Trial opens in couple's bid for religious tax break

An Orthodox Jewish couple believe the Internal Revenue Service should allow tax deductions for their children’s religious schooling, a lawyer argued during the opening of a nonjury trial.

Michael and Marla Sklar claim that since Church of Scientology members are allowed to write off the cost of spiritual counseling sessions, they should be allowed to write off their children’s Jewish school tuition.

The Sklars brought the lawsuit after the IRS ruled their deductions were invalid. The couple’s attorney, Jeffrey Zuckerman, argued that the First Amendment prohibits the IRS from discriminating on the basis of religion.

However, Louis B. Jack, an attorney for the IRS, said a ruling in the Sklars’ favor would lead “millions of Americans to start deducting religious school tuition.”

“Existing case law is clear, deduction for religious school tuition is illegal, period,” Jack said Nov. 8 in the trial in U.S. Tax Court before Judge John O. Colvin.

Michael Sklar, an accountant, testified he amended his 1991 tax return in 1993 to claim part of his children’s tuition as a charitable contribution. “The same benefit is given to a particular sect, Scientologists, and there’s no reason it shouldn’t be applied to someone else,” he said.

He said his move was prompted by the 1993 accord reached between the IRS and the Church of Scientology that gave the church tax-exempt status and allowed members to write off the cost of spiritual counseling sessions. The agreement was not made public, but a copy was ultimately leaked to The Wall Street Journal.

A telephone call to an attorney for the Church of Scientology International was not immediately returned. The church is not a party to the lawsuit.

Sklar was allowed the deduction for several years because of confusion about whether he was a Scientologist. After a 1994 audit, the IRS disallowed the deduction. The couple sued in 1997 and lost. A three-judge panel of the 9th U.S. Circuit Court of Appeals upheld the tax court ruling in 2002 in Sklar v. Commissioner of Internal Revenue.

Sklar argued that the tuition was a charitable contribution and could be deducted because his children received an “intangible religious benefit.”

The current lawsuit was filed in 2001 over a 1995 tax return in which the Sklars claimed about $15,000 in religious deductions for four of their children. The couple would have saved about $3,200 in actual taxes if the IRS had granted the deductions.

Zuckerman said that during the trial he would show the similarities between Scientology’s religious instruction and the religious instruction received by the Sklar children.

“Every practitioner of every religion has the right to deduct religious instruction, if the Church of Scientology is allowed to do that,” Zuckerman said.

Colvin will not allow testimony in the case from the Church of Scientology, Zuckerman said.

The secret agreement between the IRS and Scientology also may or may not be admitted as evidence. Zuckerman submitted a copy of the agreement, but Jack objected.

The judge said he would consider if it could be admitted into the court record.