The Church of Scientology (Church) provides "auditing" sessions
designed to increase members' spiritual awareness and training
courses at which participants study the tenets of the faith and
seek to attain the qualifications necessary to conduct auditing
sessions. Pursuant to a central tenet known as the "doctrine of
exchange," the Church has set forth schedules of mandatory fixed
prices for auditing and training sessions which vary according to a
session's length and level of sophistication, and which are paid to
branch churches. Under § 170 of the Internal Revenue Code of 1954,
petitioners each sought to deduct such payments on their federal
income tax returns as a "charitable contribution," which is defined
as a "contribution or gift" to eligible donees. After respondent
Commissioner of Internal Revenue (Commissioner or IRS) disallowed
these deductions on the ground that the payments were not
"charitable contributions," petitioners sought review in the Tax
Court. That court upheld the Commissioner's decisions and rejected
petitioners' constitutional challenges based on the Establishment
and Free Exercise Clauses of the First Amendment. The Courts of
Appeals affirmed on petitioners' separate appeals.
Held: Payments made to the Church's branch churches for
auditing and training services are not deductible charitable
contributions under § 170. Pp.
490 U. S.
689-703.
(a) Petitioners' payments are not "contribution[s] or gift[s]"
within the meaning of § 170. The legislative history of the
"contribution or gift" limitation reveals that Congress intended to
differentiate between unrequited payments to qualified recipients,
which are deductible, and payments made to such recipients with
some expectation of a
quid pro quo in terms of goods or
services, which are not deductible. To ascertain whether a given
payment was made with such an expectation, the external features of
the transaction in question must be examined. Here, external
features strongly suggest a
quid pro quo exchange of
petitioners'
Page 490 U. S. 681
money for auditing and training sessions, since the Church
established fixed prices for such sessions in each branch church;
calibrated particular prices to sessions of particular lengths and
sophistication levels; returned a refund if services went
unperformed; distributed "account cards" for monitoring prepaid,
but as-yet-unclaimed, services; and categorically barred the
provision of free sessions. Petitioners' argument that a
quid
pro quo analysis is inappropriate when a payment to a church
either generates purely religious benefits or guarantees access to
a religious service is unpersuasive, since, by its terms, § 170
makes no special preference for such payments, and its legislative
history offers no indication that this omission was an oversight.
Moreover, petitioners' deductibility proposal would expand the
charitable contribution deduction far beyond what Congress has
provided to include numerous forms of payments that otherwise are
not, or might not be, deductible. Furthermore, the proposal might
raise problems of entanglement between church and state, since the
IRS and reviewing courts would be forced to differentiate
"religious" benefits or services from "secular" ones. Pp.
490 U. S.
689-694.
(b) Disallowance of petitioners' § 170 deductions does not
violate the Establishment Clause. Petitioners' argument that § 170
creates an unconstitutional denominational preference by according
disproportionately harsh tax status to those religions that raise
funds by imposing fixed costs for participation in certain
religious practices is unpersuasive. Section 170 passes
constitutional muster, since it does not facially differentiate
among religious sects, but applies to all religious entities, and
since it satisfies the requisite three-pronged inquiry under the
Clause. First, the section is neutral both in design and purpose,
there being no allegation that it was born of animus to religion in
general or to Scientology in particular. Second, its primary effect
-- encouraging gifts to charitable entities, including but not
limited to religious organizations -- does not advance religion,
there being no allegation that it involves direct governmental
action endorsing religion or a particular religious practice. Its
primary secular effect is not rendered unconstitutional merely
because it happens to harmonize with the tenets of religions that
raise funds by soliciting unilateral donations. Third, the section
threatens no excessive entanglement between church and state.
Although the IRS must ascertain the prices of a religious
institution's services, the regularity with which such payments are
waived, and other pertinent information about the transaction, this
is merely routine regulatory interaction that does not involve the
type of inquiries into religious doctrine, delegation of state
power, or detailed monitoring and close administrative contact that
would violate the nonentanglement command. Nor does the application
of § 170 require the Government to place a monetary
Page 490 U. S. 682
value on particular religious benefits. Petitioners' claim to
the contrary raises no need for valuation, since they have alleged
only that their payments are fully exempt from a
quid pro
quo analysis -- not that some portion of those payments is
deductible because it exceeds the value of the acquired service. In
any event, the need to ascertain what portion of a payment was a
purchase and what portion was a contribution does not ineluctably
create entanglement problems, since the IRS has eschewed
benefit-focused valuation in cases where the economic value of a
good or service is elusive, and has instead employed a valuation
method which inquires into the cost (if any) to the donee of
providing the good or service. This method involves merely
administrative inquiries that, as a general matter, bear no
resemblance to the kind of governmental surveillance that poses an
intolerable risk of entanglement. Pp.
490 U. S.
695-698.
(c) Disallowance of petitioners' § 170 deductions does not
violate the Free Exercise Clause. Although it is doubtful that, as
petitioners allege, the disallowance imposes a substantial burden
on the central practice of Scientology by deterring adherents from
engaging in auditing and training sessions and by interfering with
their observance of the doctrine of exchange,
United States v.
Lee, 455 U. S. 252,
455 U. S. 260,
establishes that even a substantial burden is justified by the
broad public interest in maintaining a sound tax system, free of
myriad exceptions flowing from a wide variety of religious beliefs.
That this case involves federal income taxes, rather than the
Social Security taxes considered in
Lee, is of no
consequence. Also of no consequence is the fact that the Code
already contains some deductions and exemptions, since the guiding
principle is that a tax must be uniformly applicable to all, except
as Congress provides explicitly otherwise.
Id. at
455 U. S. 261.
Indeed, the Government's interest in avoiding an exemption is more
powerful here than in
Lee, in the sense that the claimed
exemption there stemmed from a specific doctrinal obligation not to
pay taxes, whereas there is no limitation to petitioners' argument
that they are entitled to an exemption because an incrementally
larger tax burden interferes with their religious activities. Pp.
490 U. S.
698-700.
