Tax Court Denies Scientology-Like Deduction for Jewish Courses
Date: December 21, 2005
In Hernandez v. Commissioner, 490 U.S. 680, 702 (1989), the U.S. Supreme Court held that the record did not support the taxpayer's claim of entitlement to deduct as charitable contributions payments to the Church of Scientology for what the Church of Scientology calls auditing and training. However, the parties stipulated that, pursuant to a closing agreement between the Commissioner and the Church of Scientology and certain of its constituent entities dated October 1, 1993, the Commissioner permitted members of the Church of Scientology to deduct those payments as charitable contributions.
Petitioners contend that, because of that closing agreement, the Commissioner is constitutionally required to allow a deduction for tuition paid to schools that provide religious and secular education to the extent that the tuition paid exceeds the value of the secular education. Petitioners contend that the religious education that the Jewish day schools provide in exchange for tuition is jurisprudentially indistinguishable from the auditing and training that the Church of Scientology provides to its members in exchange for a fixed fee.
At the start of this case, the IRS mistakenly thought the Sklars were deducting fees paid to Scientology, and allowed the deductions. When the IRS realized that the fees were paid for Jewish religious training, rather than Scientology courses or services, the deduction was disallowed.