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Appeals Court Rules Scientology Donations Are Tax Deductible

July 2, 1987

ST. LOUIS (AP) _ A federal appeals court has ruled that donations made by Church of Scientology members as part of their religious practices can be claimed as a federal income tax deduction.

The 8th U.S. Circuit of Appeals ruled set fees paid by Scientologists during their church’s individualized religious practices are deductible charitable contributions.

The ruling is contrary to one reached recently by the 1st U.S. Circuit Court of Appeals in Boston, which decided the payments are not deductible.

A spokesman for the St. Louis-based court said test cases have arisen in judicial circuits across the nation. He said the U.S. Supreme Court would have to issue a ruling for nationwide guidelines to be established.

The opinion, released Wednesday, pointed out the U.S. Tax Court had ruled the donations were not deductible because they were required for participation in Church of Scientology practices.

The fees addressed by the three-judge panel of the court were those for doctrinal courses and ″auditing″ sessions, during which Scientologists seek awareness of an immortal spiritual being that exists independent of their body and mind.

Participation in auditing sessions and doctrinal courses is conditioned on payment of a set charge, known as a ″fixed donation,″ from a schedule of fees established by the Church for all its activities.

The tax court concluded that Scientology fixed donations are not deductible because auditing and doctrinal courses are ″general education or vocational training″ for which payments are ″somewhat comparable″ to tuition.

With the Church of Scientology characterized as a commercial operation, the tax court concluded the fixed donations ″were not voluntary transfers without consideration, but were made with the expectation of receiving a commensurate benefit in return.″

But the 8th Circuit ruled that the establishment by a church of a set ″price″ for religious participation does not change the nature of the benefit of religion to the individual or to society.

″If the Scientologist ‘prices’ were deemed to make participation in their religious services a material, financial or economic beneft such that ... payments were not contributions, then the passing of the collection plate in church would make the church service a commercial project,″ the 8th Circuit opinion said.

In ruling for the Church of Scientology, the appeals court concluded that regardless of the timing of the payment or details of a qualified church’s method of soliciting contributions from members, an amount remitted with no return other than participation in strictly spiritual and doctrinal practices is deductible.

John Carmichael, head of the Church of Scientology in New York, applauded the decision.

″They’re saying that all religions should have an opportunity to practice their faith in an atmosphere of equality as guaranteed by the Constitution,″ he said.

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