*1 v. COMMISSIONER OF HERNANDEZ INTERNAL REVENUE 5, 1989* June November 1988 Decided Argued No. 87-963. 87-1616, Inter- et al. v. Graham Commissioner with No. *Together Appeals for the Revenue, the United States Court on certiorari to nal Ninth Circuit. *3 J., Court, Marshall, Rehnquist, opinion delivered the of the in which J., J., JJ., White, Blackmon, Stevens, joined. and O’Connor,
C. J., Scalia, dissenting opinion, joined, post, p. filed a in which 704. Bren- JJ., part Kennedy, took no the consideration or decision nan cases. argued
Michael J. Graetz the cause and filed briefs for petitioners in both cases.
Deputy argued Solicitor General Merrill the cause for respondent in him both cases. With on the brief were Solici Attorney Deputy Fried, Rose, tor General Assistant General Wallace, Horoioitz, Alan I. Solicitor General and Robert S. Pomerance.† opinion delivered of the Court.
Justice Marshall (Code), Section 170 the Internal Revenue Code of permits taxpayer gross 26 U. S. C. to deduct from income the amount of “charitable contribution.” The Code eligible gift” defines that term as a “contribution or to certain exclusively including organized operated donees, entities granted purposes.1 We certiorari to determine † Briefs the American urging of amici curiae reversal were filed for Rockier, Greimuait, S. Congress et al. Walter Julian Paul Jewish J. *4 Stem; Berger, by Religious Marc D. and for the Council on Freedom and by. Lee Booth 1 provides pertinent part: in Section “(a) Allowance of deduction
“(1) General Rule (as any “There shall be allowed as a deduction charitable contribution de- (c)) payment year. fined subsection of which is made within the taxable A shall be allowable as a if charitable contribution deduction verified prescribed by Secretary. under regulations “(c) defined Charitable contribution section, purposes “For of this the term “charitable contribution" means a gift contribution or to or for the use of— whether as charitable deduct taxpayers may contributions of to branch churches payments made Church of Scien- (Church) in order to receive known services tology as “audit- and that such “training.” We hold ing” payments are not deductible.
I
in the
was founded
1950’s
L. Ron
Scientology
by
Hubbard.
It is
a “mother
propagated today by
church”
California
and by numerous branch churches around the world. The
mother Church
trains and
instructs
ordains
laity,
ministers,
and
new
churches,
creates
Branch
known
congregations.
as
“missions,”
“franchises” or
Scientology
provide
services at
level,
the local
under the
mother
of the
supervision
Church.
Church
Scientology
Commissioner,
823 F.
California
of
(CA9
1987),
2d
(1988).
denied,
cert.
The Church also offers members doctrinal courses known “training.” Participants study in these sessions the te- Scientology qualifications nets of and seek to attain the nec- essary Training auditing courses, to serve as auditors. like provided sequential Scientologists sessions, are levels. taught spiritual participation gains result from C., such courses. 83 T. at 577. charges
The known as a donation,” Church “fixed also “price” participants gain or a “fixed contribution,” for ac- auditing training charges cess to and sessions. These are set prices vary length schedules, forth in with a session’s example, sophistication. general level In 1972, auditing ranged auditing rates for from for a 12V2-hour $625 intensive, available, $4,250 the shortest for a 100-hourin- longest Specialized types auditing tensive, available. required higher “Integrity fixed donations: a 12/4-hour Proc- essing” auditing “Expanded $750; intensive cost a 12/4-hour auditing system Dianetics” intensive cost This man- $950. datory charges fixed is based on a central tenet of Scientol- ogy exchange,” according known as “doctrine of to which any person something pay something time a receives he must doing, Scientologist back. at 577-578. In Id., so main- spiritual tains “inflow” and “outflow” and avoids decline. (CA1 1987). 819 F. 2d proceeds generated The from ses- primary sions are the Church’s source of income. The promotes only through newspaper, Church these sessions not *6 magazine, through advertisements, and radio but also free personality tests, The lectures, free and leaflets. Church encourages, also and indeed discount, rewards with 5% ad- payment 2d, for these vance sessions. 822 F. 847. The portions prepaid auditing Church refunds often unused of or training charge. an fees, less administrative pay- in
Petitioners these consolidated cases each made auditing training ments to a branch church for or sessions. They sought payments to deduct these on their federal in- §170. come tax returns as charitable contributions under Respondent Commissioner, the head of the Internal Revenue (IRS), finding Service disallowed deductions, these that the payments were not charitable contributions within the mean- ing §of 170.3 sought
Petitioners
review
of these determinations
the
Tax
That court
Court.
consolidated for trial
cases of
petitioners in
three
No. 87-1616:
Jean
Katherine
Graham,
Maynard.
Hermann,
pe
Richard M.
and David Forbes
The
agreed
87-963,
titioner No.
L.
Robert
Hernandez,
to be
findings
bound
the consolidated
trial,
Graham
re
right
separate
serving
appeal.
to a
his
trial,
Before
stipulated
Commissioner
that the branch churches of Scien
tology
religious organizations
entitled to receive tax-
deductible charitable contributions under the relevant sec
stipulation
tions of the Code. This
isolated
the sole
statutory
auditing
training
issue whether
for
or
“contribution[s]
gift[s]”
sessions constitute
under 170.4
87-963,
Hernandez,
petitioner
L.
3 The
No.
Robert
was denied a de
$2,245
$7,338
deficiency
duction of
and was
assessed
tax
of
for 1981. 819
1987).
(CA1
87-1616,
F.
petitioners
2d
Of the
in No.
Katherine
$1,682
Jean Graham
denied a
of
was
deduction
and was assessed a tax defi
1972;
ciency of
Hermann
$316.24
Richard M.
was
a tax
denied
deduction
$3,922
1975;
deficiency
$803
and was assessed a tax
and David
$5,000
Maynard
(including carryover
Forbes
was denied a
deduction
1976)
$2,385 for
made in
tax deficiency
contributions
was assessed a
C.,
$643 for
T.
