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Sklar Case Motions: Note 1: Apologies for any typos; this was rushed. Note 2: This document has been SUPPRESSED from the public, by the US Tax Court Judge John O. Colvin, who has refused public access to the Docket #395-01 file, for the duration of the Sklar v. IRS hearings, until he issues his written decision. It is reproduced here, as a public service, to coincide with anticipated public interest, from news coverage of this historic trial! Note 3: To protest this described unconstitutional conduct by the IRS (while it still relevant to current hearings), contact Mr. Jack's boss: Donald D. Korb, Chief Counsel, IRS Note 4: To put appropriate pressure upon the IRS Counsel, it is suggested that readers contact ASAP by fax, offices of those Congressional Committee members (with budgetary oversight powers over the IRS), requesting IRS Counsel's release of IRS's 1993 Church of Scientology "Secret Agreement" Documents to the Court, with the goal of a more open and fair hearing. Petitioner's Motion for Reconsideration of Three Orders: (filed November 4, 2004 in US Tax Court, Docket #395-01) Petitioner: Michael & Maria Sklar Petitioners respectfully move the Court, pursuant to Tax Court Rule 50, to reconsider three orders: 1) The unwritten order granting without explanation the motion of third-parties the Church of Scientology International ("CofS"), and Reverend Heber C. Jentzch (the President of CofS) to quash trial subpoena deuces tecum that petitioner's counsel served upon them (note 1); (note 1: CofS and Rev. Jentzch moved to quash the subpoena on March 12, 2004, and petitioners served their opposition to that motion on March 19th. The law clerk to Judge Colvin subsequently advised the attorney for petitioners, by telephone, that the Court had granted the motion to quash, and the Court referred to this during unrecorded conferences with the parties on March 24, 2004, but it appears that no written order was ever entered with respect to the third-parties motion to quash.) 2) The Order dated November 20, 2003, to the extent that it granted without explanation respondent's motion for a protective order with respect to petitioner's requests for admissions, and provides that respondent need not answer petitioner's requests for admissions nos. 1 through 78; and 3) The Order dated July 28, 2003, to the extent that it granted without explanation respondent's motion for a protective order with respect to petitioner's interrogatories and document requests, and provides that respondent need not respond to petitioner's interrogatories nos. 1 through 31 and 35, and to petitioner's document requests nos. 1 through 20 and 25. The crux of this motion is to determine whether petitioners will be permitted to prove one of their two principal arguments in this action: that IRS unconstitutionally discriminated against petitioners, in patent violation of the First Amendment, by permitting practitioners of another religion, Scientology, to deduct as charitable contributions their payments for religious education, but disallowing petitioners' deduction of their payments for religious education because they are Jews and not Scientologists. Petitioners made essentially the same argument in litigation concerning their 1994 federal income tax return. (Sklar v. Commissioner, 79 T.C.M. (CCH) 1815 (2000), aff'd 282 F.3rd 610 (9th Cir. 2002). The Tax Court did not dispute petitioner's contention that IRS may not discriminate on the basis of a taxpayer's religion, but held that "petitioners have not established that they are similarly situated with the members of the Church of Scientology who make payments for auditing." The Ninth Circuit agreed that discrimination of the type alleged by petitioners would violate the First Amendment, but expresses "serious doubt that (petitioners) are similarly situated to the persons who benefit from the Scientology closing agreement because the religious education of (petitioner's) children does not appear to be similar to the 'auditing', 'training' or other 'qualified religious services' conducted by the Church of Scientology." 