COS only religion to get this tax break?

[jimtron]

I've read about this but I'm still confused. Does the Church of Scientology get a tax break from the IRS that no other religion enjoys? If so, this seems like information that should be shared as much as possible--I would think that non-Scientologist religious (and secular) folks would be outraged...this isn't exactly new news, but I'm not sure if it's widely known. Or am I misunderstanding the issue?


From the NYT:

A trial is to begin here on Wednesday morning to determine whether a Jewish couple can deduct the cost of religious education for their five children, a tax benefit they say the federal government has granted to members of just one religion, the Church of Scientology.

The judges in the original Sklar case said ''it appears to be true'' that Scientology -- founded by L. Ron Hubbard, the science fiction writer, in the 1950's -- received preferential tax treatment in violation of the First Amendment.
''Why is Scientology training different from all other religious training?'' Judge Barry D. Silverman wrote in his opinion, adding that the question would not be answered just then because the court was not faced with the question of whether ''members of the Church of Scientology have become the I.R.S.'s chosen people.'' Judge Silverman then recommended litigation to address whether the government is improperly favoring one religion.
''If the I.R.S. does in fact give preferential treatment to members of the Church of Scientology -- allowing them a special right to claim deductions that are contrary to law and disallowed to everybody else -- then the proper course of action is a lawsuit to put a stop to that policy,'' Judge Silverman wrote.

Mr. Sklar said that after more than a decade of tax breaks for Scientologists, he believed that the only proper course for the courts was to allow people of all faiths to take charitable deductions for the costs of religious education and training.
But Judge Silverman, who had urged litigation to settle the issue, took a different approach in his opinion two years ago.
''The remedy,'' he wrote, ''is not to require the I.R.S. to let others claim the improper deduction.''

Does anyone know--the CofS does still get the deduction, right?

And from here:

The Sklars have been seeking to deduct their payments, going back to the early 1990s, since learning of a settlement between the Internal Revenue Service and members of the Church of Scientology that allows Scientologists to deduct a portion of their payments to the church for auditing and training.
The IRS allowed the deductions sought by the Sklars for 1991 through 1993, apparently because it believed the couple were Scientologists. But when the IRS and the Tax Court said the Sklars' school payments for 1994 were not deductible, they appealed to the Ninth Circuit, which ruled against them in Sklar v. Comm'r (2002) 282 F.3d 610.
The panel said it was doubtful that their deduction claim was constitutionally permitted, that it was "unlikely" that religious education for children could be considered equivalent to Scientology auditing and training, and that the deduction was not permitted in any event because there was no evidence that the payments the Sklars made exceeded the value of their children's secular education-the schools offered both secular and religious classes-so none of the money could be considered a religious gift.
The court agreed with the Sklars that the Scientology settlement violated the Establishment Clause, but said the remedy would not be to make similar payments to other faiths' institutions deductible.

The judge went on to conclude, as the court did in Sklar I, that the Scientology settlement has no bearing on the Sklars' claims because the Sklars are not similarly situated to Scientologists. The principle that a taxpayer is not entitled to "an unconstitutional denominational preference" just because the IRS gave one to members of another faith, Wardlaw wrote, is "as correct today as [it was] six years ago."

 

[jimtron]

anyone?

 

[Gazpacho]

The CoS and its members were not party to this case, so they have not been ordered to do or stop doing anything.

 

[jimtron]

The CoS and its members were not party to this case, so they have not been ordered to do or stop doing anything.

It seems insane to me that one of the least popular, most controversial religions gets a tax break that no other religion gets. This is information that should be shared as much as possible, especially among churches (by churches I mean non-Scientology religions of all denominations).

 

[The Greater Fool]

It seems insane to me that one of the least popular, most controversial religions gets a tax break that no other religion gets. This is information that should be shared as much as possible, especially among churches (by churches I mean non-Scientology religions of all denominations).

I would suspect that the "auditing and training" would be more akin to a medical deduction, being mostly a bio-feedback type thing, as I understand it. My wife was able to deduct bio-feedback sessions as a medical expense. CoS is problably claiming physical/measurable improvement from auditing.

