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U.S. Court of Appeals:
Religious Studies Tuition Payments Not Tax-Deductible


[For Further Information please contact Rabbi Avi Shafran at (212) 797-9000.]



LOS ANGELES -- A Los Angeles Jewish couple’s bid for the right to take a federal income tax deduction of the portion of their tuition payments that goes toward religious instruction has been turned down by the U.S. Court of Appeals for the Ninth Circuit. Agudath Israel of America, which filed a “friend of the court” brief in the couple’s appeal of a lower court decision, called the new ruling “deeply disappointing.”

Michael and Marla Sklar, the California parents, seized upon a precedent – the Internal Revenue Service’s agreement with the Church of Scientology to allow its practitioners to deduct the cost of certain religious studies and services as charitable contributions on their income tax statements – to make the claim that their children’s religious instruction in two Los Angeles yeshivos merited no less consideration. Though the U. S. Supreme Court ruled in 1989 that payments to the Church of Scientology for religious training exercises are not deductible as charitable contributions, subsequent changes to the tax code raised the possibility that they might indeed be. And, in 1993, the Internal Revenue Service reached an agreement with the church, which was later leaked to the press, in which it pledged “not to contest the deductibility of Church of Scientology fixed donations in connection with qualified religious services.”

The Sklars claimed that the portion of their payments for their children’s religious instruction should be entitled to the same standard of deductibility. A lower court rejected the couple’s claim and refused even to consider as evidence the precedent in the Scientology case, prompting the Sklars to appeal the decision to the U.S. Court of Appeals, which has now upheld the lower court’s decision. The Appeals Court essentially took the view that the Scientology policy was misguided, and that the tax code changes had not affected the deductibility of religious training exercises. It went on to criticize the I.R.S. for allowing what the High Court had determined to be an unauthorized tax deduction. Right or wrong, though, the I.R.S.’s Scientology policy was deemed to have no bearing on the Sklars’ appeal. In a concurring opinion, Judge Barry G. Silverman, subtly invoking a Jewish trope, asked: “Why is Scientology training different from all other religious training? We should decline the invitation to answer that question. The sole issue before us is whether the Sklars’ claimed deduction is valid, not whether members of the Church of Scientology have become the IRS’s chosen people.” The Appeals Court rejected the Sklars’ deduction not because it was for religious education but rather because there was no evidence presented that the Sklars’ total tuition bill exceeded the fair market value of a private secular education.

Prominent tax attorney Jay Friedman, along with Agudath Israel attorneys David Zwiebel and Mordechai Biser, authored the organization’s brief. In reaction to the decision, Mr. Zwiebel said that Agudath Israel and other interested parties were considering several different options, including the possibility of reopening the issue in another case in which there would be no confusion regarding the fair market value of a secular education. “This is an important issue,” he said, “and it deserves a full hearing on its merits.”

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