9th Circuit suggests 1993 IRS policy related to Scientology contributions violates the Estab Cl

James Maule maule at LAW.VILLANOVA.EDU
Wed Jan 30 22:46:59 PST 2002


I wonder if the settlement facially discriminates among denominations. True, a deduction for "payments made for auditing, training, and other qualified religious services" is literally unavailable for member of other denominations for to the best of my knowledge no other denominations have "auditing" as a religious service, and none use the term "training" to describe a theological or spiritual event (but I may be wrong on that). No church other than the Roman Catholic Church has a collection for Peter's Pence, and a deduction is allowable for contributions to Peter's Pence (it is a collection that goes directly to fund certain activities of the Vatican). Denominational favoritism? The Presbyterian Church (USA) has something similar called "per capita apportionment" which funds the presbytery, synod and general assembly. (Other denominations may have a similar contribution, but I am certain not all do).

As I recall the original litigation, the IRS claimed that the amounts paid for auditing and training were not deductible because the member "received something" (and the receipt of a quid pro quo blocks the deduction because the requisite gift is lacking... this is why the $100 donation to public TV that brings the $30 video of a program to the donor generates only a $70 deduction).

Scientology argued that despite the terminology, the payments being made were the same, in essence, as those made by members of other denominations under different terminology. For example, what about a payment for a Mass that a Roman Catholic makes for the salvation of a soul or in thanksgiving for recovery from ill health? Deductible? Yes. Scientology argued that to deny the deduction for auditing, training and similar religious services activities created denomination favoritism in favor of so-called traditional denominations.

Hence my wondering if there is the facial discrimination the Ninth circuit appears to conclude exists without any explanation of how and why this is something supposedly not available to other denomination members.



Jim Maule
Professor of Law, Villanova University School of Law
Villanova PA 19085
maule at law.villanova.edu
http://vls.law.vill.edu/prof/maule
President, TaxJEM Inc (computer assisted tax law instruction) (www.taxjem.com)
Publisher, JEMBook Publishing Co. (www.jembook.com)
Owner/Developer, TaxCruncherPro (www.taxcruncherpro.com)
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>>> VOLOKH at MAIL.LAW.UCLA.EDU 01/30/02 08:08PM >>>
        Sklar v. CIR (9th Cir.),
http://caselaw.lp.findlaw.com/data2/circs/9th/0070753p.pdf (per Judge
Reinhardt, for himself and Judge Pregerson), suggests that the 1993 IRS
policy allowing Scientologists to "deduct as charitable contributions,
payments made for 'auditing,' 'training,' and other qualified religious
services" violates the Establishment Clause:

B. The Constitutionality of the IRS's Agreement with
the Church of Scientology
The Supreme Court has developed a framework for
determining whether a statute grants an unconstitutional
denominational preference. Under that test, articulated in Larson
v. Valente, 456 U.S. 228, 246-47 (1982), the first inquiry
is whether or not the law facially discriminates amongst religions.
The second inquiry, should it be found that the law
does so discriminate, is whether or not, applying strict scrutiny,
that discrimination is justified by a compelling governmental
interest. Id. Applying this test to the policy of the IRS
towards the Church of Scientology, the initial inquiry must be
whether the policy facially discriminates amongst religions.
Clearly it does, as this tax deduction is available only to members
of the Church of Scientology.
The second Larson inquiry is whether or not the facially
discriminatory policy is justified by a compelling governmental
interest. 456 U.S. at 246-47. Although the IRS does not
concede that it is engaging in a denominational preference, it
asserts in its brief that the terms of the settlement agreement
cannot be used as a basis to find an Establishment Clause violation
because "in order to settle a case, both parties are
required to make compromises with respect to points on
which they believe they are legally correct." This is the only
interest that the IRS proffers for the alleged policy. Although
it appears to be true that the IRS has engaged in this particular
preference in the interest of settling a long and litigious tax
dispute with the Church of Scientology, and as compelling
as this interest might otherwise be, it does not rise to the level
that would pass strict scrutiny. The benefits of settling a controversy
with one religious organization can hardly outweigh
the costs of engaging in a religious preference. Even aside
from the constitutional considerations, a contrary rule would
create a procedure by which any denomination seeking a
denominational preference could bypass Congressional lawmaking
and IRS rulemaking by engaging in voluminous tax
litigation. Such a procedure would likely encourage the proliferation
of such litigation, not reduce it. Larson, 456 U.S. at
248 (holding that even assuming arguendo that the government
has a compelling governmental interest for a denominational
preference, it must show that the rule is"closely fitted
to further the interest that it assertedly serves"). Because the
facial preference for the Church of Scientology embodied in
the IRS's policy regarding its members cannot be justified by
a compelling governmental interest, we would, if required to
decide the case on the ground urged by the Sklars, first determine
that the IRS policy constitutes an unconstitutional
denominational preference under Larson. 456 U.S. at 230.



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