1977. 83
575-579.
stipulation
having
The
allowed
Court
the Tax
to avoid
to decide
particular
whether
branches to which
were made in these
3-day
during
held a
bench trial
which the
Tax
The
Court
documentary
taxpayers
testified and submitted
and others
describing
pro-
which the
the terms under
Church
exhibits
provides
Based on
sessions.
motes and
upheld the Commissioner’s decision.
the court
record,
this
(1984). It
first that the term “chari-
83 T.
observed
C.
synonymous
in 170 is
with the word
contribution”
table
*7
voluntary
“gift,”
“as a
which case law had defined
transfer
property by
to another without consideration
the owner
of
DeJong
quoting
580,
Commissioner,
v.
36
Id., at
therefor.”
(1961)
original),
(emphasis
aff’d,
309 F. 2d
T.
C.
(CA9 1962).
petitioners
that
had re-
It then determined
namely,
payments,
“the
for their
benefit
ceived consideration
by
provided
religious
the
services
Church of Scien-
various
rejected
tology.”
The Tax
also
the
C.,
83 T.
at 580.
Court
challenges
taxpayers’
based on the Establish-
constitutional
of the First Amendment.
ment and Free Exercise Clauses
petitioner
Appeals
for the First
The Courts of
Circuit
in Graham,
for the Ninth
case, and
Circuit
Hernandez’s
Maynard’s
affirmed. The
Hermann,
case,
and
First Circuit
§
argument
rejected
that
Hernandez’s
under
the IRS’ or-
dinary
taxpayer
inquiry into whether the
received considera-
payment
apply
return of a
his
should not
to “the
com-
tion for
opposed
an
benefit, as
to
economic
mensurate
(emphasis
original).
2d,
F.
at 1217
benefit.” 819
financial
170(c)(2)
501(c)(3)
§
tax-exempt
§
and
of the
qualified under
Code
eases
separate
In a
entitled to receive charitable contributions.
organizations
during
pendency
litigation,
the
of this
the Tax Court held that
case decided
qualify
tax-exempt organiza
mother Church
California did not
as a
the
501(c)(3)
years
through
under
for the
1972 because it had di
tion
others,
profits
conspired
impede
to
founder and
had
to
collection
verted
its
taxes,
pur
its
and had conducted almost all activities for a commercial
Commissioner,
Scientology
pose. Church
v.
83 T.
C.
of California
affirmed,
(1984).
Appeals
basing
The Court of
for the Ninth Circuit
its
solely
ground
profits
decision
on the
the Church had diverted
for the
private individuals.
It did not
of the Tax
use of
address
other bases
Commissioner,
Scientology
decision. Church
Court's
of California
(1988).
(1987),
denied,
The Ninth Circuit also found the that re- had specific quid pro quo a “measurable, ceived return ... a they for the donation” had made to the branch churches. 822 by focusing 2d, F. 848. The court reached this result auditing external “the features” of the transac- analytic technique expedient tions, an which “serves as an any inquiry payor.” more intrusive into the motives the particular exchange generated a Ibid. Whether secular or taxpayer irrelevant, benefits to the was for under “[i]t type is the transaction, structure and not received, Id., benefit that controls.” at 849. rejected taxpayers’ The Ninth Circuit also constitu- arguments. provision tional The tax deduction did not vio- late the Establishment Clause because 170is “neutral in its design” disability par- and reflects intent no “to visit on a Id., tic'ular 853. religion.” the tax- Furthermore, “have less money would to payers pay Church, to the or that the Church receive [would] less money, not rise to the [did] level of a burden on appellants’ their ability exercise reli- Id., beliefs.” at 851. gious Indeed, because the taxpayers could still make charitable donations to church, the branch they were “not to the put choice of the doctrine abandoning exchange losing government benefit, they may Ibid. have both.” Finally, court noted that the compel- interest ling governmental “the maintenance of a sound and uniform tax counseled system” against granting free Id., at 852-853. exercise exemption.
We granted certiorari, 485 U. S. (1988); 486 U. S. (1988), resolve Circuit conflict the valid concerning of charitable ity deductions for training paym ents.5 We now affirm.
II
For over 70
federal
years,
have been
taxpayers
allowed to
deduct the amount of contributions or
reli
gifts
charitable,
and other
gious,
institutions.
eleemosynary
See B. Bitt
ker,
Income,
¶
Federal Taxation of
Estates and Gifts
35.1.1
(1981)
deduction).
(tracing history
charitable
Section
the present
was enacted in
provision,
1954; it
a tax
requires
payer
the deduction to
claiming
satisfy a number of condit
ions.6 The Commissioner’s
case,
this
how-
stipulation
Commissioner,
(CA10
1988)
