I previously blogged the Tax Court's decision in Sklar v. Commissioner, 125 T.C. No. 14 (12/21/05), holding that a couple's tuition and fee payments to their children's Jewish day schools are not charitable contributions because they received a substantial benefit from their payments and lacked charitable intent.
The Ninth Circuit heard oral argument in the case on Monday (the audio is available here), and today's new York Sun has a detailed article on the case and an accompanying editorial:
Judges Press IRS on Church Tax Break, by Josh Gerstein:
A Jewish couple's bid to take a tax deduction they say the IRS reserves only for members of the Church of Scientology is getting a friendly reception from a federal appeals court, increasing the possibility of a ruling that could create a tax break for taxpayers of many religions who pay tuition to religious schools.
During arguments on the case this week, three judges who ride the 9th Circuit Court of Appeals expressed deep skepticism of the IRS's position that the way the agency treats Scientologists is irrelevant to the deductions the Orthodox Jews, Michael and Marla Sklar, took for part of their children's day school tuition and for after-school classes in Jewish law.
"The view of the IRS is it can unconstitutionally violate the Constitution by establishing religion, by treating one religion more favorably than other religions in terms of what is allowed as deductions, and there can never be any judicial review of that?" Judge Kim Wardlaw asked at the court session Monday in Pasadena, Calif.
A School Case To Watch (editorial):
I's always dangerous for a newspaper to predict the outcome of a court case, but at one point, Mr. Gerstein reports, Judge Kim Wardlaw put it this way: "The view of the IRS is it can unconstitutionally violate the Constitution by establishing religion, by treating one religion more favorably than other religions in terms of what is allowed as deductions, and there can never be any judicial review of that?" A hapless lawyer for the IRS tried to argue that's not what she was saying. Snapped two judges from the bench: "That's the bottom line." Added Judge Wardlaw: "This does intrude into the Establishment Clause." ...
Our own view on school vouchers and the like is that the right place to work out a solution is in the legislatures. But one of the things the courts are made for is abuses of the state power, and it certainly is starting to look like there has been an enormous one if the Internal Revenue Service is denying Jews, or Christians, or any other religion, the right to make deductions for religious education it is permitting to another group on the grounds that it is a religion. So there is at least the possibility here that the riders of the 9th United States Circuit could simply order the IRS to grant the Sklars — and others similarly situationed — deductions for certain costs of religious education similar to what the government is secretly allowing the Scientologists. Or in other words, one could make a giant leap forward in parental choice in the education of children, all in one judicial fell swoop.
(Hat Tip: Howard Bashman.)