282 F.3d at 619. Ultimately, however, the Court of Appeals did not rule on this point, because it concluded that petitioners had failed to prove that their tuition payments exceeded the market value of their children's secular education. Petitioner Michael Sklar, who is not a lawyer, represented petitioners 'pro se' in the litigation concerning their 1994 tax return. Unfortunately, his unfamiliarity with the laws of evidence hindered his proving what is really an incontestable fact, i.e., that 'auditing' and 'training' in CofS are jurisprudentially indistinguishable from the religious education of petitioner's children. Therefore, in the present action, counsel for petitioners set out to prove this fact in accordance with the rules of evidence. To this end, petitioners first tried to secure information and documents from respondent, who has been monitoring CofS for decades, through interrogatories and document requests. See petitioners First Set of Requests for the Production of Documents and Things, dated May 5, 2003. Respondent objected, and the Court upheld his objection, without explanation, in its Order dated July 28, 2003. Petitioners next asked respondent to admit certain facts, which would have established that 'auditing' and 'training' in CofS are jurisprudentially indistinguishable from the religious education of petitioner's children, and that in 1995 respondent permitted, and even today permits, Scientologists to deduct as charitable contributions their payments for auditing and training. See Petitioner's Request for Admissions by Respondent, dated September 3, 2003. Many of these facts were in statements about CofS that respondent made publicly, in court filings concerning CofS. Again, however, respondent objected, and the Court upheld his objection, again without explanation, in its Order dated November 20, 2003. Finally, petitioners subpoenaed CofS and Rev. Jentzsch to testify and produce documents at the trial of this action. Their testimony and documents also would prove that 'auditiing' and 'training' in CofS are jurisprudentially indistinguishable from the religious education of petitioner's children, and that respondent permits Scientologists to deduct as charitable contributions their payments for auditing and training. CofS and Rev. Jentzsch moved to quash the subpoena, and respondent moved to exclude from evidence all testimony or documents from CofS and Rev. Jentzsch. The Court quashed the subpoena, again without any explanation. Petitioners understand respondent's interest in hiding his unconstitutional conduct from public scrutiny. Petitioners understand CofS's and Rev. Jentzsch's preference not to be involved in someone else's lawsuit -- a lawsuit in which they have no interest whatsoever. The Court, however, should not protect respondent from having to account for his discrimination against practitioners of religions other than Scientology (note 3). (note 3: Petitioners also respectfully submit that if the Court is not going to permit them to present this evidence, the Court should explain its reasons. Petitioners, any reviewing court, and the public are entitled to know why respondent is being permitted to hide his unconstitutional conduct). Petitioners are entitled to present evidence that 'auditing' and 'training' in CofS are jurispridentially indistinguishable from the religious education of petitioner's children, and that in 1995 respondent permitted Scientologists to deduct as charitable contributions their payments for auditing and training, because if these facts are true, respondent may not refuse to permit petitioners to deduct as charitable contributions their payments in 1995 for their children's religious education. Accordingly, the Court should reconsider its three Orders listed above, and should (1) order CofS and Rev. Jentzsch to comply with the trial subpoena duces tecum that were served upon them by appearing on November 8, 2004, to testify and produce documents at the trial of this action; (2) order respondent to respond to petitioner's requests for admission nos. 1 through 78; (3) order respondent to respond to petitioner's interrogatories nos. 1 through 31 and 35; and (4) order respondent to respond to petitioner's document requests nos. 1 through 20 and 25. In further support of this motion, petitioners respectfully submit: 1) This action concern's Petitioner's federal income tax return for 1995. Respondent disallowed $15,000. of the $24,421. that Petitioners claimed that year as charitable contributions. Those $15,000. represented Petitioner's estimate of the cost of their children's religious education at Emek Hebrew Academy ("Emek") and Yeshiva Rav Isacsohn Torath Emeth Academy ("Torath Emek"). 2) Petitioners contend that they were entitled to claim the $15,000 as charitable contributions, and that Respondent erred in disallowing those contributions, for two reasons. 3) First, I.R.C. $170 permits taxpayers to deduct as charitable contributions payments they make to religious organizations in exchange for which the taxpayers receive only intangible religious benefits. The $15,000. at issue were payments to Emek and Torath Emeth in exchange for which Petitioners received only intangible religious benefits. 4) At Emek and Torath Emeth, religious studies (often referred to as 'Torah Studies') and secular studies are entirely separate. 5) For example, at Torath Emeth, religious studies are always in the morning, and secular studies are always in the afternoon. 