5 Compare Christiansen v.
6 The qualified recipient, § charitable transfer must be made to a 170(a)(1), year, § within qualified prop the taxable and consist of cash or 170(e)-(h) (1982 erty, V), §§ Supp. exceeding U. S. C. ed. not statutory inquiry has narrowed the to one such condi- ever, petitioners’ payments tion: whether or within gift[s]” meaning “contribution[s] sessions § 170. of of or lim- history
The the “contribution legislative gift” reveals that intended itation, sparse, though Congress between unrequited payments qualified differentiate re- in return made to such cipients recipients or services. the former were deemed deductible. goods Only bill, 1954 tax The House and Senate on the for ex- Reports both define “made with no ex- “gifts” ample, financial with the of a return commensurate amount pectation Sess., 1622, No. 83d 2d Rep. Cong., of the S. gift.” Sess., (1954). (1954); 1337, R. A44 H. No. 83d 2d Rep. Cong., as an both Using payments hospitals example, Reports not apply state characterization should to “a gift in consideration a an a individual to payment hospital of medical treatment for the binding obligation to indi- provide if there vidual’s It would were no employees. apply ” from the S. expectation any quo hospital. Rep. quid pro 1622, supra, added); H. 1337, No. at 196 No. (emphasis Rep. supra, at A44 (emphasis added).7
In whether a was made with ascertaining given payment “the S. No. expectation any quid pro quo,” Rep. supra, supra, A44, 196; H. No. the IRS has Rep. examined the external features of the transac customarily This has the of obviat practice advantage tion question. taxpayer’s year payment specified percentage of the income (where years. carryover permitted) subsequent 26 U. S. C. 170(d) (1982 V). 170(b), Supp. §§ ed. and actually portions Reports explicating “gifts" the term ad 7 The of these Code, 162(b), specifi closely provision which refers related dress 162(b) part, taxpayer provides, pertinent that a cally 170. Section to S expense gift” a “contribution or may as a trade or business not deduct it not for the fact that been deductible under 170 were which would have S (measured per already as a taxpayer met the maximum amount had income) 170(b) permits deducted. which to be centage *10 ing imprecise inquiries the IRS to conduct into the need for taxpayers. motivations of individual The lower courts generally analysis. g., e. See, have embraced this structural (Ct. Singer 449 F. 2d Cl. States, 413, Co. v. United 1971) cases), collecting (applying approach this and cited Endowment, v. American Bar 477 U. S. United States ¶ (1986); supra, (collecting 2 B. at 35.1.3 Bittker, see also cases). We likewise on external features United focused stipra, Endoivment, v. American Bar to resolve States taxpayers’ they partial deduc claims that were entitled to premiums organization paid insur to a charitable tions they paid coverage; taxpayers that had ance contended unusually high premiums in an effort to make contribution upheld along purchase We the Com with their of insurance. partial missioner’s of the deductions because disallowance taxpayers minimum, the ex demonstrate, had failed to at a policies prices comparable lower insurance with istence policy they purchased. In so than those of the had each doing, qua “[t]he that non of a charitable we stressed sine money property ade without contribution is a transfer of or part).8 (emphasis quate Id., consideration.” at 118 added readily apparent light understanding it In of this qualify petitioners’ payments do not to the Church gift[s].” “contributionfs] found, these the Tax or As Court quo quid pro part quintessential ex- of a were change: money, petitioners an received in return for their auditing training namely, sessions. benefit, identifiable auditing price schedules for The Church established fixed particu- training church; in each branch it calibrated sessions lengths prices auditing training particular sessions of lar sophistication; if it returned a refund and levels of unperformed; “ac- went it distributed services in American Bar Endowment who had demon taxpayer 8 The sole premium program insurance failed to show strated the existence of lower purchased expensive option at he his that he was aware of this less the time S., insurance. 477 U. at 118. persons paid money count which who had cards” on to the prepaid they yet Church could monitor what services had not *11 categorically provision auditing claimed; and it barred or training practices for free.9 Each sessions of these reveals inherently reciprocal exchange. nature of the argue analysis
Petitioners do not such a structural is inappropriate §170, under or that the external features auditing training strongly suggest transactions do not quid quo pro exchange. petitioners Indeed, the in the con- they expected solidated Graham case conceded at trial that specific to receive amounts of return payments. argue for their 822F. in- 2d, 850. Petitioners they quid pro stead that are entitled to deductions because a quo analysis inappropriate § under 170 when the benefit a taxpayer purely religious Along receives is in nature. petitioners payments lines, same claim that made for the right participate religious in a service should be auto- matically § deductible under 170. accept statutory argument
We cannot this for several rea- § support language sons. it First, finds no in the of 170. Congress could, Whether or not consistent with the Estab- provide deductibility Clause, lishment for the automatic of a payment generates religious made to a church' that either guarantees religious or benefits to a service, access that is a Congress choice has thus far declined to make. Instead, Congress specified payment organization op- has that a to an (or exclusively religious eleemosynary) pur- erated other Tax policy The Court referred to Church directive which stated: any “Price cuts are guise. forbidden under “1. BE PROCESSING MAY NEVER GIVEN AWAY BY AN ORG. Processing expensive is too to deliver. “9. ONLY FULLY STAFF FREE CONTRACTED IS AWARDED
SERVICE, AND
BY
THIS IS DONE
INVOICE AND LEGAL NOTE
WHICH BECOMES
AND PAYABLE IF THE
DUE
CONTRACT IS
C.,
577-578,
BROKEN.”
83 T.
n. 5.
poses
payment
if
is deductible
such a
ais “contribution
170(c).
gift.”
special
26 U. S. C.
The Code makes no
preference
expectation
gaining
made
Foley
benefits or
access to
service.
(CA2 1988) (Newman,
Commissioner,
844 F. 2d
J.,
cert,
dissenting),
pending, No. 88-102. The House and Sen-
Reports
legislative history
ate
and the other
of that
provision,
Congress’
offer no indication that
failure to enact
preference
oversight.
such a
was an
petitioners’ deductibility proposal
expand
Second,
would
beyond
the charitable contribution deduction far
what Con-
gress
provided.
eligible
has
Numerous forms of
plausibly
categorized
providing religious
*12
donees
could be
securing
religious
benefit or as
access to a
service. For ex-
ample,
taxpayers might regard
payments
some
their tuition
parochial
generating religious
schools as
benefit or as se-
religious
curing
payments,
access to a
service;
however,
such
long
have
been held not to be charitable contributions under
Foley, supra,
citing
Commissioner,
170.
at 98,
v.
Winters
(CA2 1972);
(noting Congress’
id.,
468 F. 2d see
at 781
legislation permitting taxpayers
refusal to enact
to deduct
parochial
payments). Taxpayers might
school tuition
make
payments
church-sponsored
similar claims about
counsel-
ing
hospitals
sessions or for medical
care
church-affiliated
might
that otherwise
be
under
that,
not
deductible. Given
reject
Amendment,
the First
the
can
valid
IRS
otherwise
taxpay-
ground
claims of
benefit
that a
alleged
sincerely
ers’
beliefs are not
held, but not on
ground
inherently irreligious,
that such beliefs are
see
(1944),
resulting
Ballard,
v.
