An Iowa administrative law judge’s recent decision to dismiss a “frivolous” petition and keep Calvary Chapel Iowa’s tax-exempt status intact has become final and is the first legal decision rendered under Iowa’s newly enacted Religious Freedom Restoration Act (RFRA).
In September 2024, the judge rejected a petition from a group of Iowa taxpayers to revoke the church’s tax-exempt status on two properties – the pastor’s recently constructed home and a portion of the church’s campus in Cedar Rapids, Iowa used for a Christian daycare and school. The judge cited that the state’s RFRA protected the church from having to prove its tax exemption entitlements to individuals not involved in enforcing state tax law. The group did not appeal the RFRA-based decision within a mandated 30-day timeline, which now binds the judge’s ruling to keep the church’s exemptions in place as a “final agency decision.”
Enacted in April 2024, Iowa’s RFRA provides robust legal protections for the Free Exercise of Religion, especially from spurious actions from public or private individuals or organizations that would ultimately burden religious practices.
Administrative Law Judge Jonathan Gallagher stated in the decision that “this type of litigation imposes a substantial burden on the exercise of religion” especially when the state’s Department of Revenue already enforces tax laws.
Liberty Counsel, in partnership with the Kirkwood Institute, defended Calvary Chapel Iowa securing the judge’s dismissal of the petition. In October 2023, the church’s pastor spoke out publicly against the sexualization of children, held a book reading of “Jesus and My Gender” in response to drag queen story time, and endorsed school board candidates on his personal social media. Then in November, several Iowa taxpayers petitioned against the church’s tax exemptions. One of the petitioners, Dustin Brooks, of Marion, serves on a local diversity and equity committee and is committee chairman for a school board candidate the pastor did not support. Brooks essentially stated that the church getting involved in politics while not paying taxes had “lit [his] fire a little bit.”
The retaliatory and baseless petition sought to revoke the church’s property tax exemptions by arguing these properties were not being used “solely” for religious purposes because the pastor’s family are “non-ecclesiastical personnel” residing in the home and due to the daycare taking in revenue.
Liberty Counsel and the Kirkwood Institute argued in the motion to dismiss brief that these claims were “frivolous” since the state had already approved the exemptions and that the church having to defend against this type of “spurious” challenge burdens the Free Exercise of Religion. A church’s tax exemptions are not nullified because pastors have families who live with them or because Christian daycares have employees and operating costs.
Judge Gallagher wrote, “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.”
Liberty Counsel Founder and Chairman Mat Staver said, “Religious freedom laws robustly protect churches and pastors against frivolous challenges from those who politically disagree with them. The power to tax is not intended to empower censorship. This first application of Iowa’s Religious Freedom Restoration Act shows that churches and pastors can focus on their mission without fear from frivolous claims, which could be financially costly to any petitioner for attorney’s fees and costs.”
