Is tax-exempt status right for the Church of Scientology?

[MarkWI]

- Religious discrimination in the US -

What www.religiousfreedomwatch.com should be talking about is how the Church of Scientology got its tax exempt status by sending PI after IRS officials and how this same status has not been granted to any other Church.

IRS considers the Hare Krishna book sales as a taxable business, yet considers everything Scientology publishes and sells as done for 'religious purposes' and therefore not taxable.

The case of Michael and Marla Sklar is another example of discrimination. They sued Internal Revenue Service to deduct cost of their children's religious Jewish schooling, and they lost.

It makes me wonder if LRH was right about his ways to handle governments by blackmailing and investigate government officials.

In a sentence of a few years ago related to Michael and Marla Sklar the Supreme Court said:

"The sine qua non of a charitable contribution is a
transfer of money or property without adequate
consideration. The taxpayer, therefore, must at a
minimum demonstrate that he purposely contributed money
or property in excess of the value of any benefit he
received in return. ..."

"A taxpayer may not deduct a payment as a charitable contribution
if the taxpayer receives a substantial benefit for a payment to a
charitable organization." (link)

Yet almost everything you donate to Scientology Churches in the US is considered tax-exempt.
The church sells it's services for big bucks and advertise them as 'priceless', more worth than any piece of MEST you can ever buy - yet to receive tax exempt for their 'fixed donations' the US Gov must consider any service delivered by Scientology Churches and missions to 'not giving a substantial benefit'.

Maybe Scientology Officials lied to the US Gov? Or are them lying to us all?

Knowledge IS a 'substantial benefit', education expenses are not tax deducible in the US.

(And as a personal opinion: any children’s secular and religious education should be tax deducible.)

__________________________

I left the Church some years ago, yet I keep receiving their SPAM despite numerous requests to take me off their mailing lists, and despite I never gave them authorization to send me promo in the first place.

That's a piece of promo I recently received.
And I wonder, what this has to do with Religion and what has to do with Business and Money?

Mark

 

[Div6]

One could also argue that this violates the Establishment Clause of the 1st Amendment, dure to unequal treatment under law.

One really wonders what dirt they dug up to have the IRS do a 180 like that. Of course, that also pins DM and his minions with "withholds" over which they will never be able to get case gain...

 

[sugaree]

One could also argue that this violates the Establishment Clause of the 1st Amendment, dure to unequal treatment under law.

The Sklars did so argue, twice, and were not found to be "similarly situated" to CoS members, as required to implicate the equal protection clause. Therefore, no *unlawful* discrimination, religious or otherwise, at least in this case.  As the Court of Appeals opined in Sklar v. Commissioner, 282 F.3d 610 (9th Cir. 2002), "[w]hile we have no doubt that certain taxpayers who belong to religions other than the Church of Scientology would be similarly situated to such members, we think it unlikely that the Sklars are. Religious education for elementary or secondary school children does not appear to be similar to the "auditing" and "training" conducted by the Church of Scientology."
 
More importantly, though, because the '93 agreement between the IRS & CoS allowing for deductions was repeatedly held to have been unnecessary or irrelevant in the adjudication or resolution of Sklar's claims, the discrimination question was not answered either way. Courts will always make decisions on the narrowest possible grounds, with this one declining the invitation to review the equal protection issue or the legality / constitutionality of that agreement. Instead, the sole legal question was the validity of the Sklars' claimed deduction; it was "not whether members of the Church of Scientology have become the IRS's chosen people." Sklar, 282 F.3d at ____.

However, the issue WAS discussed by the Court. And it very clearly suggested that the '93 agreement would be found unconstitutional if a court were forced to decide the issue under the two part test articulated in  Larson v. Valente, 456 U.S. 228, 246-47 (1982). It observed that the IRS policy was not only facially discriminatory, with deductions available only to members of CoS, but that it was also not justified by a compelling governmental interest. Had such observations been findings of fact, then the IRS agreement would have failed both parts of the Larson test for determining whether a statute or govt policy grants an unconstitutional denominational preference, aka unlawful discrimination.