Arguably, auditing would be more analigous to prayer in other religions. If it cost to pray, I imagine (like other donations), they would be deductable. I think some Catholics require prayer beads to pray, but how much do they cost compared to "the cans"?

 

[tuoni]

Originally, "auditing" and the entire practice of the phoney pseudo-quackery known as "Dianetics" was purely a "self-help" programme.

The "E-Meters" used in "auditing" are little more than a rudimentary lie detector, and the process of "auditing" has been described by official reports and investigations into Scientology as a dangerous form of hypnosis (The Anderson Report, Chapter 13 amongst others).

Through this, they end up getting people hooked - the ones at the bottom actually honestly believe it helps them as they shovel money into the corporate machine which is the CO$

tl;dr - Scientology is the worst form of woo, that which is perpetuated by those who don't believe it, but are out to make money. And yes, they do still receive a tax break in many countries. And yes, it is because L. Ron Hubbard realised that the only way to make money was to make a religion (he is quoted repeatedly as saying that) and that through being a religion he could avoid tax.

 

[Sean84]

Don't forget Operation Snow White...

From Wikipedia:
"Under this program, Scientology operatives committed infiltration, wiretapping, and theft of documents in government offices, most notably those of the U.S. Internal Revenue Service."

Along with their various other nefarious acts I see no reason to believe blackmail wasn't involved in receiving tax exemptions.

The rabbit hole is deep, but the pills ain't cheep.

 

[jimtron]

SCOTUS rebuffs Scientology tax case (today)

The Supreme Court has turned aside a Jewish couple's attempt to claim a tax break that they contend the Internal Revenue Service set up solely for practitioners of Scientology.
The order, issued by the Justices without comment this morning, appears to put an end to Michael and Marla Sklar's 15-year quest to deduct a portion of their children's tuition at an Orthodox Jewish school in Los Angeles. The Sklars also claimed deductions for special religious classes in Jewish law, or Mishna.
The pair claimed the deductions after learning that the IRS cut a deal in 1993 with the Church of Scientology allowing its followers to claim deductions for religious "training" or "auditing," a practice in which Scientology adherents use an electronic device to purge themselves of negative thoughts.
The Sklars said it would violate the Constitution to allow Scientologists to claim such deductions while not giving them to Jews or members of other religious groups. Scientology officials have long contended that the IRS agreement gave Scientologists no special rights and only guaranteed treatment parallel to that given to those who belong to other religions.

 

[Dancing David]

It seems insane to me that one of the least popular, most controversial religions gets a tax break that no other religion gets. This is information that should be shared as much as possible, especially among churches (by churches I mean non-Scientology religions of all denominations).

I don't know, it is up to the court. the tax break in on programs of the church, so I assume it applies to similar programs in other churches. Such as prayers, and the like. But I don't really know.

Can you deduct religous workshops?

 

[jimtron]

I don't know, it is up to the court. the tax break in on programs of the church, so I assume it applies to similar programs in other churches. Such as prayers, and the like. But I don't really know.

Can you deduct religous workshops?

I realize it's up to the court; nonetheless, this seems outrageous to me, that the COS gets a tax break that no other religion gets. This is from the Sklar's petition (from the link in my previous post):

In June 1989, this Court held in Hernandez v. Commissioner, 490 U.S. 680
5
(1989) (hereinafter “Hernandez”), that members of the Church of Scientology may not deduct as charitable contributions their payments for religious instruction (known as “auditing” and “training” in the Church of Scientology). Nonetheless, in October 1993, IRS and the Church of Scientology entered into an agreement that, inter alia, permitted members of the Church of Scientology to deduct as charitable contributions their payments for religious instruction. Moreover, although that agreement expired in 1999, we understand that IRS continues to this day to permit members of the Church of Scientology to deduct as charitable contributions their payments for religious instruction. IRS disallows, however, any such deductions when claimed by practitioners of any other religion. Specifically, IRS disallowed the Jewish Petitioners’ claim of a charitable deduction on their 1995 tax return for $15,000 they paid that year for their children’s religious instruction.
The Tax Court and the Ninth Circuit below upheld IRS’ disallowance of Petitioners deduction. Petitioners respectfully submit that the policy and practice of IRS to permit Scientologists to deduct their payments for religious instruction but to disallow such deduc-tions when claimed by practitioners of other religions patently violates the Establishment Clause. Peti-tioners therefore ask this Court, in accordance with its long-established rule in cases involving unconstitutional discrimination by tax authorities, to permit Petitioners, too, to deduct their payments for reli-gious instruction as charitable contributions.

