L.A. couple suing IRS to win deduction for religious school tuition

Associated Press/March 31, 2004
By Gillian Flaccus

Los Angeles -- An Orthodox Jewish couple barred from writing off tuition paid to the religious school attended by their children are claiming the decision by the Internal Revenue Service violated the First Amendment.

In their lawsuit, Michael and Marla Sklar of Los Angeles contend the IRS erred by disallowing their tax deduction while permitting Scientologists to write off the cost of spiritual counseling and instruction on that religion's tenets.

"I feel this is setting a very dangerous precedent because you have a particular sect that's being favored by the state based on religion," said Michael Sklar, an accountant. "It will have enormous ramifications whatever the ruling is. I didn't do this for the $3,000 that's at stake."

The IRS told the couple they forbid the deduction because it was considered payment for service, not a charitable contribution.

The case had been scheduled to begin last week in U.S. Tax Court in Los Angeles but was delayed until October for procedural reasons.

The Sklars hope the legal action will clarify whether millions of Americans who send their children to private religious schools can deduct part or all of those costs. But legal experts said it could raise even more difficult questions about separation of church and state.

"If the Sklars prevail, they may have created a bigger problem than they've solved," said Steve Johnson, a law professor at the University of Nevada, Las Vegas. "What the U.S. Supreme Court has repeatedly said is that one of the things we're trying to avoid is excessive entanglement of the government in religion."

Monique Yingling, attorney for the Church of Scientology International, declined comment on the case because the church is not a party in the lawsuit.

The case stems from a 1993 decision by Congress allowing taxpayers to more easily write off donations that resulted in "intangible religious benefits." Examples of such contributions could include Jewish temple dues or tickets to religious events.

Under a private agreement with the IRS that year, members of the Church of Scientology were allowed to deduct contributions that lead to one-on-one spiritual counseling sessions and doctrinal courses.

The practices, called "auditing" and "training," are a crucial part of Scientologists' spiritual advancement, said Linda Simmons Hight, a church spokeswoman. She said they are deductible as "intangible religious benefits" because - counter to the Sklars' claim - they constitute spiritual guidance rather than education.

The Sklars first sued the IRS in 1997 after the agency disallowed their deductions for tuition at their children's private Jewish day schools.

Sklar argued the tuition was a charitable contribution that resulted in the religious education of his children - or what he called an "intangible religious benefit."

Sklar represented himself and lost the case. The 9th Circuit Court of Appeals later upheld the lower court's ruling.

Those courts focused on the narrow question of whether the tuition could be considered a charitable contribution. Judges found the cost of the Sklars' religious tuition didn't exceed the cost of a nonreligious private education - thus disqualifying it as a deductible donation.

"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' chosen people," wrote 9th Circuit Judge Barry D. Silverman in his concurring opinion.

"If the IRS does, in fact, give preferential treatment to members of the Church of Scientology ... then the proper course of action is a lawsuit to put a stop to that policy," he wrote

The Sklars said they don't want to stop the deductions for Scientologists. Instead, they want to clear the way for write-offs for other religions.

Their current lawsuit was filed in 2001 over a 1995 tax return in which they claimed about $15,000 in religious tuition deductions. That could have saved the couple about $3,200 in actual taxes if the IRS had granted the deductions.

The Sklars hope to prove their tuition exceeds the cost of a private nonreligious education by including fees for purely religious afternoon and Sunday classes that were left out of their first suit, said Jeffrey Zuckerman, their attorney.

"If we prevail, other taxpayers will certainly have the right to take advantage of the ruling to the extent that their situation is similar to the Sklars'," he said.