Info sought on secret IRS deal with Scientology

A federal appeals court is being asked to tell the Internal Revenue Service to open up a secret deal with the Church of Scientology that reportedly allows members to deduct certain educational, or "auditing," expenses, a benefit denied members of other faiths in the United States.

The report comes from the American Bar Association Journal, which outlined the situation involving a case pending before the 9th U.S. Circuit Court of Appeals in California.

The appellants in the case at hand, in which a decision hasn't been released yet, Michael and Marla Sklar, are Orthodox Jews who took deductions for some of the private religious school tuition they paid for their children, the report said, as well as after-school classes in Jewish law.

The IRS disallowed the deductions multiple times, and a first case was closed, even though "the agency meanwhile reportedly has allowed members of the Church of Scientology, under a 1993 settlement agreement, to take substantial deductions for 'religious training and services.'"

The Journal report said the judges on the 9th Circuit panel, now hearing a second appeal from the same family, "appeared sympathetic to the couple's claim that the federal agency isn't treating members of all religious groups fairly concerning charitable deductions for educational expenses."

The report said the IRS settlement with Scientologists is confidential, but it was reported by the Wall Street Journal in 1997. Now the Sklars are seeking access to the document to substantiate their own claim that their educational deductions are similar, and valid.

"The IRS contends that the settlement agreement is a private matter, and says that it involves religious training rather than the kind of religious education for children that is at issue in the Sklars' case," the report said. "However, their counsel argues the IRS position represents unconstitutional favoritism of one religious group over another, in violation of the Establishment Clause."

The report said Judge Kim Wardlaw noted during arguments that the issue "does intrude into the Establishment Clause," and that the "bottom line"' is whether the IRS has, in fact, agreed to treat members of one religious group differently from members of another group.

"Even if the IRS did discriminate by allowing the Scientology training deductions, that doesn't necessarily mean that the Sklars will get to take similar education deductions," concluded the report. "'Then the proper course of action is a lawsuit to [put a] stop to that policy,' explains a concurring judge in the 9th Circuit's 2002 written opinion on the Sklars' earlier case."

The New York Times reported under the "officially secret" agreement, Scientologists "can deduct the cost of religious education as a charitable gift," and the question at hand is whether members of other religious groups will be allowed to do the same.

The Times reported the judges in the original dispute concluded "it appears to be true" Scientologists have been given preferential tax treatment.

In that case, Judge Barry Silverman asked, "Why is Scientology training different from all other religious training?'' There was no answer, he wrote, because the court wasn't faced with the question of whether "members of the Church of Scientology have become the IRS' chosen people."

Church spokeswoman Monique E. Yingling told the Times the 1993 agreement gave Scientologists charitable tax deductions.

"Scientologists now are being treated the same as everyone else, Catholics, Mormons, Hindus," she told the newspaper. "Auditing and training are both Scientology religious services." She said members participate in those to advance in the religion founded by science fiction writer L. Ron Hubbard.

Sklar, however, said that is his case: that there's no difference between services Scientologists cite for their deductions and the religious training his children get at two Hebrew schools.

The Sklars also said the IRS as much as admitted their contentions, because when the Sklars attempted to take the deduction the IRS sent them letters explaining the terms for Scientologists to take such deductions, but then disallowed theirs because they didn't provide receipts from the Church of Scientology.

"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," Sklar told the newspaper.

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