To most outsiders, the Church of Scientology is a funny little “religion.”

Its founder, L. Ron Hubbard, was a science fiction writer with an intensely unique imagination. From the sound bites mentioning aliens, e-meters and OT levels we hear in the news, to the passionate proclamations of its adherents, (such as the now infamous Tom Cruise testimonial leaked a few weeks back) it’s hardly a wonder why the average citizen doesn’t pay much attention to what’s really goes on behind the CoS doors. It’s too absurd to be taken seriously, right?

For the last 50 or so years, Scientology has had its share of ups and downs like any new “religion” might. One only need look at the global scrutiny Islam has been under since 9/11 to see even ancient and sacredly held beliefs can come under fire when they clash with contemporary culture.

Another great example of this is the Catholic Church, which has had to weather its own violent storm of criticism for an unacceptable and grotesque abomination within its hallowed halls. When rumors of rampant pedophilia committed by ordained priests were uncovered there was outrage. But when it was discovered the Catholic Church’s own hierarchy, all the way up to the Pope himself, knowingly allowed these criminal and vile acts to go unpunished thereby allowing them to continue, people were beyond outraged, they were stricken to their core.

Since then, the fallout has been legendary, with longtime Church officials not only being fired, but many guilty priests tried in criminal courts and sent to jail. Various diocese across the country have had to pay millions in civil claims settlements with victims of sexual abuse. Most importantly, the Catholic Church, under relentless pressure from the public at large, was forced to admit their crimes and culpability in these heinous abuses. This scandal was both embarassing and damaging to the Church’s reputation. Yet, in the end, they came out of it a more open and humble organization better capable of serving the needs of its followers.

If we were to look deeply at each of the major religions of the world, be it Christianity, Islam, Judaism, Hinduism or Buddhism, the central tenets that drive and help them grow in their numbers is a shared commonality: to serve the spiritual needs of its followers.

It’s also essential to note one other common factor within these known and established religions: the fundamental necessity of tending to the poor. While all religions request financial donations for the purposes of funding their charitable efforts in the community and the world at large, none REQUIRE it. Depending on what individual church, temple or mosque you go to, any religion seeking to maintain and grow within its faith wants your money.

This requirement to tithe is a necessary component to all religious organizations, so much so, that our own government gives a special tax exempt status to religious groups purposely based on this fundamental value of helping the poor. This is the origin of our own President Bush’s advocacy of “faith-based initiatives” we hear about when he talks about funding for those who are financially challenged. Why should the government get involved in charitable causes, when we have entire organizations built on the foundation of helping those in need? The federal government gives them a break, and they help the poor. A real win-win situation.

Unless of course, someone, or something comes along and takes advantage of this system.

So this brings us full circle. Many of Scientology’s biggest critics state it should have its religious-based tax-exempt status revoked (after many years of fighting the CoS was finally given tax shelter as a religious organization in 1993, after a secret deal was reached between the CoS and the IRS). The documents had been sealed until the Wall Street Journal posted them in 1997, see link for full disclosure of agreement.

But this may change due to a pending lawsuit in a 9th Circuit filed by a couple in Los Angeles against the IRS. From the 2004 NYT article:

The couple, Michael and Marla Sklar of Los Angeles, originally took the I.R.S. to court after being denied $2,080 in 1993 deductions for religious education for their children. They lost that case, in which Mr. Sklar, a tax accountant, represented himself at trial. The couple appealed, and three judges on the Court of Appeals for the Ninth Circuit ruled against them two years ago. But one judge also took the unusual step of suggesting further litigation that would better define the issues.

The judges in the original Sklar case said ”it appears to be true” that Scientology — founded by L. Ron Hubbard, the science fiction writer, in the 1950’s — received preferential tax treatment in violation of the First Amendment.

According to the agreement between the Church of Scientology and the IRS, Scientologists may deduct 80% of the cost of their training and materials (and of course donations to the Church, like all religions) on their tax returns, but no other religious group is allowed to take these same deductions, or at least in this case, the Orthodox Jewish Sklars aren’t allowed to deduct their children’s religious education costs from their tax return.

While to most this may seem an unfair precedent, until the Sklar’s pursued the deduction and the subsequent lawsuit, only one other group had challenged the special ruling for the CoS.

Continued from the article:

When the Sklars tried to take the deduction, the I.R.S. sent them letters laying out the terms for Scientologists to take such deductions. The I.R.S. then denied the deductions because the Sklars did not provide receipts from the Church of Scientology.

Other than the Sklars, the only known legal challenge to the I.R.S. agreement with the Scientologists was made by the nonprofit publisher of Tax Notes magazine. It tried unsuccessfully to get a judge to make the agreement public. (Copies of what seem to be the agreement were leaked several years ago.)