(d) Petitioners' assertion that disallowing their claimed
deductions conflicts with the IRS' longstanding practice of
permitting taxpayers to deduct payments to other religious
institutions in connection with certain religious practices must be
rejected in the absence of any specific evidence about the nature
or structure of such other transactions. In the absence of those
facts, this Court cannot appraise accurately whether IRS revenue
rulings allowing deductions for particular religious payments
correctly applied a
quid pro quo analysis to the practices
in question, and cannot discern whether those rulings contain any
unifying
Page 490 U. S. 683
principle that would embrace auditing and training session
payments. Pp.
490 U. S.
700-703.
819 F.2d 1212 and 822 F.2d 844, affirmed.
MARSHALL, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and WHITE, BLACKMUN, and STEVENS, JJ., joined.
O'CONNOR, J., filed a dissenting opinion, in which SCALIA, J.,
joined,
post, p.
490 U. S. 704.
BRENNAN and KENNEDY, JJ., took no part in the consideration or
decision of the cases.
JUSTICE MARSHALL delivered the opinion of the Court.
Section 170 of the Internal Revenue Code of 1954 (Code), 26
U.S.C. § 170, permits a taxpayer to deduct from gross income the
amount of a "charitable contribution." The Code defines that term
as a "contribution or gift" to certain eligible donees, including
entities organized and operated exclusively for religious purposes.
[
Footnote 1] We granted
certiorari to determine
Page 490 U. S. 684
whether taxpayers may deduct as charitable contributions
payments made to branch churches of the Church of Scientology
(Church) in order to receive services known as "auditing" and
"training." We hold that such payments are not deductible.
I
Scientology was founded in the 1950's by L. Ron Hubbard. It is
propagated today by a "mother church" in California and by numerous
branch churches around the world. The mother church instructs
laity, trains and ordains ministers, and creates new congregations.
Branch churches, known as "franchises" or "missions," provide
Scientology services at the local level, under the supervision of
the mother church.
Church of Scientology of California v.
Commissioner, 823 F.2d 1310, 1313 (CA9 1987),
cert.
denied, 486 U. S. 1015
(1988).
Scientologists believe that an immortal spiritual being exists
in every person. A person becomes aware of this spiritual dimension
through a process known as "auditing." [
Footnote 2] Auditing involves a one-to-one encounter
between a participant (known as a "preclear") and a Church official
(known as
Page 490 U. S. 685
an "auditor"). An electronic device, the E-meter, helps the
auditor identify the preclear's areas of spiritual difficulty by
measuring skin responses during a question and answer session.
Although auditing sessions are conducted one on one, the content of
each session is not individually tailored. The preclear gains
spiritual awareness by progressing through sequential levels of
auditing, provided in short blocks of time known as "intensives."
83 T.C. 575, 577 (1984),
aff'd, 822 F.2d 844 (CA9
1987).
The Church also offers members doctrinal courses known as
"training." Participants in these sessions study the tenets of
Scientology and seek to attain the qualifications necessary to
serve as auditors. Training courses, like auditing sessions, are
provided in sequential levels. Scientologists are taught that
spiritual gains result from participation in such courses. 83 T.C.
at 577.
The Church charges a "fixed donation," also known as a "price"
or a "fixed contribution," for participants to gain access to
auditing and training sessions. These charges are set forth in
schedules, and prices vary with a session's length and level of
sophistication. In 1972, for example, the general rates for
auditing ranged from $625 for a 12 1/2-hour auditing intensive, the
shortest available, to $4,250 for a 100-hour intensive, the longest
available. Specialized types of auditing required higher fixed
donations: a 12 1/2-hour "Integrity Processing" auditing intensive
cost $750; a 12 1/2-hour "Expanded Dianetics" auditing intensive
cost $950. This system of mandatory fixed charges is based on a
central tenet of Scientology known as the "doctrine of exchange,"
according to which any time a person receives something, he must
pay something back.
Id. at 577-578. In so doing, a
Scientologist maintains "inflow" and "outflow," and avoids
spiritual decline. 819 F.2d 1212, 1222 (CA1 1987).
The proceeds generated from auditing and training sessions are
the Church's primary source of income. The Church promotes these
sessions not only through newspaper,
Page 490 U. S. 686
magazine, and radio advertisements, but also through free
lectures, free personality tests, and leaflets. The Church also
encourages, and indeed rewards with a 5% discount, advance payment
for these sessions. 822 F.2d at 847. The Church often refunds
unused portions of prepaid auditing or training fees, less an
administrative charge.
Petitioners in these consolidated cases each made payments to a
branch church for auditing or training sessions. They sought to
deduct these payments on their federal income tax returns as
charitable contributions under § 170. Respondent Commissioner, the
head of the Internal Revenue Service (IRS), disallowed these
deductions, finding that the payments were not charitable
contributions within the meaning of § 170. [
Footnote 3]
Petitioners sought review of these determinations in the Tax
Court. That court consolidated for trial the cases of the three
petitioners in No. 87-1616: Katherine Jean Graham, Richard M.
Hermann, and David Forbes Maynard. The petitioner in No. 87-963,
Robert L. Hernandez, agreed to be bound by the findings in the
consolidated Graham trial, reserving his right to a separate
appeal. Before trial, the Commissioner stipulated that the branch
churches of Scientology are religious organizations entitled to
receive tax-deductible charitable contributions under the relevant
sections of the Code. This stipulation isolated as the sole
statutory issue whether payments for auditing or training sessions
constitute "contribution[s] or gift[s]" under § 170. [
Footnote 4]
Page 490 U. S. 687
The Tax Court held a 3-day bench trial during which the
taxpayers and others testified and submitted documentary exhibits
describing the terms under which the Church promotes and provides
auditing and training sessions. Based on this record, the court
upheld the Commissioner's decision. 83 T.C. 575 (1984). It observed
first that the term "charitable contribution" in § 170 is
synonymous with the word "gift," which case law had defined "as a
voluntary transfer of property by the owner to another
without consideration therefor."
Id. at 580,
quoting
DeJong v. Commissioner, 36 T.C. 896, 899 (1961)
(emphasis in original),
aff'd, 309 F.2d 373 (CA9 1962). It
then determined that petitioners had received consideration for
their payments, namely, "the benefit of various religious services
provided by the Church of Scientology." 83 T.C. at 580. The Tax
Court also rejected the taxpayers' constitutional challenges based
on the Establishment and Free Exercise Clauses of the First
Amendment.