United States
(1982). prob might petitioners raise
Finally, seek the deduction If framed entanglement church and state. between lems of payments generating a re benefits of for those as a deduction petitioners’ proposal payor, inex would ligious for the nature reviewing orably to differentiate courts the IRS force as a de “religious” If framed “secular” ones. benefits from with a reli in connection made for those duction proposal gious petitioners’ the IRS and would force service, differentiating “religious” judiciary from services into judgment pass the con no now on We need “secular” ones. inquiries, stitutionality hypothetical we do note but of such presence monitoring” “pervasive or overt for “the subtle that danger against we have which a central matter” is Aguilar guards. Felton, v. Clause held Establishment (1985); Vincent, 454 see also Widmar U. S. (“LT]he (1981) University would risk 263, 272, U. S. n. by attempting greater ‘entanglement’ its exclusion to enforce ” by open ‘religious speech’ ‘religious worship’ than speakers); nonreligious ing religious as well as forum to its Security Employment Indiana cf. v. Review Bd. Thomas (1981). Div., 707, 716 450 U. S. petitioners’ Accordingly, to the we conclude “contri sessions are not Church for statutory meaning gift[s]” bution[s] of that within the expression.10
Ill petitioners’ claims based constitutional turn now to We the Free Exercise Clause and the Establishment Clause the First Amendment. “dual payments qualify as argued here that their have not 10 Petitioners to a they therefore entitled that payments” regulations and under IRS of the the value payments exceeded partial the extent their deduction to (cit Endowment, S., at 117 477 U. American Bar
benefit received. See 104). 67-246, have no occasion We thus Cum. Bull. ing Rev. Rul. to decide this issue.
695 A denying requested argue that their deduction Petitioners respects. First, the Establishment Clause two violates §170 an denominational is said to create unconstitutional disproportionately preference by according tax status harsh by imposing religions fixed costs that raise funds to those § religious practices. 170 participation Second, in certain religion governmental entanglement allegedly with threatens religion entangle requires itself with because it the IRS prac- by engaging “supervision beliefs Peti- Brief for services.” tices” and “valuation of 44. tioners (1982), v. 456 228 Valente, in Larson U. S.
Our decision evaluating petitioners’ analytic supplies framework that, it claimed Larson teaches when is contentions. inquiry preference exists, the initial a denominational religions. facially among If law differentiates whether the apply preference proceed cus exists, we facial no such tomary three-pronged inquiry derived Clause Establishment (1971).11 Kurtzman, 403 602 Lemon v. U. S. from § analyzed, easily passes muster. constitutional Thus non- 170 draws between deductible The line which statutorily qualified organizations payments deductible among the Minnesota sects. Unlike does not differentiate facially exempted from Larson, which statute issue reporting requirements registration those state religious organizations their more than half that derived “explicit members, and deliberate 170makes no funds from religious organizations,” between different distinctions “11 second, ‘First, purpose; its legislative the statute must have a secular neither advances nor inhibits primary effect must be one that principal or Allen, (1968); finally, v. Education 392 U. S. religion, Board of governmental entanglement with “an excessive the statute not foster must Comm'n, (1970)].’” v. Lemon religion.” Walz Tax U. S. [v. S., 612-613, S., Valente, 456 U. quoted Larson 403 U. Kurtzman. at 252. *14 applying religious 23, instead to all 246-247, n. S., at
U. entities. comports Lemon First, with the test. 170 also
Section § religion allegation to that 170was born of animus no there is Scientology particular. supra, general Larson, in Cf. hostility (history Minnesota restriction reveals “get people at . . that are “Moonies” and intent to . provision running airports”). The is neutral both around design purpose. encouraging gifts primary effect of Second, 170— religious orga- including limited to entities, but not
charitable religion. It neither nor inhibit to advance § nizations—is government “[d]irect alleged ac- here that involves not practice.” endorsing religion particular religious or a tion (1985) J., v. 472 U. S. Jaffree, Wallace (O’Connor, concurring judgment). may consequence that a It be pro quo gift” quid orientation of the “contribution or re- impose disparate quirement is to burden on those charitable groups rely religious on sales of commodities or fundraising, groups a means of relative to those services as by soliciting primarily unilateral funds donations. that raise primarily having effect a secular does not vio- But statute merely “happens because it the Establishment Clause late or harmonize with the tenets of some or all reli- coincide (1961); Maryland, gions.” 420, v. 366 U. S. McGowan University States, Bob 461 U. S. see also Jones United (1983). 604, n. entanglement Third, 170threatens no excessive between pay- ascertaining whether a sure, and state. To be church part quid pro quo institution is of a trans- ment to may require from the institution the IRS to ascertain action regularity prices commodities, of its services and services and commodities are with which for such pertinent information about the transac- waived, and other regulatory which involves But routine interaction no tion. Presbyterian inquiries doctrine, into see Church
697 Mary Presbyterian Elizabeth Blue Hull Memorial v. U. S. (1969), delegation 440, of Church, 393 U. S. no state religious body, power Den, Inc., to a see Larkin v. Grendel's (1982), monitoring and no and close U. S. 116 “detailed religious bodies, administrative contact” between secular and Aguilar, 414, see 473 U. does not of itself violate the S., nonentanglement Tony and Alamo command. See Susan Secretary 290, Labor, Foundation v. 471 U. S. (1985) nonentanglement principle (stating that “does not ex empt organizations governmental religious from such secular zoning regula activity inspections building fire as recordkeeping requirements the Fair Labor tions” or the omitted). Act) (citation have observed, weAs Standards requir petitioners’ interpretation supra, 170, is 694, it ing distinguish “secular” “re the Government to between may “fraught ligious” with the services, which be benefits or entanglement Lemon, that the Constitution forbids.” sort of supra, at 620. practices religious application 170 to
Nor does
par-
monetary
place
require
value on
a
the Government
petitioners’
matter,
an initial
benefits. As
ticular
they
alleged
have
valuation,
need
claim here raises no
quid pro
fully exempt
from a
that their
analysis
portion
quo
of these
that some
—not
acquired serv-
it exceeds the value of
deductible because
(de-
at 117
S.,
Bar
477 U.
Endowment,
ice.