These comments directly contradict those of Scn tax atty Yingling. In reference to the Sklar matter, she claims on the CoS website that "[t]he Church’s members are not actually advantaged, but are simply afforded the same privilege that has long been enjoyed by the members of other religions" Not exactly correct, since such members *have* been identifed as uniquely "advantaged." At best, her assertion has not yet been proven false.

It again remains for another court in another case to make the authoritative determination as to whether or not the IRS does, in fact, allow CoS members to claim deductions that are contrary to law and rightly disallowed to everybody else. As for the question of who or what on Earth or at least in the US may have standing to mount this challenge, please stay tuned.

Any ideas in the interim?
 
Sugaree

PS. While I have yet to figure out if/what new argument(s) or fact(s) enabled or led the Sklars to plead their case in the equivalent of trial court for tax matters a second time, the appellate court decision is controlling on the applicable law.

 

[MarkWI]

The Sklars did so argue, twice, and were not found to be "similarly situated" to CoS members, as required to implicate the equal protection clause. Therefore, no *unlawful* discrimination, religious or otherwise, at least in this case.  As the Court of Appeals opined in Sklar v. Commissioner, 282 F.3d 610 (9th Cir. 2002), "[w]hile we have no doubt that certain taxpayers who belong to religions other than the Church of Scientology would be similarly situated to such members, we think it unlikely that the Sklars are. Religious education for elementary or secondary school children does not appear to be similar to the "auditing" and "training" conducted by the Church of Scientology."
 
More importantly, though, because the '93 agreement between the IRS & CoS allowing for deductions was repeatedly held to have been unnecessary or irrelevant in the adjudication or resolution of Sklar's claims, the discrimination question was not answered either way. Courts will always make decisions on the narrowest possible grounds, with this one declining the invitation to review the equal protection issue or the legality / constitutionality of that agreement. Instead, the sole legal question was the validity of the Sklars' claimed deduction; it was "not whether members of the Church of Scientology have become the IRS's chosen people." Sklar, 282 F.3d at ____.

However, the issue WAS discussed by the Court. And it very clearly suggested that the '93 agreement would be found unconstitutional if a court were forced to decide the issue under the two part test articulated in  Larson v. Valente, 456 U.S. 228, 246-47 (1982). It observed that the IRS policy was not only facially discriminatory, with deductions available only to members of CoS, but that it was also not justified by a compelling governmental interest. Had such observations been findings of fact, then the IRS agreement would have failed both parts of the Larson test for determining whether a statute or govt policy grants an unconstitutional denominational preference, aka unlawful discrimination.

These comments directly contradict those of Scn tax atty Yingling. In reference to the Sklar matter, she claims on the CoS website that "[t]he Church’s members are not actually advantaged, but are simply afforded the same privilege that has long been enjoyed by the members of other religions" Not exactly correct, since such members *have* been identifed as uniquely "advantaged." At best, her assertion has not yet been proven false.

It again remains for another court in another case to make the authoritative determination as to whether or not the IRS does, in fact, allow CoS members to claim deductions that are contrary to law and rightly disallowed to everybody else. As for the question of who or what on Earth or at least in the US may have standing to mount this challenge, please stay tuned.

Any ideas in the interim?
 
Sugaree

PS. While I have yet to figure out if/what new argument(s) or fact(s) enabled or led the Sklars to plead their case in the equivalent of trial court for tax matters a second time, the appellate court decision is controlling on the applicable law.

Thank you for that nice clarification.
M

 

[sugaree]

Most welcome.

And thank you for raising what I agree is an important issue. Took me several hours to get up to speed and my eyes glazed over as usual with all the talk of money & figures in the tax court analysis, but I enjoyed it nonetheless. I really wish I could think of who would have standing to challenge the policy, as it seems the Sklars did or would have had they been similarly situated, but the court found a way to avoid deciding the issue. How to force it?

Maybe with some sort of similarly situated taxpayer union harmed by the disparate treatment, but I suspect one would be hard to find. And even though times have changed for the CoS, I would not want to be the judge in that case. I'd expect DM to pull out all the stops to prevent losing tax exemption status in the US. While courts are not politicans, nor vulnerable to the types of pressure as the latter, I think Sklar is a good example of how they can easily find a legitimate, legal basis on which to avoid confronting certain issues.