And from here:

The IRS and the church agreed to keep the details of their deal secret, but Mr. Sklar noticed in late 1993 that the tax agency suddenly withdrew, without explanation, a written ruling that had barred Scientologists from taking deductions for religious programs. Mr. Sklar viewed the government's decision as conferring a benefit on Scientologists that is not extended to members of other religions.

I don't know if one can deduct religious workshops or not.

 

[jimtron]

I would suspect that the "auditing and training" would be more akin to a medical deduction, being mostly a bio-feedback type thing, as I understand it. My wife was able to deduct bio-feedback sessions as a medical expense. CoS is problably claiming physical/measurable improvement from auditing.

Arguably, auditing would be more analigous to prayer in other religions. If it cost to pray, I imagine (like other donations), they would be deductable. I think some Catholics require prayer beads to pray, but how much do they cost compared to "the cans"?

The COS was ordered to put warning labels on E-meters saying that they have no medical or scientific value. I highly doubt that COS services would be legally deductible as medical expenses. Regarding prayer, I'm skeptical that the IRS would allow that to be deductible, even if costs were incurred.

 

[Dancing David]

From what little I could find it looks as though the deduction is no longer allowed anyway. It is probably similar to when people settle with the IRS you can get all sorts of breaks in a settlements that don't apply to other people.

 

[jimtron]

From what little I could find it looks as though the deduction is no longer allowed anyway. It is probably similar to when people settle with the IRS you can get all sorts of breaks in a settlements that don't apply to other people.

That may be the case, and there does seem to be some ambiguity here, but if that was definitively the case, I wonder if it would have gone all the way to the Supreme Court. Also, from the Sklar's petition:

Moreover, although that agreement expired in 1999, we understand that IRS continues to this day to permit members of the Church of Scientology to deduct as charitable contributions their payments for religious instruction.

 

[Dancing David]

Yes , i know, but is hooking you up to the 'engram-o-matic' the same as religous instruction at a yeshiva?

Apparently the SCOTUS does not think so.

 

[jimtron]

Yes , i know, but is hooking you up to the 'engram-o-matic' the same as religous instruction at a yeshiva?

Apparently the SCOTUS does not think so.

The case was not to see if the two are the same; the case was to determine if the Sklar's are allowed a deduction for religious training.

 

[fredcarr]

Been following this with some interest.

Took some study as a couple things were not clear to me. Why are the Sklar's not allowed to deduct donations made for religious activities.

Question answered here: (Towards bottom)

http://www.cosvm.org/sklar.htm

Also since the Church of Scientology doesn't currently have Scientology schools for its children (We have secular schools which teach traditional educational subjects.) why were they comparing apples to oranges? That's clear to me now as well.

I wondered what was taught in Jewish religious instruction. The first thing of course is the Hebrew language. Brings up an interesting point - if one has to study a second language in order to then study one's religious texts should this be a tax deduction? Especially if one goes to a "religious" school to learn said language.