American
Cf.
payments) (citing,
scribing
alia,
inter
Rev.
character”
“dual
105);
supra.
10,
see n.
68-432,
Rul.
1968-2 Cum. Bull.
pay-
portion
any
of a
the need to ascertain what
event,
In
portion
purchase
a contribution
a
and what
was
ment was
ineluctably
entanglement problems
forcing
create
does not
place monetary
a
ben-
value on
the Government
good
or service
In
where the economicvalue of
efit.
cases
example,
good
comparable
or serv-
where, for
no
is elusive—
marketplace
benefit-
has eschewed
ice is sold the
IRS
—the
employed
an al-
it
Instead,
valuation.
has often
focused
(if
inquiry
any)
ternative method of valuation an
into the cost
providing
good
g.,
to the donee of
See,
or service.
e.
1972)
(CA1
Oppewal
Commissioner,
v.
468 F.
2d
(cost providing “religiously-oriented” education);
Winters
(CA2 1972)(same);
Commissioner,
DeJong
v.
F.
2d 778
(CA9 1962) (same).
Commissioner,
The
exercise
asks
has
inquiry
free
whether government
burden
a substantial
on the observation of a central
placed
if
and,
so,
belief or
whether a
practice
compelling
the burden. Hobbie v.
Un-
interest
governmental
justifies
employment Appeals
Fla.,
Comm’n
141-
U. S.
of
Employment
Thomas v. Review Bd.
Indiana
(1987);
Security Div.,
Yoder,
Wisconsin v.
S.,
717-719;
450 U.
(1972).
U. S.
It is not within the
ken
judicial
beliefs or
to a
question
centrality
particular
practices
faith, or
validity
particular
litigants’ interpretations
supra,
Thomas,
however,
do,
those creeds.
at 716. We
have
whether the
the de-
doubts
burden
alleged
imposed by
duction
on the
is a sub-
disallowance
Scientologists’ practices
taxes is
stantial one. Neither
nor the
payment
receipt
faith
Scientology
generally,
Scientology
forbidden
in connection with
does not
of taxes
proscribe
payment
United States
or
sessions
Cf.
auditing
training
specifically.
Lee,
257.
S.,
Any
imposed
455 U.
burden
that, as a
the fact
therefore derives
from
solely
denial,
less money
have
result of the deduction
adherents
*17
burden is no
This
available to
access to such sessions.
gain
indeed,
fee;
tax or
by any
different from that imposed
public
or gift”
the burden
the denial of the “contribution
imposed by
to the overall
to pale by comparison
deduction would seem
Likewise,
it is
on an adherent.
federal income tax burden
be violated by
unclear
the doctrine of
would
why
exchange
free
so
as an adherent
is
long
deduction disallowance
with “inflow”
for as
audit-
many
“outflow”
equalize
paying
2d, at
sessions as he wishes.
See 822 F.
ing
of burden on Scientol-
(questioning substantiality
(same).
2d,
819 F.
at 1222-1225
ogists);
event,
In
need
decide whether
the burden of
any
we
not
one,
for our
170 deduction is a substantial
disallowing
in Lee
that
burden
decision
establishes
even
substantial
in maintain-
would be
the “broad
interest
justified by
public
a sound tax
free of
ing
system,”
“myriad exceptions flowing
variety
religious
from a wide
beliefs.”
IV finally, petitioners’ disallowing turn, We assertion that longstanding their claimed deduction is at odds with the IRS’ practice permitting taxpayers to deduct made to other institutions connection with certain reli- gious practices. Through appellate stages litiga- of this essentially tion, this claim was framed as one of selective prosecution. Appeals The Courts of First and Ninth summarily rejected finding Circuits this claim, no evidence governmental necessary of the intentional discrimination *18 (no support showing such a claim. 822 2d, F. at 853 of “the type hostility target to a of law enforcement that would support enforcement”); a claim of selective 819 F. 2d, (no “discriminatory proved). intent” arguments petitioners Court, to this have shifted
In their They closely emphasis. now related claims. make two payments auditing and train- the IRS has accorded for First, compared payments ing disparately to to harsh treatment synagogues religious services: churches and for their other comparable auditing Recognition and train- deduction for necessary ing payments in- this administrative to cure § consistency. Congress, modifying in 170 over the Second, deductibility acquiesced pay- years, impliedly in the has payments for faiths; ments to these other because pay- indistinguishable from these other acquiesced they principle within the Con- ments, fall gress payments for services are deductible under 170. argument
Although at oral the Commissioner demurred pay- permits taxpayers to deduct IRS, fact, to whether the purchase services from other churches ments made peri- Arg. synagogues, 30-31, Tr. of the Commissioner’s Oral position rulings rather have stated the IRS’ odic revenue clearly. ruling, rents, effect, “Pew A 1971 still states: paid building periodic a church assessments, and dues fund making church, to the . all contributions . . are methods charitable contributions such are deductible as 170 of the Code.” limitations set out section within the (superseding A.R.M. 70-47, Bull. 49 Rev. Rui. Cum. (1919)). purposes Bull. 150 We also assume 2, Cum. “spec- taxpayers argument deduct allows that the IRS also Holy Day High services, for for attendance at ified Foley readings plaques.” tithes, for and for memorial torah 2d, F. 96. Commissioner, present litigation, development however, makes of the The they petitioners’ impossible claim that it us to resolve compared unjustifiably to ad- treatment have received harsh inquiry religions. in determin- The relevant herents of other ing gift” payment under whether a is “contribution payment reli- noted, whether the secures is, as we have not *19 religious services, but gious whether access to benefits or payment involved is structured as is transaction which exchange. pro qtto quid To make such a determination a testimony and received docu- heard case, the Tax Court this mentary proof terms of the to the and structure as factual from this evidence it made transactions; and findings upon its of nondeductibil- it based conclusion which ity, with and with we have held consonant a conclusion the First Amendment. theory