The Courts of Appeals for the First Circuit in petitioner
Hernandez's case, and for the Ninth Circuit in Graham, Hermann, and
Maynard's case, affirmed. The First Circuit rejected Hernandez's
argument that, under § 170, the IRS' ordinary inquiry into whether
the taxpayer received consideration for his payment should not
apply to "the return of a commensurate
religious benefit,
as opposed to an
economic or
financial benefit."
819 F.2d at 1217 (emphasis in original).
Page 490 U. S. 688
The court found
"no indication that Congress intended to distinguish the
religious benefits sought by Hernandez from the medical,
educational, scientific, literary, or other benefits that could
likewise provide the
quid for the
quo of a
nondeductible payment to a charitable organization."
Ibid. The court also rejected Hernandez's argument that
it was impracticable to put a value on the services he had
purchased, noting that the Church itself had "established and
advertised monetary prices" for auditing and training sessions, and
that Hernandez had not claimed that these prices misstated the cost
of providing these sessions.
Id. at 1218.
Hernandez's constitutional claims also failed. Because § 170
created no denominational preference on its face, Hernandez had
shown no Establishment Clause violation.
Id. at 1218-1221.
As for the Free Exercise Clause challenge, the court determined
that denying the deduction did not prevent Hernandez from paying
for auditing and training sessions, and thereby observing
Scientology's doctrine of exchange. Moreover, granting a tax
exemption would compromise the integrity and fairness of the tax
system.
Id. at 1221-1225.
The Ninth Circuit also found that the taxpayers had received a
"measurable, specific return . . . as a
quid pro quo for
the donation" they had made to the branch churches. 822 F.2d at
848. The court reached this result by focusing on "the external
features" of the auditing and training transactions, an analytic
technique which "serves as an expedient for any more intrusive
inquiry into the motives of the payor."
Ibid. Whether a
particular exchange generated secular or religious benefits to the
taxpayer was irrelevant, for under § 170, "[i]t is the structure of
the transaction, and not the type of benefit received, that
controls."
Id. at 849.
The Ninth Circuit also rejected the taxpayers' constitutional
arguments. The tax deduction provision did not violate the
Establishment Clause, because § 170 is "neutral in its design," and
reflects no intent "to visit a disability on a particular
Page 490 U. S. 689
religion."
Id. at 853. Furthermore, that the taxpayers
would
"have less money to pay to the Church, or that the Church
[would] receive less money, [did] not rise to the level of a burden
on appellants' ability to exercise their religious beliefs."
Id. at 851. Indeed, because the taxpayers could still
make charitable donations to the branch church, they were "not put
to the choice of abandoning the doctrine of exchange or losing the
government benefit, for they may have both."
Ibid.
Finally, the court noted that the compelling governmental interest
in "the maintenance of a sound and uniform tax system" counseled
against granting a free exercise exemption.
Id. at
852-853.
We granted certiorari, 485 U.S. 1005 (1988); 486 U.S. 1022
(1988), to resolve a Circuit conflict concerning the validity of
charitable deductions for auditing and training payments. [
Footnote 5] We now affirm.
II
For over 70 years, federal taxpayers have been allowed to deduct
the amount of contributions or gifts to charitable, religious, and
other eleemosynary institutions.
See 2 B. Bittker, Federal
Taxation of Income, Estates and Gifts � 35.1.1 (1981) (tracing
history of charitable deduction). Section 170, the present
provision, was enacted in 1954; it requires a taxpayer claiming the
deduction to satisfy a number of conditions. [
Footnote 6] The Commissioner's stipulation in this
case, however,
Page 490 U. S. 690
has narrowed the statutory inquiry to one such condition:
whether petitioners' payments for auditing and training sessions
are "contribution[s] or gift[s]" within the meaning of § 170.
The legislative history of the "contribution or gift"
limitation, though sparse, reveals that Congress intended to
differentiate between unrequited payments to qualified recipients
and payments made to such recipients in return for goods or
services. Only the former were deemed deductible. The House and
Senate Reports on the 1954 tax bill, for example, both define
"gifts" as payments "made with no expectation of a financial return
commensurate with the amount of the gift." S.Rep. No. 1622, 83d
Cong., 2d Sess., 196 (1954); H.R.Rep. No. 1337, 83d Cong., 2d
Sess., A44 (1954). Using payments to hospitals as an example, both
Reports state that the gift characterization should not apply
to
"a payment by an individual to a hospital
in consideration
of a binding obligation to provide medical treatment for the
individual's employees. It would apply only if there were no
expectation of any
quid pro quo from the hospital."
S.Rep. No. 1622,
supra, at 196 (emphasis added); H.Rep.
No. 1337,
supra, at A44 (emphasis added). [
Footnote 7]
In ascertaining whether a given payment was made with "the
expectation of any
quid pro quo," S.Rep. No. 1622,
supra, at 196; H.Rep. No. 1337,
supra, at A44,
the IRS has customarily examined the external features of the
transaction in question. This practice has the advantage of
obviating
Page 490 U. S. 691
the need for the IRS to conduct imprecise inquiries into the
motivations of individual taxpayers. The lower courts have
generally embraced this structural analysis.
See, e.g., Singer
Co. v. United States, 449 F.2d 413, 422-423 (Ct.Cl.1971)
(applying this approach and collecting cases), cited in
United
States v. American Bar Endowment, 477 U.
S. 105,
477 U. S. 117
(1986);
see also 2 B. Bittker,
supra, at � 35.1.3
(collecting cases). We likewise focused on external features in
United States v. American Bar Endowment, supra, to resolve
the taxpayers' claims that they were entitled to partial deductions
for premiums paid to a charitable organization for insurance
coverage; the taxpayers contended that they had paid unusually high
premiums in an effort to make a contribution along with their
purchase of insurance. We upheld the Commissioner's disallowance of
the partial deductions because the taxpayers had failed to
demonstrate, at a minimum, the existence of comparable insurance
policies with prices lower than those of the policy they had each
purchased. In so doing, we stressed that "[t]he
sine qua
non of a charitable contribution is a transfer of money or
property
without adequate consideration."