Thanks again.

 

[Div6]

Most welcome.

And thank you for raising what I agree is an important issue. Took me several hours to get up to speed and my eyes glazed over as usual with all the talk of money & figures in the tax court analysis, but I enjoyed it nonetheless. I really wish I could think of who would have standing to challenge the policy, as it seems the Sklars did or would have had they been similarly situated, but the court found a way to avoid deciding the issue. How to force it?

Maybe with some sort of similarly situated taxpayer union harmed by the disparate treatment, but I suspect one would be hard to find. And even though times have changed for the CoS, I would not want to be the judge in that case. I'd expect DM to pull out all the stops to prevent losing tax exemption status in the US. While courts are not politicans, nor vulnerable to the types of pressure as the latter, I think Sklar is a good example of how they can easily find a legitimate, legal basis on which to avoid confronting certain issues.

Thanks again.

Not only standing, but the deep pockets that would be needed to litigate this. In some *private* discussions with counsel, the ballpark was 4 million to see it through to an uncertain conclusion. And of course the downside in a case like that is not pretty to contemplate either...

 

[sugaree]

Not only standing, but the deep pockets that would be needed to litigate this. In some *private* discussions with counsel, the ballpark was 4 million to see it through to an uncertain conclusion. And of course the downside in a case like that is not pretty to contemplate either...

Geez, I totally forgot about that lil monetary detail.

Excellent point. It would be the kind of "test case" usually undertaken by publicly funded public interest law firms and agencies, such as the ACLU. But I am having trouble seeing who the victim in this scenario might be, someone whose constitutional rights were trampled upon in clear or "certain" ways. "Tax injury" does not seem to be an especially sympathetic problem or source of unlawful discrimination. I cannot imagine an agency, off the top of my head at least, which would support such an action. So it would be left to the private sector to handle, making it a bigger challenge IMO. Not only to find a willing, able & legally suitable plaintiff, but also willing and able counsel.

And that downside, yikes!!!!

But I am sure glad to hear that somone is talking with lawyers. Do you know if that plaintiff, one with the "right facts" to establish standing, has been identified? I've asked a few people for their thoughts and they were just as verklempt over the standing issue. Assuming that close similarity of services is really the basis for finding a parties similarly situated in this context, what other religion charges members for anything even remotely analagous to auditing?

 

[Div6]

Geez, I totally forgot about that lil monetary detail.

Excellent point. It would be the kind of "test case" usually undertaken by publicly funded public interest law firms and agencies, such as the ACLU. But I am having trouble seeing who the victim in this scenario might be, someone whose constitutional rights were trampled upon in clear or "certain" ways. "Tax injury" does not seem to be an especially sympathetic problem or source of unlawful discrimination. I cannot imagine an agency, off the top of my head at least, which would support such an action. So it would be left to the private sector to handle, making it a bigger challenge IMO. Not only to find a willing, able & legally suitable plaintiff, but also willing and able counsel.

And that downside, yikes!!!!

But I am sure glad to hear that somone is talking with lawyers. Do you know if that plaintiff, one with the "right facts" to establish standing, has been identified? I've asked a few people for their thoughts and they were just as verklempt over the standing issue. Assuming that close similarity of services is really the basis for finding a parties similarly situated in this context, what other religion charges members for anything even remotely analogous to auditing?

Well, here's an angle to contemplate.

Suppose parishioner X was in the church for 6 years. Each year he donated (and wrote off) 10,000. In year 7, he leaves the church, or even gets declared and expelled.

What is his tax liability for the previous years? Can the IRS "audit" him and say since he is obviously "NCG" he now needs to pay up?

What if he paid but never took the services, got the tax breaks, and then got a refund?

Then the Establishment issue becomes much clearer to my mind......no one else would incur tax penalties for apostasy that I know of. I'm just thinking out loud here.

As to the standing issue, some ideas have been tossed around....but none have really brought in the indicators fully. Lets just say it is still an open question.

The whole question may be mooted if the "church" keeps "expanding" like it currently is....