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March 24, 2004
Scientologists Get Special Tax Breaks?

A lawsuit resulting from an IRS audit has revealed that the IRS reached a secret agreement with the Church of Scientology to allow tax breaks for religious education that it denies to all other religions, the New York Times reports in today's paper:

A trial is to begin here on Wednesday morning to determine whether a Jewish couple can deduct the cost of religious education for their five children, a tax benefit they say the federal government has granted to members of just one religion, the Church of Scientology.

The potential ramifications are huge, for a ruling in favor of the couple could affect the millions of Americans who send their children to religious schools of all types. At stake is whether people of all religions can deduct the cost of religious education as a charitable gift, as Scientologists are allowed to do under an officially secret 1993 agreement with the Internal Revenue Service.

Scientologists argue that the secret agreement -- which is still under seal -- puts them on the same plane as "Catholics, Mormons, and Hindus," but no practitioners of those religions are allowed to deduct the cost of private education from their taxes. The IRS agreed to this unique benefit despite the deduction being disallowed in court in 1989. Now this couple wants the same rules applied to their costs for sending their children to Hebrew school -- and the IRS has responded by auditing them and their tax clients.

This appears to be a straightforward case of equal protection, at least as far as the courts are concerned. However, the IRS needs to answer for its 1993 secret agreement with Scientology that allowed this discriminatory behavior, and to explain what motivated them to negotiate it in the first place. Somehow, I suspect that the impetus for this secret arrangement came from somewhere outside the IRS. Hint: What changed in 1993, and who helped make that change possible?

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Posted by Ed Morrissey at March 24, 2004 6:46 AM

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