Id. at
477 U. S. 118
(emphasis added in part). [
Footnote
8] In light of this understanding of § 170, it is readily
apparent that petitioners' payments to the Church do not qualify as
"contribution[s] or gift[s]." As the Tax Court found, these
payments were part of a quintessential
quid pro quo
exchange: in return for their money, petitioners received an
identifiable benefit, namely, auditing and training sessions. The
Church established fixed price schedules for auditing and training
sessions in each branch church; it calibrated particular prices to
auditing or training sessions of particular lengths and levels of
sophistication; it returned a refund if auditing and training
services went unperformed; it distributed "account
Page 490 U. S. 692
cards" on which persons who had paid money to the Church could
monitor what prepaid services they had not yet claimed; and it
categorically barred provision of auditing or training sessions for
free. [
Footnote 9] Each of
these practices reveals the inherently reciprocal nature of the
exchange.
Petitioners do not argue that such a structural analysis is
inappropriate under § 170, or that the external features of the
auditing and training transactions do not strongly suggest a
quid pro quo exchange. Indeed, the petitioners in the
consolidated
Graham case conceded at trial that they
expected to receive specific amounts of auditing and training in
return for their payments. 822 F.2d at 850. Petitioners argue
instead that they are entitled to deductions because a
quid pro
quo analysis is inappropriate under § 170 when the benefit a
taxpayer receives is purely religious in nature. Along the same
lines, petitioners claim that payments made for the right to
participate in a religious service should be automatically
deductible under § 170.
We cannot accept this statutory argument for several reasons.
First, it finds no support in the language of § 170. Whether or not
Congress could, consistent with the Establishment Clause, provide
for the automatic deductibility of a payment made to a church that
either generates religious benefits or guarantees access to a
religious service, that is a choice Congress has thus far declined
to make. Instead, Congress has specified that a payment to an
organization operated exclusively for religious (or other
eleemosynary) purposes
Page 490 U. S. 693
is deductible only if such a payment is a "contribution or
gift." 26 U.S.C. § 170(c). The Code makes no special preference for
payments made in the expectation of gaining religious benefits or
access to a religious service.
Foley v. Commissioner, 844
F.2d 94, 98 (CA2 1988) (Newman, J., dissenting),
cert.
pending, No. 88-102. The House and Senate Reports on § 170,
and the other legislative history of that provision, offer no
indication that Congress' failure to enact such a preference was an
oversight.
Second, petitioners' deductibility proposal would expand the
charitable contribution deduction far beyond what Congress has
provided. Numerous forms of payments to eligible donees plausibly
could be categorized as providing a religious benefit or as
securing access to a religious service. For example, some taxpayers
might regard their tuition payments to parochial schools as
generating a religious benefit or as securing access to a religious
service; such payments, however, have long been held not to be
charitable contributions under § 170.
Foley, supra, at 98,
citing
Winters v. Commissioner, 468 F.2d 778 (CA2 1972);
see id. at 781 (noting Congress' refusal to enact
legislation permitting taxpayers to deduct parochial school tuition
payments). Taxpayers might make similar claims about payments for
church-sponsored counseling sessions or for medical care at
church-affiliated hospitals that otherwise might not be deductible.
Given that, under the First Amendment, the IRS can reject otherwise
valid claims of religious benefit only on the ground that a
taxpayers' alleged beliefs are not sincerely held, but not on the
ground that such beliefs are inherently irreligious,
see United
States v. Ballard, 322 U. S. 78
(1944), the resulting tax deductions would likely expand the
charitable contribution provision far beyond its present size. We
are loath to effect this result in the absence of supportive
congressional intent.
Cf. United States v. Lee,
455 U. S. 252,
455 U. S.
259-261 (1982).
Page 490 U. S. 694
Finally, the deduction petitioners seek might raise problems of
entanglement between church and state. If framed as a deduction for
those payments generating benefits of a religious nature for the
payor, petitioners' proposal would inexorably force the IRS and
reviewing courts to differentiate "religious" benefits from
"secular" ones. If framed as a deduction for those payments made in
connection with a religious service, petitioners' proposal would
force the IRS and the judiciary into differentiating "religious"
services from "secular" ones. We need pass no judgment now on the
constitutionality of such hypothetical inquiries, but we do note
that "pervasive monitoring" for "the subtle or overt presence of
religious matter" is a central danger against which we have held
the Establishment Clause guards.
Aguilar v. Felton,
473 U. S. 402,
473 U. S. 413
(1985);
see also Widmar v. Vincent, 454 U.
S. 263,
454 U. S. 272,
n. 11 (1981) ("[T]he University would risk greater
entanglement' by attempting to enforce its exclusion of
`religious worship' and `religious speech'" than by opening its
forum to religious as well as nonreligious speakers); cf.
Thomas v. Review Bd. of Indiana Employment Security Div.,
450 U. S. 707,
450 U. S. 716
(1981).
Accordingly, we conclude that petitioners' payments to the
Church for auditing and training sessions are not "contribution[s]
or gift[s]" within the meaning of that statutory expression.
[
Footnote 10]
III
We turn now to petitioners' constitutional claims based on the
Establishment Clause and the Free Exercise Clause of the First
Amendment.
Page 490 U. S. 695
A
Petitioners argue that denying their requested deduction
violates the Establishment Clause in two respects. First, § 170 is
said to create an unconstitutional denominational preference by
according disproportionately harsh tax status to those religions
that raise funds by imposing fixed costs for participation in
certain religious practices. Second, § 170 allegedly threatens
governmental entanglement with religion because it requires the IRS
to entangle itself with religion by engaging in "supervision of
religious beliefs and practices" and "valuation of religious
services." Brief for Petitioners 44.
Our decision in
Larson v. Valente, 456 U.
S. 228 (1982), supplies the analytic framework for
evaluating petitioners' contentions.
