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Old 02-08-2008, 05:38 AM   #1 (permalink)
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IRS, church of Scientology, tax benefit for all

Article
Quote:
A Jewish couple's bid to take a tax deduction they say the Internal Revenue Service reserves only for members of the Church of Scientology is getting a friendly reception from a federal appeals court, increasing the possibility of a ruling that could create a tax break for taxpayers of many religions who pay tuition to religious schools.

During arguments on the case this week, three judges who ride the 9th Circuit Court of Appeals expressed deep skepticism of the IRS's position that the way the agency treats Scientologists is irrelevant to the deductions the Orthodox Jews, Michael and Marla Sklar, took for part of their children's day school tuition and for after-school classes in Jewish law.

"The view of the IRS is it can unconstitutionally violate the Constitution by establishing religion, by treating one religion more favorably than other religions in terms of what is allowed as deductions, and there can never be any judicial review of that?" Judge Kim Wardlaw asked at the court session Monday in Pasadena, Calif.

"That is not at all what I said," a Justice Department lawyer representing the IRS, Ellen Delsole, said.

"That's the bottom line," Judge Wardlaw and a colleague on the panel, Harry Pregerson, both replied. "This does intrude into the Establishment Clause," Judge Wardlaw added.

The case stems from an agreement the IRS reached with the Church of Scientology in 1993 to end more than a decade of lawsuits, audits, and other enforcement actions involving the tax agency, Scientology entities, and church leaders. The church paid $12.5 million, while the IRS agreed to drop arguments that Scientology, which was founded by L. Ron Hubbard, was not a bona fide religion.

At about the time of that deal, the IRS agreed to allow Scientologists to deduct at least 80% of the fees paid for "religious training and services."

The Sklars took similar deductions for religious education on their returns for the early 1990s, without challenge by the IRS. However, the IRS rejected their deductions for 1994 and beyond.

The 1993 pact between the IRS and the Scientologists was memorialized in a 72-page "closing agreement," which was published by the Wall Street Journal in 1997. However, the IRS has never acknowledged the accuracy of that document, and when the Sklars' attorney, Jeffrey Zuckerman, sought it from the agency, the IRS refused to turn the document over.

Mr. Zuckerman also subpoenaed the agreement and other records from the Church of Scientology and its president, Reverend Heber Jentzsch. The tax court judge who handled the case, John Colvin, quashed the subpoenas without explanation.

Ms. Delsole told the appeals court that the agreement with the Scientologists must be kept confidential for privacy reasons. "That's getting into the private taxpayer business of another taxpayer," she said.

The government lawyer asserted that the Sklars were not "similarly situated" to the Scientologists because the couple was seeking to deduct fees related to basic education for children and not the kind of training Scientologists undergo.

"How do we know that?" Judge Wardlaw asked, according to a recording of the hearing.

"You tell us you don't know anything either, but you read the Wall Street Journal," Judge Pregerson said to Ms. Delsole. She said that even if the benefit for Scientologists went too far, the solution was not to give it to "one taxpayer and one more religion."

"That's your best argument: two wrongs don't make a right," the third judge on the case, Ronald Leighton, said. He called the agency's refusal to explain its agreement with the Scientologists "a frustration that is hard to get beyond."

Ms. Delsole warned the court that the IRS would have difficulty resolving tax disputes if it could be forced to justify those deals in cases involving other taxpayers. "Every person who can find out about it from any other religious group is going to come in and want the same thing and that would really tie the IRS's hands," she said.

Members of racial minorities could also claim taxpayers of other races got better deals, the government lawyer said. "That's the sort of thing that would flow from the idea that the IRS can't settle and keep this confidential," she added.

Mr. Zuckerman rejected that idea. "If the IRS were saying white people were entitled to a certain deduction and black people were not, why would it be such a parade of horrors for the courts to come in and say the government may not act that way?" he asked.

The court made no immediate ruling, but an attorney who represents the Church of Scientology, Monique Yingling, said she was surprised by the judges' statements that data on the church's deal with the IRS was needed for the Sklars' case. "There's a lot of information already in the public record about this question," she said. "I don't know that there's any need for any additional information."

Ms. Yingling said the 1993 deal merely ensured parity for Scientologists under tax law. "They are not getting any kind of special treatment," she said.

Ms. Yingling said the training Scientologists can deduct is not the same as religious education. "The use of the word 'training' in Scientology is not analogous to education," she said. "It's just another way of advancing spiritually in Scientology."

