Saturday, February 9, 2008

9th Cir. Case - Establishment of Religion?

In 1993 the Church of Scientology and the IRS settled longstanding disputes over a variety of tax issues.  The Church paid the IRS $12.5 million and the IRS agreed to stop questioning whether the Church was a religion.  The Wall Street Journal published a closing agreement that memorialized the deal and the agreement included The IRS also agreed that church members could deduct 80% of the fees paid for "religious training and services."  The Wall Street Journal published the closing agreement that memorialized the deal, but the IRS never acknowledged the accuracy of the published version.

Now a Jewish couple is in court, fighting with the IRS about the deductibility of "religious training."  The couple deducted tuition they paid to send their children to day school and for after-school training in Jewish law.  The IRS denied the deduction and the 9th Circuit Court of Appeals is now considering the case.  At oral argument last Monday the judges expressed concern and skepticism over the IRS position:

"The view of the IRS is it can unconstitutionally violate the Constitutuion 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 . . . .  "This does intrude into the Establishment Clause."

The IRS is arguing that the taxpayer parents sought to deduct general education, not specialized training of the sort Scientologists can deduct. 

Read Josh Gerstein's report of the oral argument in The New York Sun.

Thanks to Greg Reinert for finding this report.

sng

http://lawprofessors.typepad.com/nonprofit/2008/02/in-1993-the-chu.html

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