioners argued that “Calvary Christian Preschool & Daycare” shouldn’t be tax exempt either, because there was no evidence it was providing any kind of religious benefit to members; its rates were no different from those of neighboring secular daycare facilities. It seemed like this daycare, which was tax-exempt because it was connected to a church, was nothing more than a secular for-profit business.

(The italics below are in the original complaint.)

Considering the daycare and preschool are not providing discounted or free childcare, we do not see where they are providing charitable objects to the community or to their religious society. However, they are tax-exempt, and, unlike other daycares in the area, do not have to pay taxes on their revenue. This revenue is then being used to finance the property at [home address], in which the Director of the childcare center resides with her family. It is a clear and obvious personal benefit for the director of the non-profit daycare and preschool to be living in housing paid for by that daycare and preschool tax-free revenue. Iowa Code does not allow tax exemptions on property for housing of non-religious staff.

For all those reasons, the petitioners said the Iowa Department of Revenue needed to investigate “all tax-exemptions being provided to Calvary Chapel Iowa, as there may be tax-exempt abuse and/or tax evasion occurring elsewhere that has yet to be uncovered.”

Their complaint was sent to the Iowa Department of Revenue, which sent the case to a panel of judges to assess. That administrative tribunal has now issued a decision… to dismiss the case entirely.

In short, the judges never went into the merits of the argument, but said that random taxpayers had no right to challenge a tax exemption already claimed by a church… all thanks to Iowa’s RFRA law.

That’s because making the Higgins defend themselves “imposes a substantial burden on the exercise of religion.” If we allowed anyone to sue religious leaders over alleged wrongdoing, it would get in the way of them telling their congregations how ethical they were.

If that sounds absurd, the judges seemed to realize that, which is why they called on a higher court to steer them in a better direction.

To hold otherwise would be to allow the unaccountable political opponents of a church the option to use the power of the State to target and/or retaliate against the religious organization for the organization’s activities, thereby creating a chilling effect not only on that specific religious group but also all other similarly oriented religious organizations. This is precisely the type of religious interference that RFRA was designed to prevent, and until the judiciary provides different guidance on the scope of RFRA, this case must be dismissed.

Higgins' own lawyers argued that making him comply with discovery requests was a burden on his faith:

… Time is a limited resource. The work and ministries of the church will face the vagaries of litigation which will take primacy. Pastor Higgins will experience a chill on his First Amendment-protected speech about socio-political-theological issues, and will face the choice of self-censorship, or run the risk that Petitioners will add more of his protected statements to their litany of complaints.

That’s how good it is to be a Christian pastor: You can bend the law in your favor, arguably illegally, then say no one has the right to challenge you because it amounts to religious persecution.

Unless the Iowa Department of Revenue or a government agency initiates this lawsuit, there’s no way for the tax exemptions to be challenged, much less revoked. That’s because, due to RFRA, the state’s “compelling interest” in enforcing the tax code can be achieved without letting random taxpayers file lawsuits and giving them “the unfettered right to force churches into litigation to justify their tax status.”

That’s why the judges said “this case must end unless or until the government pursues the matter.”

Will the petitioners appeal? It doesn’t seem like they’ll get a different ruling from other judges, so that’s not likely. Which means RFRA is working exactly as intended. Instead of promoting “religious freedom,” it’s giving religious organizations another weapon to use to fight rules that are meant to apply to everybody.

Joe Stutler, one of the petitioners who filed the initial complaint, told me this decision creates “unfettered access by any religious institution to basically do whatever they want with no guidelines, no restrictions.”

If people in the Department of Revenue do their jobs, though, this doesn’t have to be the final word in this case. Unfortunately, asking government officials to challenge a church about anything is a hard ask, and most don’t have the stomach for it. Certainly when statewide officials are almost all Republicans, there’s virtually no chance of that happening.

Side note: When a local ABC affiliate first posted about this ruling, it said the petitioners were going after the church because Higgins had endorsed two school board candidates from the pulpit. While that’s also a problem—because, according to IRS rules, churches that endorse candidates should lose their tax-exempt statuses—it had nothing to do with why these petitioners filed their complaint. The article was later revised to tell a more accurate version of the story.

I was told that the reporter never spoke with the petitioners before initially publishing that piece. Instead, he bought the spin that the church’s lawyers were offering. Telling the truth didn’t make their side look good, so the lawyers were eager to tell a story that pointed to persecution instead.

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