Perhaps inconsis- administrative because petitioners appeal, tency emerged not endeavor did on any specific other sources from the IRS or at trial to adduce The transactions. IRS’ about other faiths’ evidence merely agency’s rulings, which state the conclusions revenue deductibility apparently which never been re- as to have body, pro- by any judicial also viewed the Tax Court or other specific facts about the nature of these other faiths’ vide no simply we have facts, In the absence of such transactions. (other relying wholly illegitimate way than the one no observations) appraise experiences personal accu- to our correctly ap- rulings rately have the IRS’ revenue whether analysis respect any plied quid pro quo all of the with or a religious practices question. know, for exam- We do not truly ple, are other faiths’ services whether gener- any obligatory are or all of these services or whether “mandatory” encouraged ally provided not the whether or payment made. gift” application “contribution or standard of the
The IRS’ respect wrong faiths, may right it to these other or with be practices respect may right to some be with may wrong respect It also be that some of others. with partially appropriately de- classified as these religions respect payments.” With those “dual ductible involving religious serv- of transactions where the structure centrally congrega- individual not but is established ices analy- quid pro quo proper point tions, of reference for religion congregation, might individual not the sis be proper Only upon make we factual record could whole. reject we must record, Absent such a determinations. these *20 consistency argument.13 petitioners’ administrative congressional acquiescence for simi- claim fails Petitioners’ acqui- Congress has if that Even one assumes lar reasons. respect “[p]ew ruling build- rents, with to in the esced IRS’ periodic 70-47, ing Rev. Rui. dues,” assessments, fund ruling the IRS’ 1971 49, the fact is that 1970-1 Cum. Bull. deductibility, principle instead but of articulates no broad pay- types merely of three discrete as deductible identifies Having nature or about the no information before us ments. way payments, dis- of we have no three structure of these unifying principle, any whether cerning possible alone let payments principle embrace would such training sessions.
V judgments Courts of herein, stated For the reasons hereby Appeals are
Affirmed. Kennedy part no took Brennan Justice Justice cases. of these or decision consideration guidance answer “question and an unofficial argue that Petitioners pay deductibility of requires by an official recently issued IRS package” ruling revenue Referring to the auditing and sessions. ments for for similar rents, that “fixed states pew the brochure on Examina Explains New fully IRS Official deductible. See services” are Tax-Exempt Orga Charitable Contributions Program on tion-Education 186, 1, Executives, nizations, Special Report No. Daily Report BNA J — 6). 1988) (cited In ascertain Reply Brief for Petitioners (Sept. J-3 however, our practice, justifications for its administrative ing the IRS’ inter rulings, the unofficial rely agency’s official not on practice is to on the event, which any In the brochure pretations particular IRS officials. before the Tax Court or rely included the record petitioners was not fact, cases, and, after we was issued months Appeals in these Courts granted certiorari. O’Connor,
Justice Justice with whom joins, Scalia dissenting. today acquiesces in
The Court
the decision of the Internal
(IRS)
singular exception
Revenue Service
to manufacture a
70-year practice
allowing
its
fixed
indistin-
guishable
by petitioners
from those made
to be deducted as
charitable contributions. Because the IRS cannot constitu-
tionally
religions
be allowed to select which
will receive the
past rulings,
respectfully
benefit of
I
its
dissent.
artificiality
The cases before the Court
an air of
have
about
litigation strategy against
them that is due to the IRS’ dual
(Church).
Scientology
Church
As the Court notes,
successfully argued
ante,
at 686-687, n.
the IRS has
Scientology
tax-exempt orga
the mother Church of
was
anot
profits
nization from 1970to 1972because it
diverted
had
*21
Scientology
conspired
impede
the founder of
others,
and
to
taxes,
its
collection of
and conducted almost
of
all
its activi
purpose.
Scientology
ties for a commercial
See Church of
(1984),
Commissioner,
v.
T.
The ato sentence the Scientology Court, ante, 686, at established that atwas all religion; Scientology relevant times that each branch to which were made at all relevant times a was § 170(b)(l)(A)(i); meaning “church” within the and that “corporation” Scientology all mean- times a within the was 170(c)(2) exempt general ing from income taxation 501(a). ¶¶ App. 83 T. C. 52-53; S. C. See under U. (CA9 1987). (1984), the So- aff’d, 822 F. 2d As 575, 576 recognizes, stipulations it follows from these licitor General operates Scientology purposes’” and for that “‘charitable private puts “public the Brief the interest above interest.” supra, Respondent More- Neher, 30. also at 855. See by stipulations the that made establish over, petitioners fixed made to a tax- donations individuals organization participate exempt religious in order in re prices ligious based on “market set to services, are not moneymaking profits reap venture.” a commercial (CA8 1987), Staples F. 2d Commissioner, ap pending, however, Court, The Tax No. 87-1382. cert. stipulations. per ignored pears concluded, have It Scientology, previous opinion haps relying its Church provid “Scientology operates in a commercial manner training]. [auditing ing In fact, one of its articulated money.” goals C., 83 T. The Solicitor make 578. is to referring duplicated on numerous here, the error General has Scientology in an at nature of to the commercial occasions stipulations. negate Brief tempt See effect of Respondent 44. 13-14, 23, 25, position emphasized is not here that the IRS’
It must be
knowledge
portion
re-
upon
that a
of the
the contention
based
commercial,
secular,
is of
ceived from
*22
in
nonreligious
these
the denial of a deduction
Thus,
value.
for
to the denial of a deduction
no resemblance
cases bears
up
religious-school
secu-
the
value of the
market
tuition
Oppewal
larly
v. Commis-
education received. See
useful
(CA1 1972);
Commissioner,
sioner,
F. 2d
Winters v.
(CA2 1972);DeJong Commissioner, 309 F.