6) At Emek, depending upon the grade, religious studies may be either in the morning (in which case secular studies are in the afternoon), or in the afternoon (in which case secular studies are in the morning). 7) In 1995, one of Petitioner's children also attended a daily, after- school class at Emek in Mishna, which is a part of the Talmud. Petitioners paid extra for this class, and those payments were among the charitable contributions that Respondent disallowed. 8) Petitioners deducted only their payments for their children's religious studies, not their payments for their children's secular studies. Therefore, the $15,000 were deductible as charitable contributions, because petitioners received only intangible religious benefits in exchange for those payments. 9) Petitioners' second argument as to why they were entitled to claim as charitable contributions the $15,000 that respondent disallowed is based upon a 1993 agreement between IRS and CofS, pursuant to which in 1995 (and other years before and since) respondent permitted members of the Church of Scientology to deduct as charitable contributions their payments to the Church for what the Church calls 'auditing' and 'training.' (A copy of this agreement, as published by the Wall Street Journal Online, is Exhibit B to Petitioner's Opposition to Third-Parties Motion to Quash Subpoenas and Respondent's Motion in Limine, dated March 19, 2004). (note 4) (note 4: On information and belief, IRS continues to permit members of the Church of Scientology to deduct as charitable contributions their payments for religious instruction, even though the 1993 agreement between IRS and CofS has expired by its terms). 10) According to IRS, in 'training' courses, 'individuals study the doctrines and tenets of Scientology.' Brief for the Respondent at 3, Hernandez v. Commissioner of Internal Revenue, 490 U.S. 680 (1989) (Nos. 87-963 and 87-1616). 11) According to CofS, 'In training...parishioners study the doctrine, tenets, codes, policies and practices of Scientology.' Brief for the Petitioners at 5, Hernandez v. Commissioner of Internal Revenue, 490 U.S. 680 (1989) (Nos. 87-963 and 87-1616). 12) In their religious studies, petitioner's children studied the doctrines and tenets of Judaism. 13) Thus, according to both respondent and CofS, 'training' of members of the Church of Scientology is similar to the religious studies of petitioner's children in that each involves study of the doctrines and tenets of the individual's religion. 14) As a matter of law, "unless there is a rational reason for differential treatment, similarly-situated taxpayers should be treated similarly." Oshkosh Truck Group v. United States, 123 F.3d 1477, 1481 (Fed Cir. 1997). "The Commissioner cannot tax one and not tax another without some rational basis for the difference." United States v. Kaiser 363 U.S 299, 308 (1960) (Frankfurter, J. concurring). See also International Business Machines v. United States, 343 F.2d 914, 920 (Ct. Cl. 1965): "Equality of treatment is so dominant in our understanding of justice that discretion, where it is allowed a role, must play the strictest heed." 15) Here, respondent has not even suggested any rational basis for treating members of CofS more favorably than petitioners by permitting the former to deduct as charitable contributions their payments for religious instruction while disallowing petitioner's deduction of their payments for religious instruction. 16) Therefore, petitioners, like members of CofS, were entitled to deduct their payments for religious instruction in 1995. 17) Moreover, the disparate treatment here is particularly invidious, because it involves the Government discriminating in favor of one religion against other religions. This is an intolerable situation under the First Amendment, because the Establishment Clause bars the Government from preferring one religion over another. "Government in our democracy... must be neutral in matters of religious theory, doctrine and practice. It may not be hostile to any religion or to the advocacy of no-religion; and it may not aid, foster, or promote one religion or religious theory against another...The First Amendment mandates governmental neutrality between religion and religion..." Epperson v. Arkansas, 393 U.S. 97, 103-04 (1968). Accord, Everson v. Board of Education, 330 U.S. 1, 15 (1947). "Neither a state nor the Federal Government... can pass laws which...prefer one religion over another." 18) Indeed, "ensuing governmental neutrality in matters or religion" is "perhaps the central purpose of the Establishment Clause." Giletter v. United States, 401 U.S. 437, 449-50 (1971). 