”The reason I got started on this course of action was I felt that there was a precedent being set that is extremely dangerous,” Mr. Sklar said. ”If the government is allowed to do this unchallenged, it means you have a state-favored religion, and that has never fared well for the Jews.”

Mr. Sklar said that after he pressed his claim for a charitable deduction, the I.R.S. audited him and eight clients. ”I think the I.R.S. was harassing me because before I had maybe one audit in two years,” he said.

A subpoena for the secret agreement with the Scientologists has been quashed at the request of the Church of Scientology and the I.R.S. A fight over access to that agreement is likely to be a crucial issue on appeal, which seems certain regardless of how the trial judge rules.

Mr. Sklar said that after more than a decade of tax breaks for Scientologists, he believed that the only proper course for the courts was to allow people of all faiths to take charitable deductions for the costs of religious education and training.

But Judge Silverman, who had urged litigation to settle the issue, took a different approach in his opinion two years ago.

”The remedy,” he wrote, ”is not to require the I.R.S. to let others claim the improper deduction.”

This is where the story left off in 2004, but it seems there has been new developments in the Sklar’s lawsuit. A New York Sun article suggests, things may be looking up for the Sklar’s:

A Jewish couple’s bid to take a tax deduction they say the Internal Revenue Service 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.

A 9th Circuit judge reviewing the case had this to say about the IRS’ stance on the Sklar’s assertions the IRS is giving an unfair advantage to Scientologists by allowing them to take tax donations for “training and materials:”

“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.

Justice Department lawyer Ellen Delsole, who represents the IRS denied that charge, stating “That is not at all what I said.”

Judge Wardlaw disagreed, as did a fellow judge on the panel, Harry Pregerson. Wardlaw followed up with, “This does intrude into the Establishment Clause.”

So we have two federal entities disagreeing with each other about whether the Treasury Department, who oversees the IRS, made special provisions for Scientologists to get tax breaks related to their spiritual training, from which all other religious entities are excluded from. When you couple this, with the fact the original agreement between CoS leader David Miscavige and the IRS was kept confidential (until documents leaked by the WSJ four years later) it does smell fishy.

To this day, the IRS refuses to acknowledge the accuracy of the leaked agreement, but they haven’t denied it either. The also refused to hand the documents over to the Sklar’s lawyers for review.

It will be curious to see how this plays out in the courts. After 10 years of auditing, investigating and looking into the CoS, in 1993, the IRS agreed to drop all pending judgments against the CoS and the organization was granted an 80% deduction rate on all fees paid for in “religious training and services.”

It’s also interesting to note the argument used by the IRS’ lawyer were that the Sklar’s requested deduction weren’t similar to those of CoS members because the deductions were taken for “basic education” for children, this however raised questions for Judge Wardlaw who asked, “How do we know that?”

The IRS’ lawyer, Ms.Delsole tried to use the argument of the dangers of setting legal precedents which the IRS would be unable to handle, due to claims from all sorts of groups claiming deductions under the agreement afforded the CoS, but the judges in the case were unwilling to accept this, saying:

“That’s your best argument: two wrongs don’t make a right,” the third judge on the case, Ronald Leighton, said. He called the agency’s refusal to explain its agreement with the Scientologists “a frustration that is hard to get beyond.”

Ms. Delsole warned the court that the IRS would have difficulty resolving tax disputes if it could be forced to justify those deals in cases involving other taxpayers. “Every person who can find out about it from any other religious group is going to come in and want the same thing and that would really tie the IRS’s hands.”

Members of racial minorities could also claim taxpayers of other races got better deals, the government lawyer said. “That’s the sort of thing that would flow from the idea that the IRS can’t settle and keep this confidential,” she added.

Mr. Zuckerman rejected that idea. “If the IRS were saying white people were entitled to a certain deduction and black people were not, why would it be such a parade of horrors for the courts to come in and say the government may not act that way?” he asked.

The case is still pending, and there have been no official judgments made, but the CoS had their own attorney, Monique Yingling, questioned the basic legitimacy of the Sklar’s lawsuit, and suggested there were no similarities between a Scientologist’s spiritual needs and those of the Sklar’s children. She also stated there was no need for the original agreement between the IRS and the Church of Scientology to be made available to the Sklar’s attorneys.

“There’s a lot of information already in the public record about this question,” she said. “I don’t know that there’s any need for any additional information…They [CoS} are not getting any kind of special treatment…The use of the word ‘training’ in Scientology is not analogous to education,” she said. “It’s just another way of advancing spiritually in Scientology.”

Jeff Zuckerman, Sklar’s lawyer, said this is the exact “distinction” they are wishing to have clarified in this case, stating, “You need to get a factual record on that, then you can make your argument.”

We will keep you posted on any new developments in this pending case.

Editor’s note: Last paragraph has been corrected, Zuckerman is the Sklar’s lawyer, not a judge.