------


III. The Sklars' Tuition Payments Do Not Constitute Partially Deductible "Dual Payments" Under the Tax Code
A "dual payment" (or "quid pro quo payment") under the Tax Code is a payment made in part in consideration for goods and services, and in part as a charitable contribution. I.R.C. SS 6115. For example, the purchase, for seventyfive dollars, of an item worth five dollars at a charity auction would constitute a dual payment: five dollars in consideration for goods, and seventy dollars as a charitable contribution.
The IRS permits a deduction under �170 for the portion of a dual payment that consists of a charitable contribution, but not for the portion for which the taxpayer receives a benefit in return. Although the Sklars concede that they received a benefit for their tuition payments, in that their children received a secular education, they claim that part of the payment -- the part attributable to their children's religious education -- should be regarded as a charitable contribution because they received only an "intangible religious benefit " in return.
Leaving aside both the issue, discussed in section I, of whether the tax code does indeed treat payments for which a taxpayer receives an "intangible religious benefit" as a charitable contribution, as well as any constitutional considerations, we are left with the Sklars' contention that their tuition payment was a dual one: in part in consideration for secular education, and in part as a charitable contribution.
The Sklars assert that because 45% of their children's school day was spent on secular education, and 55% on religious education, they should receive a deduction for 55% of their tuition payments.
[page]
[5] On the record before this court, the Sklars failed to satisfy the requirements for deducting part of a "dual payment" under the Tax Code. The Supreme Court discussed the deductibility of such payments in United States v. American Bar Endowment, 477 U.S. 105 (1986), and held that the tax-payer must establish that the dual payment exceeds the market value of the goods received in return.
The facts of that case were as follows: The American Bar Endowment ("ABE"), a tax-exempt corporation organized for charitable purposes and associated with the American Bar Association ("ABA"), raised money for its charitable work by providing group insurance policies to its members, all of whom were also members of the ABA. ABE negotiated premium rates with insurers, collected premiums from its members and passed those premiums on to the insurers. 477 U.S. at 107.
Because the group policies purchased by ABE were "experience rated," the group members were entitled to receive, each year, a refund of the portion of their premiums paid above the actual cost to the insurer of providing insurance to the group. Id. at 107-108. Although normally these refunds, called "dividends," would be distributed to individual policyholders, ABE required its members to agree to turn the dividends over to ABE for use in its charitable work. Id. ABE members sought to deduct the dividends as charitable contributions to ABE, claiming that the premiums paid constituted partially deductible "dual payments."
The Supreme Court held that the ABE members could not deduct the dividends as charitable contributions because they had not shown that the premiums they paid to ABE exceeded the market value of the insurance they purchased, or that the "excess payment," if any, was made with the intention of making a gift. 477 U.S. at 117. Because the ABE insurance was no more costly to its members than other policies that were available to them, the tax-payers could not prove that they "purposely contributed money or property in excess of the value of any benefit [they] received in return." 447 U.S. at 118.
[page]
[6] Similarly, the Sklars have not shown that any dual tuition payments they may have made exceeded the market value of the secular education their children received. They urge that the market value of the secular portion of their children's education is the cost of a public school education. That cost, of course, is nothing. The Sklars are in error.
The market value is the cost of a comparable secular education offered by private schools. The Sklars do not present any evidence even suggesting that their total payments exceeded that cost. There is no evidence in the record of the tuition private schools charge for a comparable secular education, and thus no evidence showing that the Sklars made an "excess payment" that might qualify for a tax deduction. This appears to be not simply an inadvertent evidentiary omission, but rather a reflection of the practical realities of the high costs of private education.
The Sklars also failed to show that they intended to make a gift by contributing any such "excess payment." Therefore, under the clear holding of American Bar Endowment, the Sklars cannot prevail on this appeal.14
IV. Conclusion
We hold that because the Sklars have not shown that their "dual payment" tuition payments are partially deductible under the Tax Code, and, specifically, that the total payments they made for both the secular and religious private school education their children received exceeded the market value of other secular private school education available to those

Foot note 14: Moreover, as the IRS argues in its brief, the Sklars' deduction was properly denied on the alternative ground that they failed to meet the contemporaneous substantiation requirement of SS 170(f)(8)(A), (B) & (C). The Sklars did not present, prior to filing their tax return, a letter from the schools acknowledging their "contribution" and estimating the value of the benefit they received, as is required under the statute. As noted earlier, certain reporting requirements are not applicable where intangible religious benefits are received in exchange, but such exemptions apply only where the consideration consists solely of such benefits. See the discussion of ss 170(f)(8) at p. 1377, supra. ​

[page]
children, the IRS did not err in disallowing their deductions, and the Tax Court did not err in affirming the IRS's decision. We affirm the decision of the Tax Court on that ground.
AFFIRMED.