19) By denying the deductibility of petitioner's payments for religious education, while permitting Scientologists to deduct their payments for religious education, IRS has violated this cardinal principal of First Amendment law. The Federal Government is preferring one religion -- the Church of Scientology --- over all others. It simply may not do this. Like members of CofS, petitioners must be permitted to claim as charitable contributions their payments in 1995 for religious instruction. (note 5). (note 5: In 1976, the Tax Court observed that "It has long been the position of this Court that our responsibility is to apply the law to the facts of the case before us and determine the tax liability of the parties before us; how the Commissioner my have treated other taxpayers has generally been considered irrelevant." Davis v. Commissioner, 65 T.C. 1014, 1022. This position should not survive Oshkosh Truck, supra. Even if it did, however, the Tax Court also held pre-Oshkosh Truck that there are limits to Respondent's freedom to discriminate between taxpayers: "To establish illegal discrimination by the Commissioner, petitioners must show more than the fact that they have been treated less favorably than other similarly situated taxpayers. Petitioners must also show that such allegedly discriminatory treatment is based upon impermissible considerations such as race, religion, or the desire to prevent the exercise of constitutional rights." Harbor Bancorp v. Commissioner, 105 T.C. 260, 286-87 (1995). Here, Respondent's discrimination against petitioners is based upon their religion, and is therefore prohibited even if Respondent does not have a general obligation to treat similarly-situated taxpayers alike). 20) Respondent does not, and could not, deny that in 1995 he permitted members of CofS to deduct as charitable contributions their payments for auditing and training. For example, in a letter to petitioners dated February 3, 1994, IRS wrote: "The settlement agreement between the Internal Revenue Service and the Church of Scientology allows individuals to claim, as charitable contributions, 80 percent of the cost (sic) of qualified religious services." (A copy of this letter is Exhibit A to Petitioner's Opposition to Third Parties' Motion to Quash Subpoenas and Respondent's Motion in Limine, dated March 19, 2004). 21) In December 1997, the Wall Street Journal Online published what it described as the full text of the agreement between respondent and CofS. "Qualified religious services" are defined to include auditing and training. (A copy of this agreement, as published by the Wall Street Journal Online, is Exhibit B to Petitioner's Opposition to Third-Parties Motion to Quash Subpoenas and Respondent's Motion in Limine, dated March 19, 2004). 22) On the other hand, Respondent also has refused to admit that it permits members of CofS to deduct their payments for auditing and training pursuant to an agreement between CofS and respondent. Respondent has so far admitted only that, "a closing agreement was entered into between the Internal Revenue Service and the Church of Scientology that settled a variety of longstanding issues between the Church and the Service, including exemption from tax..." Respondent's Response to Petitioner's Request for Admissions, dated August 6, 2001, at 2. 23) Any agreement between respondent and CofS concerning the deductability of payments for training by members of CofS plainly is relevant to petitioners contention that they are being treated differently from similarly-situated taxpayers on the basis of petitioner's religion. Therefore, petitioners sought in discovery to obtain such agreements from respondent, to secure confirmation that respondent permitted Scientologists to deduct as charitable contributions their payments for auditing and training, and to obtain from respondent information and documents to show that auditing and training are jurisprudentially similar to the religious education of petitioner's children. 24) Respondent objected, and sought a protective order, arguing inter alia, that "production of these documents or related information is barred by the confidentiality mandates of I.R.S. $6103(a)," and that the documents "are irrelevant." Respondent's Motion for Protective Order, dated June 9, 2003. 25) Respondent ignored I.R.C. $6103 (h) (4) (B), which permits disclosure in a judicial proceeding of otherwise confidential "return information" which is "directly related to the resolution of an issue in the proceeding." The agreement between CofS and respondent, and related information, is directly related to the resolution of a key issue in this proceeding, i.e., whether respondent discriminated against petitioners on the basis of their religion by disallowing their deduction of payments in 1995 for their children's religious education while permitting members of CofS to deduct as charitable contributions their payments for religious instruction. 