Larson teaches that,
when it is claimed that a denominational preference exists, the
initial inquiry is whether the law facially differentiates among
religions. If no such facial preference exists, we proceed to apply
the customary three-pronged Establishment Clause inquiry derived
from
Lemon v. Kurtzman, 403 U. S. 602
(1971). [
Footnote 11]
Thus analyzed, § 170 easily passes constitutional muster. The
line which § 170 draws between deductible and nondeductible
payments to statutorily qualified organizations does not
differentiate among sects. Unlike the Minnesota statute at issue in
Larson, which facially exempted from state registration
and reporting requirements only those religious organizations that
derived more than half their funds from members, § 170 makes no
"explicit and deliberate distinctions between different religious
organizations," 456
Page 490 U. S. 696
U.S. at
456 U. S.
246-247, n. 23, applying instead to all religious
entities.
Section 170 also comports with the
Lemon test. First,
there is no allegation that § 170 was born of animus to religion in
general or Scientology in particular.
Cf. Larson, 456 U.S.
at
456 U. S.
254-255 (history of Minnesota restriction reveals
hostility to "Moonies" and intent to "get at . . . people that are
running around airports"). The provision is neutral both in design
and purpose.
Second, the primary effect of § 170 -- encouraging gifts to
charitable entities, including but not limited to religious
organizations -- is neither to advance nor inhibit religion. It is
not alleged here that § 170 involves "[d]irect government action
endorsing religion or a particular religious practice."
Wallace
v. Jaffree, 472 U. S. 38,
472 U. S. 69
(1985) (O'CONNOR, J., concurring in judgment). It may be that a
consequence of the
quid pro quo orientation of the
"contribution or gift" requirement is to impose a disparate burden
on those charitable and religious groups that rely on sales of
commodities or services as a means of fundraising, relative to
those groups that raise funds primarily by soliciting unilateral
donations. But a statute primarily having a secular effect does not
violate the Establishment Clause merely because it "happens to
coincide or harmonize with the tenets of some or all religions."
McGowan v. Maryland, 366 U. S. 420,
366 U. S. 442
(1961);
see also Bob Jones University v. United States,
461 U. S. 574,
461 U. S. 604,
n. 30 (1983).
Third, § 170 threatens no excessive entanglement between church
and state. To be sure, ascertaining whether a payment to a
religious institution is part of a
quid pro quo
transaction may require the IRS to ascertain from the institution
the prices of its services and commodities, the regularity with
which payments for such services and commodities are waived, and
other pertinent information about the transaction. But routine
regulatory interaction which involves no inquiries into religious
doctrine,
See Presbyterian Church
in
Page 490 U. S. 697
U.S. v. Mary Elizabeth Blue Hull Memorial Presbyterian
Church, 393 U. S. 440,
393 U. S. 451
(1969), no delegation of state power to a religious body,
see
Larkin v. Grendel's Den, Inc., 459 U.
S. 116 (1982), and no "detailed monitoring and close
administrative contact" between secular and religious bodies,
see Aguilar, 473 U.S. at
473 U. S. 414,
does not of itself violate the nonentanglement command.
See
Tony and Susan Alamo Foundation v. Secretary of Labor,
471 U. S. 290,
471 U. S.
305-306 (1985) (stating that nonentanglement principle
"does not exempt religious organizations from such secular
governmental activity as fire inspections and building and zoning
regulations" or the recordkeeping requirements of the Fair Labor
Standards Act) (citation omitted). As we have observed
supra at
490 U. S. 694,
it is petitioners' interpretation of § 170, requiring the
Government to distinguish between "secular" and "religious"
benefits or services, which may be "fraught with the sort of
entanglement that the Constitution forbids."
Lemon, 403
U.S. at
403 U. S.
620.
Nor does the application of § 170 to religious practices require
the Government to place a monetary value on particular religious
benefits. As an initial matter, petitioners' claim here raises no
need for valuation, for they have alleged only that their payments
are fully exempt from a
quid pro quo analysis -- not that
some portion of these payments is deductible because it exceeds the
value of the acquired service.
Cf. American Bar Endowment,
477 U.S. at
477 U. S. 117
(describing "dual character" payments) (citing,
inter
alia, Rev.Rul. 68-432, 1968-2 Cum.Bull. 104, 105);
see n 10,
supra. In any event, the need to ascertain what portion of
a payment was a purchase and what portion was a contribution does
not ineluctably create entanglement problems by forcing the
Government to place a monetary value on a religious benefit. In
cases where the economic value of a good or service is elusive --
where, for example, no comparable good or service is sold in the
marketplace -- the IRS has eschewed benefit-focused valuation.
Instead, it has often employed as an alternative
Page 490 U. S. 698
method of valuation an inquiry into the cost (if any) to the
donee of providing the good or service.
See, e.g., Oppewal v.
Commissioner, 468 F.2d 1000, 1002 (CA1 1972) (cost of
providing a "religiously-oriented" education);
Winters v.
Commissioner, 468 F.2d 778 (CA2 1972) (same);
DeJong v.
Commissioner, 309 F.2d 373 (CA9 1962) (same). This valuation
method, while requiring qualified religious institutions to
disclose relevant information about church costs to the IRS,
involves administrative inquiries that, as a general matter,
"bear no resemblance to the kind of government surveillance the
Court has previously held to pose an intolerable risk of government
entanglement with religion."
Tony and Susan Alamo Foundation, supra, at
471 U. S. 305;
cf. Lemon, supra, at
403 U. S.
621-622 (school aid statute authorizing government
inspection of parochial school records created impermissible
"intimate and continuing relationship between church and state"
because it required State "to determine which expenditures are
religious and which are secular"). [
Footnote 12]
B
Petitioners also contend that disallowance of their § 170
deductions violates their right to the free exercise of religion by
"plac[ing] a heavy burden on the central practice of Scientology."
Brief for Petitioners 47. The precise nature of this claimed burden
is unclear, but it appears to operate in two ways. First, the
deduction disallowance is said to deter adherents from engaging in
auditing and training sessions. Second, the deduction disallowance
is said to interfere with observance of the doctrine of exchange,
which mandates equality of an adherent's "outflow" and
"inflow."