_______________________________________________________
SILVERMAN, Circuit Judge, concurring:
Why is Scientology training different from all other religious training? We should decline the invitation to answer that question. The sole issue before us is whether the Sklars' claimed deduction is valid, not whether members of the Church of Scientology have become the IRS's chosen people.
The majority states that the Church of Scientology's closing agreement is not relevant because "the Sklars[are] not similarly situated to the members of the Church of Scientology..." That may or may not be true, but it has no bearing on whether the tax code permits the Sklars to deduct the costs of their children's religious education as a charitable contribution.
Whether the Sklars are entitled to the deduction they claim is governed by 26 U.S.C. SS 170, Hernandez v. Commissioner, 490 U.S. 680 (1989), and United States v. American Bar Endowment, 477 U.S. 105 (1986), not by the Church of Scientology closing agreement.

• 
  [*] Section 170 states that quid pro quo donations, for which a taxpayer receives something in return, are not deductible.
  [*] Hernandez holds that SS 170 applies to religious quid pro quo donations.
  [*] American Bar Endowment holds that charitable donations are deductible only to the extent that they [page]
  exceed the fair market value of what is received in exchange.
  
  

The Sklars receive something in return for their tuition payments -- the education of their children. Thus, they are not entitled to a charitable deduction under SS 170, as Judge Reinhardt carefully shows. Hernandez clearly forecloses the argument that SS 170 should not apply because the tuition payments are for religious education.
Finally, the Sklars have not demonstrated that what they pay for their children's education exceeds the fair market value of what they receive in return; therefore, they have not shown that they are entitled to a deduction under American Bar Endowment. It is as simple as that.
Accordingly, under both the tax code and Supreme Court precedent, the Sklars are not entitled to the charitable deduction they claimed. The Church of Scientology's closing agreement is irrelevant, not because the Sklars are not"similarly situated" to Scientologists, but because the closing agreement does not enter into the equation by which the deductibility of the Sklars' payments is determined. An IRS closing agreement cannot overrule Congress and the Supreme Court. If the IRS does, in fact, give preferential treatment to members of the Church of Scientology -- allowing them a special right to claim deductions that are contrary to law and rightly disallowed to everybody else -- then the proper course of action is a lawsuit to put a stop to that policy. [See foot note #1]
The remedy is not to require the IRS to let others claim the improper deduction, too.

Foot note 1: See Bowen v. Kendrick, 487 U.S. 589 (1988) (allowing a taxpayer group to challenge the constitutionality of the Adolescent Family Life Act under the Establishment Clause); School Dist. of City of Grand Rapids v. Ball, 473 U.S. 373, 380 n.5 (1985) (noting and affirming "the numerous cases in which we have adjudicated Establishment Clause challenges by state taxpayers to programs for aiding nonpublic schools."), rev'd on other grounds, Agostini v. Felton, 521 U.S. 203 (1997). ​

 

[Dancing David]

Um, don't use the large font, that is ridiculous.

 

[jimtron]

In light of the recent interest in the COS, I thought I'd give this thread a bump. I think everyone should know that apparently the Church of Scientology enjoys a tax break that no other denomination is allowed.

 

[Wildy]

Also since the Church of Scientology doesn't currently have Scientology schools for its children (We have secular schools which teach traditional educational subjects.) why were they comparing apples to oranges? That's clear to me now as well.

Yes you do. For example Delphi Schools in the US, the Athena School in Australia,Birchwood Academy in Canada and the Greenfields School in the UK are all schools that use Hubbard's Study Tech.

By the way, I notice that you seem to have relocated to Utah.

 

[blutoski]

In light of the recent interest in the COS, I thought I'd give this thread a bump. I think everyone should know that apparently the Church of Scientology enjoys a tax break that no other denomination is allowed.

Actually, I'm not clear on whether that's confirmed true.

The SCOTUS ruling quoted above explicitly said they are not evaluating whether that particular claim (of the plaintiff) is true or false.

I think we need to know more about the "Church of Scientology closing agreement" - it may be a one-time thing, and possibly there are a lot of them issued over the years by the IRS, which might mean COS is not really receiving special treatment. It could be part of a complex settlement where COS made a concession that the Sklars are not offering.