It becomes however, the “contribu- portion payment charity tion” of a to a where what is re- merely intangible, intangible ceived in return is an an not but (or, tangible) bought that a for matter that is not and sold except price in donative contexts so that the “market” against price which it can be a evaluated is market that always Suppose, example, includes donations. that the organization traditionally charitable that solicits donations on Day, exchange gives it Veterans for which the donor an poppy bearing name, imitation were a its to establish flat rule gets poppy that no one without a donation of least $10. say One would have to the “market” rate for such poppies assuredly $10, was but it would not be true that everyone “bought” poppy who made $10 no contribu- Similarly, buys prayer if tion. one seat at a break- $100 *23 quid receiving pro quo body as the food for both fast— say make no sense soul—it would that no charitable con- simply “going whatever has occurred tribution because the food) (with prayer equivalent bodily rate” for all breakfasts is may “going The latter true, well be but that rate” $100. includes a contribution. difficulty, with this and with the constitutional
Confronted necessity making among taxpay- of not irrational distinctions equality higher ers, and with the even of treat- standard of imposes, among religions ment that the First Amendment regard options practicable with the Government has two disregard distinctively quo: religious quids pro all, them years the former has chosen or to tax them all. it Over course. excep-
Congress enacted the first charitable contribution 1917, Act tion to income taxation 1917. War Revenue §1201(2), years later, in A two ch. 40 Stat. 330. mere (1919), gave its first A.R.M. 1 Cum. Bull. 150 the IRS blessing payments to to the deductions of fixed organizations as charitable contributions: assessments, pew
“[T]he church rents, distinction of hardly war- and the like collections dues, from basket ‘contributions’ ranted the act. The act reads ‘gifts.’ two all these come within It is felt that terms. simply
“In these substance it is believed they may vary. contributing although methods of form involuntarily given to be distin- Is basket collection guished envelope system, being re- from an the latter garded angle, pew rents as ‘dues’? From a technical may practice ‘per- differentiated, be but the so-called they may conjectural. sonal accommodation’ afford is It is believed that the real and not to intent is to contribute pew personal fact, hire a seat or In accommodation. basket contributors sometimes receive the same accom- informally.” modation *24 ruling “[p]ew position in 1970, that
The IRS reaffirmed its building periodic paid fund dues rents, assessments to a making church . . . are all methods of contributions to the payments church and such are deductible as charitable con- Rul. 70-47, tributions.” Rev. Cum. Bull. 49. Simi- larly, notwithstanding stipends the “form” of Mass as fixed payments specific religious services, infra, for see at 709, payments. the IRS has allowed charitable deductions of such 78-366, See Rev. Rul. 1978-2 Cum. Bull. 241. rulings, interpretation[s] [the
These which are “official of laws] tax [IRS],” Rev. Proc. 78-24, 1978-2 Cum. Bull. flatly contradict 503, 504, the Solicitor claim General’s that practice recognizing pay- there “is no administrative that exchange religious ments made for tax benefits are deduct- Respondent for ible.” Brief 16. Indeed, an Assistant Com- recently explained “question missioner of the IRS in a guidance package” tax-exempt organizations answer to payments, “[i]n contrast tuition observances regarded generally yielding private not are as benefits to the receiving only donor, is viewed as who incidental benefits attending primary when observances. The beneficiaries being general public are viewed as and members of the saying pew faith. Thus, for masses, rents, tithes, payments involving and other fixed donations for similar reli- gious fully services, deductible contributions.” IRS Offi- Explains Program cial New Examination-Education on Char- Tax-Exempt Organizations, itable Contributions BNA Daily Report Special Report Executives, No. 186, J-l, 1988). (Sept. Although guidance package may this 26, J-3 rulings, 703, not be as authoritative as IRS see ante, at n. 13, any contrary in indications it absence does reflect the continuing practice allowing IRS to adherence of the its payments for deductions for fixed services. pay- no There can be doubt that at least some of the fixed as ments which the IRS has treated charitable deductions, or taxpayers which the Court assumes the IRS would allow “inherently reciprocal,” 690-691, ante, deduct, are as ante, In as the at issue here. ex- payment pew change rents, Christians receive for their during Encyclopedic worship particular See seats services. (1979). Similarly, syna- Dictionary Religion some High gogues worship at the services for Jewish attendance Holy Days predicated upon purchase general is often Feldman, ticket or a reserved seat ticket. See J. admission Temple Management Manual, Schoen, M. Fruhauf, H. & (1984). Religious publicly p. honors such read- ch. *25 purchased periodically ing Scripture or auctioned from Syria. synagogues See H. of Jews from Morocco some Treasury Dobrinsky, Sephardic A Laws and Customs of (1986). income as nec- Mormons must tithe their obtaining “temple essary rec- but not sufficient condition to temple. right into the i. to be admitted ommend,” e., (1921); Reorga- Nephi 3 24:7-12 Mormon, The Book of See Latter-day Saints, Book of nized Church of Jesus Christ of (1978); § Corporation Pre- 106:1b Doctrine and Covenants of Latter-day siding Bishop Saints Church Jesus Christ of (1987). stipend-a A Mass Amos, 327, 330, S. n. U. priest, payment given consideration to a Catholic fixed obliged apply the Mass for the to the fruits of which he is exchange. overtones intention of the donor—has similar According theologians, the nature of the to some Catholic stipend pays pact priest a Mass and a who between a donor person One known as do ut “a bilateral contract facias. something agrees agrees give party the other to do while Stipend, Encyclopedia, Mass in return.” 13 New Catholic (1967). exchange example quid pro quo p. A finer of a be hard to formulate. would explicitly has