Page 490 U. S. 699
The free exercise inquiry asks whether government has placed a
substantial burden on the observation of a central religious belief
or practice and, if so, whether a compelling governmental interest
justifies the burden.
Hobbie v. Unemployment Appeals Comm'n of
Fla., 480 U. S. 136,
480 U. S.
141-142 (1987);
Thomas v. Review Bd. of Indiana
Employment Security Div., 450 U.S. at
450 U. S.
717-719;
Wisconsin v. Yoder, 406 U.
S. 205,
406 U. S.
220-221 (1972). It is not within the judicial ken to
question the centrality of particular beliefs or practices to a
faith, or the validity of particular litigants' interpretations of
those creeds.
Thomas, supra, at
450 U. S. 716.
We do, however, have doubts whether the alleged burden imposed by
the deduction disallowance on the Scientologists' practices is a
substantial one. Neither the payment nor the receipt of taxes is
forbidden by the Scientology faith generally, and Scientology does
not proscribe the payment of taxes in connection with auditing or
training sessions specifically.
Cf. United States v. Lee,
455 U. S. 252,
455 U. S. 257
(1982). Any burden imposed on auditing or training therefore
derives solely from the fact that, as a result of the deduction
denial, adherents have less money available to gain access to such
sessions. This burden is no different from that imposed by any
public tax or fee; indeed, the burden imposed by the denial of the
"contribution or gift" deduction would seem to pale by comparison
to the overall federal income tax burden on an adherent. Likewise,
it is unclear why the doctrine of exchange would be violated by a
deduction disallowance so long as an adherent is free to equalize
"outflow" with "inflow" by paying for as many auditing and training
sessions as he wishes.
See 822 F.2d at 850-853
(questioning substantiality of burden on Scientologists); 819 F.2d
at 1222-1225 (same).
In any event, we need not decide whether the burden of
disallowing the § 170 deduction is a substantial one, for our
decision in
Lee establishes that even a substantial burden
would be justified by the "broad public interest in maintaining a
sound tax system," free of "myriad exceptions flowing
Page 490 U. S. 700
from a wide variety of religious beliefs." 455 U.S. at
455 U. S. 260.
In
Lee, we rejected an Amish taxpayer's claim that the
Free Exercise Clause commanded his exemption from Social Security
tax obligations, noting that "[t]he tax system could not function
if denominations were allowed to challenge the tax system" on the
ground that it operated "in a manner that violates their religious
belief."
Ibid. That these cases involve federal income
taxes, not the Social Security system, is of no consequence.
Ibid. The fact that Congress has already crafted some
deductions and exemptions in the Code also is of no consequence,
for the guiding principle is that a tax "must be uniformly
applicable to all, except as
Congress provides explicitly
otherwise."
Id. at
455 U. S. 261
(emphasis added). Indeed, in one respect, the Government's interest
in avoiding an exemption is more powerful here than in
Lee; the claimed exemption in
Lee stemmed from a
specific doctrinal obligation not to pay taxes, whereas
petitioners' claimed exemption stems from the contention that an
incrementally larger tax burden interferes with their religious
activities. This argument knows no limitation. We accordingly hold
that petitioners' free exercise challenge is without merit.
IV
We turn, finally, to petitioners' assertion that disallowing
their claimed deduction is at odds with the IRS' longstanding
practice of permitting taxpayers to deduct payments made to other
religious institutions in connection with certain religious
practices. Through the appellate stages of this litigation, this
claim was framed essentially as one of selective prosecution. The
Courts of Appeals for the First and Ninth Circuits summarily
rejected this claim, finding no evidence of the intentional
governmental discrimination necessary to support such a claim. 822
F.2d at 853 (no showing of "the type of hostility to a target of
law enforcement that would support a claim of selective
enforcement"); 819 F.2d at 1223 (no "discriminatory intent"
proved).
Page 490 U. S. 701
In their arguments to this Court, petitioners have shifted
emphasis. They now make two closely related claims. First, the IRS
has accorded payments for auditing and training disparately harsh
treatment compared to payments to other churches and synagogues for
their religious services: recognition of a comparable deduction for
auditing and training payments is necessary to cure this
administrative inconsistency. Second, Congress, in modifying § 170
over the years, has impliedly acquiesced in the deductibility of
payments to these other faiths; because payments for auditing and
training are indistinguishable from these other payments, they fall
within the principle acquiesced in by Congress that payments for
religious services are deductible under § 170.
Although the Commissioner demurred at oral argument as to
whether the IRS, in fact, permits taxpayers to deduct payments made
to purchase services from other churches and synagogues, Tr. of
Oral Arg. 30-31, the Commissioner's periodic revenue rulings have
stated the IRS' position rather clearly. A 1971 ruling, still in
effect, states:
"Pew rents, building fund assessments, and periodic dues paid to
a church . . . are all methods of making contributions to the
church, and such payments are deductible as charitable
contributions within the limitations set out in section 170 of the
Code."
Rev.Rul. 70-47, 1970-1 Cum.Bull. 49 (superseding A.R.M. 2,
Cum.Bull. 150 (1919)). We also assume for purposes of argument that
the IRS also allows taxpayers to deduct "specified payments for
attendance at High Holy Day services, for tithes, for torah
readings and for memorial plaques."
Foley v. Commissioner,
844 F.2d at 94, 96.
The development of the present litigation, however, makes it
impossible for us to resolve petitioners' claim that they have
received unjustifiably harsh treatment compared to adherents of
other religions. The relevant inquiry in determining whether a
payment is a "contribution or gift" under § 170 is, as we have
noted, not whether the payment secures religious
Page 490 U. S. 702
benefits or access to religious services, but whether the
transaction in which the payment is involved is structured as a
quid pro quo exchange. To make such a determination in
this case, the Tax Court heard testimony and received documentary
proof as to the terms and structure of the auditing and training
transactions; from this evidence it made factual findings upon
which it based its conclusion of nondeductibility, a conclusion we
have held consonant with § 170 and with the First Amendment.
