Following up on my 27 October 2005 post regarding Harriet Miers's tax returns
, Senator Baucus has introduced a bill that would require the Joint Committee on Taxation
to review the tax returns of Supreme Court nominees
. The actual tax return documents would likely be reviewed on an "eyes only" basis by Committee staffers, who would then report to the Committee whether or not the tax returns reflect compliance with the Internal Revenue Code.
On one hand, the thought of a Congressional bureaucrat being a shadow IRS agent is inherently scary because there is significant potential for abuse.
On the other hand, the taxpaying public does need to know that the judges who talk the talk about tax law compliance are also walking the walk. The rank and file IRS employee's tax returns are audited; all the more should the Supreme Court nominee's tax returns be audited.
My 27 October post insinuated that Harriet Miers withdrew her name from consideration because Baucus found the skeleton in her closet when his 12 October request for Harriet's tax returns remained unrequited
12 days later. When my wife and I did a mortgage re-fi a few months ago, we were able to come up with our back tax returns in about 12 minutes. Why couldn't Harriet do it in 12 days? I consider Sen. Baucus's proposed amendment to require the review of Supreme Court nominees' tax returns as confirmation that Harriet had some warps and glitches in her tax affairs.
Supreme Court nominations don't really happen all that often, but if Baucus's bill becomes law, then it would pre-emptively weed out all the would-be Supreme Court nominees who do not keep a kosher kitchen with their finances.
Which brings us to Michael and Marla Sklar. Like me and my wife, the Sklars send their kids to Jewish religious day schools, and pay tuition accordingly. And like me and my wife and other parents who send their kids to non-public schools (religion-based or otherwise), the Sklars are quite open to ideas for controlling the tuition costs. So Michael and Marla came up with an idea: The schools where the Sklars send their children (and, for that matter, the school where my son goes) have a dual curriculum. For half the day, the students learn secular subjects such as Math, English, Science, Social Studies, Gym, et cetera. The other half of the day (or, in the case of my son's school, the first half of the day) is devoted to Jewish religious studies.
Well, it seems that the Church of Scientology and the IRS settled their past litigation by entering into a secret sweetheart deal whereby certain payments by individual Church of Scientology members to the Church for certain "religious" training and education will qualify as charitable deductions on the members' individual income tax returns. This is noteworthy because in 1989 the Supreme Court specifically ruled in the Hernandez case
that such expenses are not deductible. Essentially, the IRS circumvented the Supreme Court, which raises all kinds of troubling issues.
It is not the purpose of this discourse to get into all the ins and outs of the Scientology faith (other than to emphatically state for the record that I personally do not subscribe to it), nor do I nor the Sklars particularly strive to bash the organization or its members or its purported tenets of faith. But like me, the Sklars take the position that if the Scientologists are entitled to a charitable deduction for religious training and education, then dammit, the tuition we pay for the religious studies portion of our childrens' tuition should be given commensurate tax treatment!
And so, the Sklars prorated the Jewish studies from their tuition payments and took the charitable deduction on their 1991, 1992 and 1993 tax returns. The IRS accepted those returns without much ado. The same deduction was disallowed by the IRS on the Sklar's 1994 tax return. The Tax Court upheld the IRS's disallowance of the deduction, and that decision was affirmed on appeal to the Ninth Circuit
As their 1994 tax return was being audited, the Sklars claimed a similar deduction on their 1995 tax return. That, too, was disallowed, and the Sklars contested it in the Tax Court. Yesterday, the Tax Court once again ruled against the Sklars
. But though the IRS won, it might have been at some cost. The IRS, which heretofore has been very evasive about the secret sweetheart deal with the Scientologists, stipulated that such an agreement exists. And while it is true that stipulations in Tax Court litigation cannot be used for any purpose other than the particular matter at bar
, the IRS will henceforth be very ill postured to deny that they made the deal with the Scientologists.
There is a good chance that the Sklars will appeal this latest Tax Court decision against them (that decision will no doubt be made by the Sklars, in consultation with their attorney). And, like other payers of tuition to private religious schools, I would be pleased to no end to see the Sklars prevail over the IRS, not only on account of the grand principle involved here, but also for mercenary reasons because I myself would stand to benefit from a similar deduction.
But Michael and Marla might not be the appropriate poster children for the religious day school tuition deduction! Michael Sklar, you see, is an account. A Certified Public Accountant. And not just an ordinary CPA, but a CPA who specifically prepares tax returns for members of the public
. And this CPA named Michael Sklar, who prepares tax returns for the public, received two extensions of time to file his own 1994 tax return. But even after getting his due date extended to October 15, 1995, Michael didn't file the return until November 16, 1995
(which may be a reason why the IRS audited it in the first place)!
There is no getting around the fact that the system is biased against the dilatory taxpayer. Michael and Marla, I would suggest, are not the ones who should be leading the charge to secure from the IRS the same courtesy it extends to the Scientologists, any more than Ted Kennedy should be the prime sponsor of legislation to punish drunken driving. What we need are people who not only have fulfilled their tuition obligations, but who have fulfilled their tax obligations as well.