Mr. Zuckerman said that alleged distinction is precisely what he wants to explore in the court case. "You need to get a factual record on that, then you can make your argument," he said.
This is to me a very interesting case, and I am surprised I really can not find any other articles on the topic. I have for years wondered why / how the Church of Scientology was able to strong arm the IRS in to allowing them and only them a tax break for religious studies.

Personally since I know I will send my child(ren) (G-d willing when we have), to a private school the idea that I can get a tax break is promising. At the same time I am against it because personally I do not think the government should pay for religeous education.

But on this exact topic I feel that if we are willing to pay to some degree for education for the "Church of Scientology" (let us not really debate the religion of it because that can be a whole thread in itself) we should pay for all religions.

Personally I think they will lose the case in the end, and may have to be appealed more. My concern is the Judges will get political pressure to deny them, because it opens a huge can of worms.
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Old 02-08-2008, 06:49 AM   #2 (permalink)
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Even if you cannot deduct your children's education, what about if one decided to undergo rabbinical or seminary studies?

Shouldn't that be equally fair game? In the case of the seminarian (I can only speak from Christianity point of view) poverty is a vow in some priesthoods, so to what earnings would one take any deduction? But for the parents who sponsor the seminarian, shouldn't they too be able to enjoy the same and equal benefits of a scientologiest?
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Old 02-08-2008, 07:12 AM   #3 (permalink)
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Scientology isn't a religion, it's a cult that extorts large sums of money from its members for this "training" that is akin to brainwashing. The only way to advance in Scientology is to pay these fees. Your government shouldn't give Scientology a tax break, nor should it provide tax breaks for any other religion. If you want to go through religious "training" whether it be in a private religious law school, or in a Scientology facility, it should come out of your own pocket, not your government's through tax breaks.

A fool and their money are easily parted... But I guess the IRS has the reputation of a bunch of fools anyway.
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Old 02-11-2008, 05:54 AM   #4 (permalink)
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Quote:
Originally Posted by Ace_O_Spades
Scientology isn't a religion, it's a cult that extorts large sums of money from its members for this "training" that is akin to brainwashing. The only way to advance in Scientology is to pay these fees. Your government shouldn't give Scientology a tax break, nor should it provide tax breaks for any other religion. If you want to go through religious "training" whether it be in a private religious law school, or in a Scientology facility, it should come out of your own pocket, not your government's through tax breaks.

A fool and their money are easily parted... But I guess the IRS has the reputation of a bunch of fools anyway.
I agree I am against religious schools getting money from the government but that being said if you allow Scientology for all these years to have a tax break you have to allow everyone to receive it.

And amazingly this story is not being covered anywhere else that I can find.
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Old 02-11-2008, 09:11 AM   #5 (permalink)
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Yes, but two wrongs do not make a right.

Just because your government made a mistake and gave tax exempt status to a cult, doesn't mean it should slide down the slippery slope and provide it to everyone.

Remove the cult's exempt status, and everything goes back to being kosher.
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Old 02-11-2008, 09:24 AM   #6 (permalink)
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Quote:
Originally Posted by Ace_O_Spades
Yes, but two wrongs do not make a right.

Just because your government made a mistake and gave tax exempt status to a cult, doesn't mean it should slide down the slippery slope and provide it to everyone.

Remove the cult's exempt status, and everything goes back to being kosher.
I agree but the only way it will happen is by a case like this. If the courts force the IRS to treat everyone the same as Scientology, the IRS will do everything it can to make sure no one can get it. I know it is backwards but somehow Scientology is powerful enough that they have gotten away with this loophole for years, and this might be the kick needed to plug the loophole.
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Old 06-06-2008, 06:56 AM   #7 (permalink)
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New case it seems is about to start

NY Times
Quote:
Scientologists' Tax Break Cited in Suit Against I.R.S.
By DAVID CAY JOHNSTON

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 potential ramifications are huge, for a ruling in favor of the couple could affect the millions of Americans who send their children to religious schools of all types. At stake is whether people of all religions can deduct the cost of religious education as a charitable gift, as Scientologists are allowed to do under an officially secret 1993 agreement with the Internal Revenue Service.

That agreement came despite a 1989 Supreme Court ruling denying tax deductions for money paid in fees set by the Church of Scientology for its ''auditing'' and ''training'' services. The Supreme Court decision said the money did not qualify for the charitable gift deduction because it involved a fixed price and was akin to a fee for a service.

The couple, Michael and Marla Sklar of Los Angeles, originally took the I.R.S. to court after being denied $2,080 in 1993 deductions for religious education for their children. They lost that case, in which Mr. Sklar, a tax accountant, represented himself at trial. The couple appealed, and three judges on the Court of Appeals for the Ninth Circuit ruled against them two years ago. But one judge also took the unusual step of suggesting further litigation that would better define the issues.