Perhaps because the theory of administrative inconsistency
emerged only on appeal, petitioners did not endeavor at trial to
adduce from the IRS or other sources any specific evidence about
other religious faiths' transactions. The IRS' revenue rulings,
which merely state the agency's conclusions as to deductibility,
and which have apparently never been reviewed by the Tax Court or
any other judicial body, also provide no specific facts about the
nature of these other faiths' transactions. In the absence of such
facts, we simply have no way (other than the wholly illegitimate
one of relying on our personal experiences and observations) to
appraise accurately whether the IRS' revenue rulings have correctly
applied a
quid pro quo analysis
Page 490 U. S. 703
with respect to any or all of the religious practices in
question. We do not know, for example, whether payments for other
faiths' services are truly obligatory, or whether any or all of
these services are generally provided whether or not the encouraged
"mandatory" payment is made.
The IRS' application of the "contribution or gift" standard may
be right or wrong with respect to these other faiths, or it may be
right with respect to some religious practices and wrong with
respect to others. It may also be that some of these payments are
appropriately classified as partially deductible "dual payments."
With respect to those religions where the structure of transactions
involving religious services is established not centrally, but by
individual congregations, the proper point of reference for a
quid pro quo analysis might be the individual
congregation, not the religion as a whole. Only upon a proper
factual record could we make these determinations. Absent such a
record, we must reject petitioners' administrative consistency
argument. [
Footnote 13]
Petitioners' congressional acquiescence claim fails for similar
reasons. Even if one assumes that Congress has acquiesced in the
IRS' ruling with respect to "[p]ew rents, building fund
assessments, and periodic dues," Rev.Rul. 70-47, 1970-1 Cum.Bull.
49, the fact is that the IRS' 1971 ruling articulates no broad
principle of deductibility, but instead merely identifies as
deductible three discrete types of payments. Having before us no
information about the nature or structure of these three payments,
we have no way of discerning any possible unifying principle, let
alone whether such a principle would embrace payments for auditing
and training sessions.
V
For the reasons stated herein, the judgments of the Courts of
Appeals are hereby
Affirmed.
JUSTICE BRENNAN and JUSTICE KENNEDY took no part in the
consideration or decision of these cases.
Page 490 U. S. 704
* Together with No. 87-1616,
Graham et al. v. Commissioner
of Internal Revenue, on certiorari to the United States Court
of Appeals for the Ninth Circuit.
[
Footnote 1]
Section 170 provides in pertinent part:
"(a) Allowance of deduction"
"(1) General Rule"
"There shall be allowed as a deduction any charitable
contribution (as defined in subsection (c)) payment of which is
made within the taxable year. A charitable contribution shall be
allowable as a deduction only if verified under regulations
prescribed by the Secretary."
"
* * * *"
"(c) Charitable contribution defined"
"For purposes of this section, the term 'charitable
contribution' means a contribution or gift to or for the use of
--"
"(2) A corporation, trust, or community chest, fund, or
foundation -- "
"(A) created or organized in the United States or in any
possession thereof, or under the law of the United States, any
State, the District of Columbia, or any possession of the United
States;"
"(B) organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes, or to
foster national or international amateur sports competition (but
only if no part of its activities involve the provision of athletic
facilities or equipment), or for the prevention of cruelty to
children or animals;"
"(C) no part of the net earnings of which inures to the benefit
of any private shareholder or individual; and"
"(D) which is not disqualified for tax exemption under section
501(c)(3) by reason of attempting to influence legislation, and
which does not participate in, or intervene in (including the
publishing or distributing of statements), any political campaign
on behalf of any candidate for public office. . . ."
[
Footnote 2]
Auditing is also known as "processing," "counseling," and
"pastoral counseling." 83 T.C. 575, 577 (1984),
aff'd, 822
F.2d 844 (CA9 1987).
[
Footnote 3]
The petitioner in No. 87-963, Robert L. Hernandez, was denied a
deduction of $7,338 and was assessed a tax deficiency of $2,245 for
1981. 819 F.2d 1212, 1215 (CA1 1987). Of the petitioners in No.
87-1616, Katherine Jean Graham was denied a deduction of $1,682 and
was assessed a tax deficiency of $316.24 for 1972; Richard M.
Hermann was denied a tax deduction of $3,922 and was assessed a tax
deficiency of $803 for 1975; and David Forbes Maynard was denied a
deduction of $5,000 (including a carryover of $2,385 for
contributions made in 1976) and was assessed a tax deficiency of
$643 for 1977. 83 T.C. at 575-579.
[
Footnote 4]
The stipulation allowed the Tax Court to avoid having to decide
whether the particular branches to which payments were made in
these cases qualified under § 170(c)(2) and § 501(c)(3) of the Code
as tax-exempt organizations entitled to receive charitable
contributions. In a separate case decided during the pendency of
this litigation, the Tax Court held that the mother church in
California did not qualify as a tax-exempt organization under §
501(c)(3) for the years 1970 through 1972. because it had diverted
profits to its founder and others, had conspired to impede
collection of its taxes, and had conducted almost all activities
for a commercial purpose.
Church of Scientology of California
v. Commissioner, 83 T.C. 381 (1984). The Court of Appeals for
the Ninth Circuit affirmed, basing its decision solely on the
ground that the Church had diverted profits for the use of private
individuals. It did not address the other bases of the Tax Court's
decision.
Church of Scientology of California v.
Commissioner, 823 F.2d 1310 (CA9 1987),
cert. denied,
486 U. S. 1015
(1988).
[
Footnote 5]
Compare Christiansen v. Commissioner, 843 F.2d 418
(CA10 1988) (holding payments not deductible),
cert.
pending, No. 87-2023;
Miller v. IRS, 829 F.2d 500
(CA4 1987) (same),
cert. pending, No. 87-1449,
with
Neher v. Commissioner, 852 F.2d 848 (CA6 1988) (holding
payments deductible);
Foley v. Commissioner, 844 F.2d 94
(CA2 1988) (same),
cert. pending, No. 88-102;
Staples
v. Commissioner, 821 F.2d 1324 (CA8 1987) (same),
cert.
pending, No. 87-1382. The rulings for the taxpayer in the
Neher, Foley, and
Staples cases rested on
statutory, not constitutional, grounds.
