Monday, May 20, 2024

Update on Iowaska Church of Healing

Iowaska Church of Healing – Inner Oasis for Wisdom, Advancement, Sacred  Knowledge, and Awakening

The last entry on Iowaska Church of Healing concerned oral arguments before the DC Circuit Court of Appeals.  I predicted that the lower court's dismissal of Iowaska's action would be affirmed because the Church is suing the wrong party.  The Church is suing the Service instead of DEA, which is still dragging its feet on Iowaska's application for a permit to use "huasca" in its religious services.  The Church is clearly entitled to the license under Supreme Court precedent.  When it obtains the license it will then be entitled to tax exemption.  But instead of suing DEA, it is suing the Service because the Service basically concedes that the Church is entitled to tax exemption after it gets the license.  Not before.  

But a settlement reached between DOJ and a different church that uses ayahuasca in its religious practices provides better odds for Iowaska all of the sudden.  From a media report: 

The government’s recent agreement with the Arizona-based Church of the the Eagle and the Condor (CEC) permits the church “to practice its ayahuasca sacrament, and to engage in related activities including importation and manufacture, on a permanent basis, subject to various anti-diversion, documentation, health and safety, inspection and security requirements,” Iowaska pointed out in its letter.  "The CEC settlement must be presumed to represent the Government’s view of the public policy enshrined in the CSA and RFRA in this context,” the organization told the court, saying it would be “irrational” to penalize Iowaska while allowing CEC—which Iowaska claims never applied for an exemption—to proceed.

In a one-page reply letter filed with the court last Friday, however, a lawyer for DOJ’s tax division called the government’s settlement with the Arizona church “irrelevant.” That church’s lawsuit, wrote DOJ attorney Kathleen Lyon “does not involve a request for tax exempt status…and is therefore irrelevant to the resolution of this case in any event.” Lyon also asserted that Iowaska’s letter to the court was filed inappropriately “and should be disregarded in its entirety.”

In a two page filing Iowaska said this:

In the CEC, the Government agreed to permit CEC to practice its ayahuasca sacrament, and to engage in related activities including importation and manufacture, on a permanent basis, subject to various anti-diversion, documentation, health and safety, inspection and security requirements. ICH has committed to similar requirements in its organizational documents and in representations to the Drug Enforcement Administration (“DEA”) and the IRS, see generally JA 167-71, 236-65, 274-81, 299-302, 317-20, 324-26, 336, 339, and it recently reiterated that commitment to the DEA, while offering to match its procedures more closely to those specified in the CEC settlement. 

The Service's response is essentially that CEC did not affirmatively seek tax exemption as Iowaska is doing and therefore the settlement is irrelevant to Iowaska.  But this seems to punish Iowaska for doing what it needn't have done -- apply for tax exemption.  As a church it was not required to do so.  It must have done so only as an act of transparency and in an effort to dispel any chance of prosecution, either of its members or its leaders. DOJ Tax doesn't care enough to get with DEA and settle this thing quickly.  From the government's response:

This letter responds to appellant Iowaska Church of Healing’s Rule 28(j) letter dated May 7, 2024, attaching a purported settlement document in Church of the Eagle and the Condor v. Garland, et al., 22-cv-01004-SRB (D. Ariz.). The settlement document is inappropriate for a Rule 28(j) submission and should be disregarded in its entirety. The document is not new authority, and “Rule 28(j) is not a procedure for supplementing the record on appeal.” Meeks v. United States, 742 F.3d 841, 844 (8th Cir. 2014); accord Keith v. Koerner, 707 F.3d 1185, 1190 (10th Cir. 2013); DiBella v. Hopkins, 403 F.3d 102, 108 (2d Cir. 2005). Regardless, Church of the Eagle and the Condor does not involve a request for tax-exempt status under § 501(c)(3) of the Internal Revenue Code and is therefore irrelevant to the resolution of this case in any event.

I have always thought two things:  (1) Iowaska sued the wrong party.  It should have sued DEA.  And (2) the Government is giving Iowaska the proverbial run-around.  The Service is denying tax exemption, as it must, for lack of a DEA permit.  But DEA is doing nothing in response to Iowaska's nearly five year old application for the permit. 

The Government's response is disingenuous at best.  Because the Government necessarily grants tax exemption to CEC by virtue of the agreement.  That's because a Church is entitled to tax exemption without ever filing a 1023.  Here, Iowaska is disadvantaged relative to CEC because it took the reasonable and extra step of applying for tax exemption when it need not have done so.  The Government's settlement with CEC necessarily grants tax exemption to CEC by operation of law because CEC is a church entitled to exemption without filing a 1023.  So the last sentence of DOJ Tax's response is silly.  

For Iowaska, this is beginning to look like no good deed going unpunished.  

darryll k. jones

https://lawprofessors.typepad.com/nonprofit/2024/05/update-on-iowaska-church-of-healing.html

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