26) Nonetheless, with respect to any agreements between IRS and CofS, and all information about CofS, the court entered the requested protective order, without explanation. Order dated July 28, 2003. 27) Petitioners then pursued another method to prove this aspect of their case. Petitioners asked respondent to admit as true a number of statements about CofS, including statements concerning auditing and training, that respondent had made publicly, such as a brief filed with the Supreme Court of the Unites States. 28) Again respondent sought a protective order, and again the Court entered a protective order without explanation. Order dated November 20, 2003. 29) Having thus failed to obtain from respondent his agreements with CofS, or documents, information or admissions sufficient to prove that auditing and training are jurispridentially indistinguishable from the religious education of petitioner's children, petitioners served trial subpoena duces tecum upon CofS and its President Rev. Jentzsch. 30) Through their testimony and documents, in conjunction with the testimony of other witnesses, petitioners can prove that auditing and training are jurisprudentially indistinguishable from the religious education of petitioner's children, and that in 1995, respondent permitted members of CofS to deduct as charitable contributions for their payments for auditing and training. 31) CofS and Rev. Jentzsch moved to quash the subpoena, and respondent made a Motion in Limine to bar any testimony of evidence concerning CofS or its agreement with respondent. 32) CofS and Rev. Jentzsch could not (and did not) claim that I.R.C. $6103(a) barred their production of CofS's agreement with IRS. Rather, they (and respondent in Motion in Limine) argued that the agreements are not relevant to any issue in this action. 33) As we have shown above, however, the agreement between IRS and CofS that permitted members of CofS in 1995 to deduct as charitable contributions their payments instruction is plainly relevant to Petitioner's contention that respondent unlawfully and unconstitutionally discriminated against Petitioners by disallowing their payments in 1995 for religious instruction because they are Jews and not Scientologists. 34) Indeed, this agreement between IRS and CofS is the foundation and keystone for Petitioner's second consideration. To argue that this agreement is not relevant to any issue in this action is simply absurd. 35) Moreover, Rev. Jentzsch's testimony concerning the nature of auditing and training, when considered in conjunction with other witnesses' testimony concerning the religious studies of petitioner's children, will demonstrate that the two are jurisprudentially indistinguishable. 36) Thus, the subpoena sought plainly relevant documents and testimony. 37) Respondent made three other arguments in support of his Motion in Limine, each of which may be summarily rejected. 38) Respondent argued that "the undue delay and waste of time required to present this evidence to the Court would outweigh any probative value the testimony and documents may have." Respondent's Motion in Limine at 5. 39) There is no reason, however, to anticipate any "undue delay and waste of time." The documents are few -- there may be only one document responsive to the subpoena -- and could be collected by CofS within minutes. Reverend Jentzsch and the CofS Custodian of Documents can therefore testify during the trial scheduled to begin on Monday, November 8th. 40) Moreover, the probative value of the responsive document(s) is definitive with respect to Petitioner's second contention. 41) Respondent next argued that the agreement between IRS and CofS is barred from evidence by Fed Rule of Evidence 408. Id at 608. Rule 408, however, only bars offering a settlement "to prove liability for or invalidity of the (underlying) claim or its amount." 42) Petitioners do not seek the agreement between IRS and CofS for this purpose. Rather, we seek it in order to prove that subsequent to the agreement, in 1995, IRS permitted members of the Church of Scientology to deduct as charitable contributions their payments for religious education. Rule 408 does not bar this use of the agreement. 43) Rule 408 also bars "evidence of conduct or statements made in compromise negotiations," but petitioners do not seek to offer any such evidence. 44) Thus, Respondent's Rule 408 argument fails, too. 45) Finally, Respondent argued that the Court should not consider Petitioner's argument that their constitutional rights have been violated. Id. at 8-9. In making this argument, Respondent turned the applicable legal principle on its head. 46) As Respondent wrote, "federal courts must exercise restraint in reaching constitutional questions if there are other dispositive grounds. Id. at 8. In the present context, this means that the Court should not rule upon Petitioner's contention that IRS unconstitutionally discriminated by disallowing the $15,000. if the Court rules in Petitioner's favor with respect to their contention that the $15,000. were deductible under I.R.C. $170, or if it rules that Respondent has a general obligation to treat Petitioners the same as Scientologists. 