Michael and Marla Sklar, a Jewish couple, have led a long and lonely battle against the Internal Revenue Service (IRS) over what they allege is special treatment given to the Church of Scientology. The IRS has long stonewalled inquiries over the deal with Scientology. Still viewed as a cult and not a religion in some countries, Scientology itself litigated for years against the U.S. government over its tax status. At the heart of the case is the controversy over such Scientology practices such as auditing. This case has long been fascinating and could result in an important constitutional decision.
At issue are deductions for religious education as a charitable gift. Under a secret 1993 agreement with the Internal Revenue Service, Scientologists are allowed to take a deduction reportedly for auditing and other practices. Yet, in 1989, the Supreme Court held that fees paid to the Church of Scientology for auditing and training did not qualify for charitable gift status because they were more like services.
The Sklars of Los Angeles sought to deduction $2,080 in 1993 for religious education for their children. They lost both the trial and an appeal. However, one judge suggested on appeal a new round of litigation over the preferential treatment — a rare suggestion from a federal judge. Judge Barry D. Silverman asked ”Why is Scientology training different from all other religious training? . . . members of the Church of Scientology have become the I.R.S.’s chosen people.”The Sklars sued again and, after failing on the trial level, they have received a warmer reception on the Ninth Circuit.
Judge Kim Wardlaw noted “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?”We could be seeing an important decision under the Establishment Clause. It would be highly ironic that Scientology would be viewed as the government’s “Chosen People” after being viewed as a criminal cult for so many years. It is equally ironic given the founder L. Ron Hubbard long-standing tax and fraud controversies.
The IRS has shown particularly poor judgment in this matter. Putting aside the merits of the claims of deduction (on which I am agnostic), the very notion of a secret deal and special status for a religion raises highly problematic elements in the case.
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