This is not a situation where the IRS affirmatively longstanding interpretation of reevaluated its § analyze religious all contributions 170 and decided to fixed quid pro quo is no indication what- under a standard. There 70-year practice re- has abandoned its with ever the IRS spect payments Scientologists. than made those other payments auditing In 1978, when it ruled that for and train- ing were not charitable contributions under the IRS try previous rulings did not cite—much less to reconcile—its deductibility concerning payments of other forms fixed practices. for services Rev. See Rui. 78-189, payments (equating 1978-1 Cum. Bull. 68 for with schools). paid tuition respondent attempts Nevertheless, now to reconcile his previous rulings by relying with his decision in these cases a distinction between direct and incidental benefits ex- payments change organization. made to charitable early This ruling, distinction, adumbrated as as the IRS’ 1919 recognizes may that even a deductible charitable contribution generate long certain benefits for the donor. As the bene- payment fits remain “incidental” and do not indicate that the actually “personal was made for the accommodation” of the payment respondent’s donor, the will be deductible. It is by petitioners view that the made should be not de- ductible under because the “unusual facts in these cases primarily . .. demonstrate that the were made ‘personal Respondent Spe- accommodation.’” Brief for 41. *26 cifically, rigid the Solicitor General asserts that “the connec- provision auditing training tion between the of and services payment price” quid pro quo and of the fixed indicates a rela- tionship “reflect[s] petitioners expected and the value that ” money. receive for their Id., at 16. why rigid
There is no discernible reason there is a more payment connection between and in services the practices Scientology religious practices of than in the respondent the faiths described above. Neither has ex- plained why by the benefit received a Christian who obtains pew by paying the of his or her choice a a fee, rental Jew who gains High Holy Day by purchasing entrance to services a payment necessary ticket, a Mormon who makes the fixed for temple pays stipend, recommend, a aor Catholic a who Mass “general the real benefit on the conferred is incidental Daily Report, J-3, public faith,” of the BNA members by auditing Scientologist a from received the benefit while perceived personal If difference lies the a accommodation. worship congrega- and Jews in the fact that Christians Scientologists, in a manner reminiscent tions, whereas (testimony religions, App. of Dr. Thomas see Eastern being” spiritual Love), gain the “immortal awareness of auditors, ante, sessions with them one-to-one within would raise serious Establishment 684-685, such a distinction Clause'problems. 38, 69- v. 472 U. S. Jaffree, See Wallace (1985) Lynch concurring judgment); J., (O’Connor, (1984)(concurring opinion). Donnelly, 668, 687-689 465 U. S. legitimate if it is based on the no The distinction is more worship congregational said services “would be fact that payment Respondent anyway,” a the without Brief for by particular stipend The pew adherent. tithe a rental or or religions Scientology comparison other between relevant Scientologist undergoing must be between congregation For the other. hand and the on one congregation importance religions of the the central some legal Judaism, exam- In Orthodox dimensions. achieves Scrip- performed worship ple, cannot be services certain presence publicly least of at without the read cannot be ture (1972). Minyan, p. If Encyclopaedia Judaica, men. setting, participation would occurred such while for incidental 10th man be benefit to the the personal vein, will In same the 11th? accommodationof stipend deductibility whether there turn on of Mass conversely, congregants does And to hear the Mass? other payment is an ab- a tithe a Mormon the fact that pay- temple prerequisite make that to admission to the solute regardless personal accommodation admission ment for *27 congregation? the size of cases, in these it is an understate- stance
Given the IRS’ say respect to fixed that with ment to 712
services “the line between the taxable and the immune has by unsteady been drawn hand.” v. United States Alle- an. (1944) J.). (Jackson, gheny County, 322 174, U. S. This governmental regulation “hap- is not a situation which a pens or to coincide with harmonize the tenets some or all religions,” Maryland, (1961), McGowan v. 420, U. S. but does not violate the Establishment Clause because it is neutral, founded on a secular basis. See Boh Jones Univer- (1983). sity v. States, 574, United 461 U. S. n. 30 application it involves Rather, the differential of a standard constitutionally impermissible by based on differences drawn among religions. the Government As it is best charac- such, imprimatur “put[ting] a case of terized as the Government an religion.” [all but] States, one Gillette United (1971). may U. S. That the not Government do. attempts downplay The Court the constitutional diffi- culty created the IRS’ different treatment other fixed by accepting services the Solicitor case-specific quid General’s invitation to let the IRS make pro quo (“The ap- determinations. ante, See at 702 IRS’ plication gift’ may right of the ‘contribution or standard be wrong respect may right with to these faiths, other or it be respect religious practices wrong with to some with re- others”). spect Respondent See also Brief for 41-42. As practical unprincipled ap- matter, I do think that not this proach prove helpful. will The Solicitor General was confi- enough argue making dent in his brief to that, “even without inquiry,” tithing a detailed factual Mormon does not involve quid pro quo arrangement. argu- Id., at 43-44. At oral Deputy however, ment, Solicitor General that if conceded mandatory, tithing distinguishable it was would be from the “ordinary Arg. case church Tr. dues.” of Oral 36-37. If approach suggested by the Solicitor General is so mallea- panacea indefinite, ble and it is not a be cannot trusted to against arbitrary rights secure First Amendment incursions by the Government. *28 abjure level, fundamental cannot its a more Court
On problems by responsibility to address serious constitutional converting a violation of the Establishment Clause into an consistency argument,” ante, with an “administrative ignore longstand- inadequate It has chosen to both record. ing, clearly practice, failure articulated IRS and the any respondent cogent, explanation for the to offer neutral apply practice refusal to this to the Church of Scien- IRS’ tology. pretended that Instead, the Court has whatever application in are hidden errors IRS has committed from any gaze event, rectified due time. will, its be my misapplied longstanding prac- In has its view, IRS §170 allowing under tice of charitable contributions way It has uncon- that violates Establishment Clause. stitutionally payments for the refused to allow contributions service of to be deducted as charitable way payments to other reli- it the same has allowed fixed gions statute at issue to be as the Minnesota deducted. Just (1982), discriminated Valente, in Larson v. U. S. application against of the the IRS’ Church, the Unification quo quid pro standard here—and here—discriminates Scientology. against I reverse the deci- would Church sions below.