47) If, however, the Court rules against Petitioners on these two points, it will have to rule upon their claim of unconstitutional discrimination. Pace Respondent's argument, ruling against Petitioner's on these two points will not obviate the necessity for the Court to rule upon the constitutional issue, it will make such a ruling absolutely necessary. 48) Regardless of whether the Court will ultimately have to rule upon Petitioner's constitutional argument, Petitioners are entitled to present evidence at trial in support of that argument as long as it is possible that the Court will have to rule upon it. Otherwise, if the Court rules against Petitioners with respect to their first argument, it will have to reopen the trial to receive evidence concerning their second argument. There can be no justification for thus further delaying complete resolution of the petition in this action. 49) Furthermore, Respondent argues that Petitioners were not entitled to claim the disallowed deductions because Petitioners do not have the substantiation required by I.R.C. $170(f) with respect to some of their payments. The First Amendment, however, bars Respondent from waiving compliance with $170(f) by Scientologists, but insisting upon strict compliance by Jews who are not Scientologists. 50) Therefore, petitioner's interrogatories, document requests and requests for admission also were intended to demonstrate that respondent in 1995 permitted Scientologists to deduct as charitable contributions their payments for religious education even when they did not have the documentation specified in I.R.C. $170(f). CofS's documents and Rev. Jentzsch's testimony also should prove this. 51) For this reason, too, the proposed testimony, and Petitioner's document requests, requests for admissions and interrogatories, are all relevant to an issue in this action. 52) Finally, respondent seeks to impose a negligence penalty pursuant to I.R.C. $6662(a). In their defense against imposition of any such penalty, petitioners contend, inter alia, that they had a "reasonable basis" for claiming the deductions which were disallowed by respondent. 53) One aspect of their "reasonable basis" was Respondent's permitting members of CofS to deduct as charitable contributions their payments for religious instruction. 54) Accordingly, evidence that auditing and training in the CofS are jurisprudentially similar to the religious studies of Petitioner's children, and that Respondent in 1995 permitted members of CofS to deduct as charitable contributions their payments for auditing and training, is relevant to Petitioner's defense against assessment of a negligence penalty. 55) Therefore, for this reason, too, the testimony and documents of CofS and Rev. Jentzsch, and Petitioner's document requests, requests for admissions and interrogatories, are all relevant to an issue in this action. Conclusion For the foregoing reasons, Petitioners respectfully submit that the Court should reconsider its Orders dated July 28 and November 20, 2003, as well as its unwritten order quashing the trial subpoena duces tecum which were served upon the Church of Scientology International and Reverend Heber C. Jentzsch at Petitioner's behest, and should: (1) order the Church of Scientology International and Rev. Jentzsch to comply with the trial subpoena duces tecum that were served upon them by appearing on November 8, 2004, to testify and produce documents at the trial of this action; (2) order Respondent to respond to Petitioner's requests for admission nos. 1 through 78; (3) order Respondent to respond to Petitioner's interrogatories nos. 1 through 31 and 35; and (4) order Respondent to respond to Petitioner's document requests nos. 1 through 20 and 25. Dated: November 4, 2004 Respectfully Submitted, Jeffrey I. Zuckerman Attorney for the Petitioners NY Sun on Sklar Case Read Main Index Page Heading for more Sklar news as it happens More information on Scientology's tax status HERE - Scientology Religion or Scam! ( and links to previous Sklar case rulings )
Background Information on Scientology by then Time Magazine writer Richard Behar that summarizes what it is like to deal with Scientology in the media, the reporter developing this story for the web has endured considerable harassment by Scientology in pursuit of the truth. See some of Scientology's Scandals HERE The Washington Post's Richard Leiby's - Collection of articles about Scientology
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