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.

In this second trial, also against the I.R.S. and involving $3,209 of taxes for 1995, the Sklars are represented by Jeffrey I. Zuckerman of Curtis, Mallet-Prevost, Colt & Mosle in Washington, who is serving pro bono.

The chief tax lawyer for the Church of Scientology, Monique E. Yingling, said the Sklar lawsuit was baseless. She said that until the 1993 agreement, Scientologists were discriminated against by not being allowed to take charitable deductions.

''Scientologists now are being treated the same as everyone else, Catholics, Mormons, Hindus,'' she said, her list of religions continuing.

''Auditing and training are both Scientology religious services,'' Ms. Yingling said, that members ''participate in to advance in Scientology.''

Mr. Sklar, though, said he saw no difference between the services that Scientologists cite for their deductions and the religious training his children receive at two Hebrew schools in Los Angeles.

On their tax returns, the Sklars claimed charitable deductions equal to the portion of the Hebrew school tuition that covers the cost of religious education. He said that were he a Scientologist, it was clear he could deduct these sums.

When the Sklars tried to take the deduction, the I.R.S. sent them letters laying out the terms for Scientologists to take such deductions. The I.R.S. then denied the deductions because the Sklars did not provide receipts from the Church of Scientology.

Other than the Sklars, the only known legal challenge to the I.R.S. agreement with the Scientologists was made by the nonprofit publisher of Tax Notes magazine. It tried unsuccessfully to get a judge to make the agreement public. (Copies of what seem to be the agreement were leaked several years ago.)

''The reason I got started on this course of action was I felt that there was a precedent being set that is extremely dangerous,'' Mr. Sklar said. ''If the government is allowed to do this unchallenged, it means you have a state-favored religion, and that has never fared well for the Jews.''

Mr. Sklar said that after he pressed his claim for a charitable deduction, the I.R.S. audited him and eight clients. ''I think the I.R.S. was harassing me because before I had maybe one audit in two years,'' he said.

A subpoena for the secret agreement with the Scientologists has been quashed at the request of the Church of Scientology and the I.R.S. A fight over access to that agreement is likely to be a crucial issue on appeal, which seems certain regardless of how the trial judge rules.

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.''
I hope that everyone gets the same equal treatment in the end a big NO tax break. But the case is not about that, so I hope that everyone gets the ok in savings, and then they will have to plug the loophole for everyone.
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Old 06-07-2008, 05:03 AM   #8 (permalink)
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The Church of Scientology is like a modern day Free Masons, only they flaunt themselves in public rather than meeting in the attics and back rooms. Is there any question that they have special treatment because there are high standing members of the "Church" in the IRS? It seems pretty transparent
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Old 06-07-2008, 07:06 PM   #9 (permalink)
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If some specific religions get tax breaks, my godless self sure as shit better get some too.

Remove all the special rules and make us equal.
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Old 06-07-2008, 07:59 PM   #10 (permalink)
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Last edited by pocon1; 07-06-2008 at 11:20 AM..
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Old 06-07-2008, 08:17 PM   #11 (permalink)
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Quote:
Originally Posted by Destrox
If some specific religions get tax breaks, my godless self sure as shit better get some too.

Remove all the special rules and make us equal.
Then run a certain kind of business. There are tax breaks available, I'm sure. Organized religion isn't the only way to get tax breaks.
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Old 06-09-2008, 10:01 PM   #12 (permalink)
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Quote:
Originally Posted by Destrox
If some specific religions get tax breaks, my godless self sure as shit better get some too.

Remove all the special rules and make us equal.
Why? Atheists already claim they aren't a religion so therefore you can't claim a religious tax break. You can't have it both ways.
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Old 06-17-2008, 08:07 PM   #13 (permalink)
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Why? Atheists already claim they aren't a religion so therefore you can't claim a religious tax break. You can't have it both ways.
Religious freedom includes the ability to not worship. Atheism is treated as a religious status in the United States. (An atheist soldier in Fort Riley is currently filing suit aginst the army for not protecting his religious freedom in Iraq)

Think about this situation in reverse. If every religious person was suddenly charged an extra 10% on their taxes would that be considered just or unjust?

The point being made was that this possible future-expanded tax break would be (and currently is) smaking of religious intolerance.
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Old 06-18-2008, 10:51 AM   #14 (permalink)
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Quote:
Originally Posted by Baraka_Guru
Then run a certain kind of business. There are tax breaks available, I'm sure. Organized religion isn't the only way to get tax breaks.

But religion is the only for-profit business that is entirely tax free, at least here in the USA.
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