[
Footnote 6]
The charitable transfer must be made to a qualified recipient, §
170(c) within the taxable year, § 170(a)(1), and consist of cash or
qualified property, 26 U.S.C. §§ 170(e)-(h) (1982 ed. and Supp. V),
not exceeding a specified percentage of the taxpayer's income in
the year of payment or (where a carryover is permitted) in
subsequent years. 26 U.S.C. §§ 170(b), 170(d) (1982 ed. and Supp.
V).
[
Footnote 7]
The portions of these Reports explicating the term "gifts"
actually address a closely related provision of the Code, § 162(b),
which refers specifically to § 170. Section 162(b) provides, in
pertinent part, that a taxpayer may not deduct as a trade or
business expense a "contribution or gift" which would have been
deductible under § 170 were it not for the fact that the taxpayer
had already met the maximum amount (measured as a percentage of
income) which § 170(b) permits to be deducted.
[
Footnote 8]
The sole taxpayer in
American Bar Endowment who had
demonstrated the existence of a lower premium insurance program
failed to show that he was aware of this less expensive option at
the time he purchased his insurance. 477 U.S. at
477 U. S.
118.
[
Footnote 9]
The Tax Court referred to a Church policy directive which
stated:
"Price cuts are forbidden under any guise."
"1. PROCESSING MAY NEVER BE GIVEN AWAY BY AN ORG. Processing is
too expensive to deliver."
"
* * * *"
"9. ONLY FULLY CONTRACTED STAFF IS AWARDED FREE SERVICE, AND
THIS IS DONE BY INVOICE AND LEGAL NOTE WHICH BECOMES DUE AND
PAYABLE IF THE CONTRACT IS BROKEN."
83 T.C. at 577-578, n. 5.
[
Footnote 10]
Petitioners have not argued here that their payments qualify as
"dual payments" under IRS regulations and that they are therefore
entitled to a partial deduction to the extent their payments
exceeded the value of the benefit received.
See American Bar
Endowment, 477 U.S. at
477 U. S. 117
(citing Rev.Rul. 67-246, 1967-2 Cum.Bull. 104). We thus have no
occasion to decide this issue.
[
Footnote 11]
"'First, the statute must have a secular legislative purpose;
second, its principal or primary effect must be one that neither
advances nor inhibits religion,
Board of Education v.
Allen, 392 U. S. 236,
392 U. S.
243 (1968); finally, the statute must not foster 'an
excessive governmental entanglement with religion.'
Walz [v.
Tax Comm'n, 397 U. S. 664,
397 U. S.
674 (1970)].'"
Lemon v. Kurtzman, 403 U.S. at
403 U. S.
612-613, quoted in
Larson v. Valente, 456 U.S.
at
456 U. S.
252.
[
Footnote 12]
We do not rule out the possibility that, under the circumstances
of a particular case, an IRS inquiry under § 170 into a religious
institution's expenses might raise entanglement problems. Because
petitioners' claim necessitates no valuation inquiry, however, we
need only decide here that such inquiries into cost under § 170
generally pose no constitutional problem.
[
Footnote 13]
Petitioners argue that an unofficial "question and answer
guidance package" recently issued by an IRS official requires
deductibility of payments for auditing and training sessions.
Referring to the revenue ruling on pew rents, the brochure states
that "fixed payments for similar religious services" are fully
deductible.
See IRS Official Explains New
Examination-Education Program on Charitable Contributions to
Tax-Exempt Organizations, BNA Daily Report for Executives, Special
Report No. 186, J-1, J-3 (Sept. 26, 1988) (cited in Reply Brief for
Petitioners 6). In ascertaining the IRS' justifications for its
administrative practice, however, our practice is to rely on the
agency's official rulings, not on the unofficial interpretations of
particular IRS officials. In any event, the brochure on which
petitioners rely was not included in the record before the Tax
Court or the Courts of Appeals in these cases, and, in fact, was
issued months after we granted certiorari.
JUSTICE O'CONNOR, with whom JUSTICE SCALIA joins,
dissenting.
The Court today acquiesces in the decision of the Internal
Revenue Service (IRS) to manufacture a singular exception to its
70-year practice of allowing fixed payments indistinguishable from
those made by petitioners to be deducted as charitable
contributions. Because the IRS cannot constitutionally be allowed
to select which religions will receive the benefit of its past
rulings, I respectfully dissent.
The cases before the Court have an air of artificiality about
them that is due to the IRS' dual litigation strategy against the
Church of Scientology (Church). As the Court notes,
ante
at
490 U. S.
686-687, n. 4, the IRS has successfully argued that the
mother Church of Scientology was not a tax-exempt organization from
1970 to 1972 because it had diverted profits to the founder of
Scientology and others, conspired to impede collection of its
taxes, and conducted almost all of its activities for a commercial
purpose.
See Church of Scientology of California v.
Commissioner, 83 T.C. 381 (1984),
aff'd, 823 F.2d
1310 (CA9 1987),
cert. denied, 486 U.
S. 1015 (1988). In the cases before the Court today,
however, the IRS decided to contest the payments made to
Scientology under 26 U.S.C. § 170 rather than challenge the
tax-exempt status of the various branches of the Church to which
the payments were made. According to the Deputy Solicitor General,
the IRS challenged the payments themselves in order to expedite
matters. Tr. of Oral Arg. 26-29.
See also Neher v.
Commissioner, 852 F.2d 848, 850-851 (CA6 1988). As part of its
litigation strategy in these cases, the IRS agreed to several
stipulations which, in my view, necessarily determine the proper
approach to the questions presented by petitioners.
The stipulations, relegated to a single sentence by the Court,
ante at
490 U. S. 686,
established that Scientology was at all relevant times a religion;
that each Scientology branch to which payments were made was at all
relevant times a "church" within the meaning of § 170(b)(1)(A)(i);
and that
Page 490 U. S. 705
Scientology was at all times a "corporation" within the meaning
of § 170(c)(2), and exempt from general income taxation under 26
U.S.C. § 501(a).
See App. 38, �� 52-53; 83 T.C. 575, 576
(1984),
aff'd, 822 F.2d 844 (CA9 1987). As the Solicitor
General recognizes, it follows from these stipulations that
Scientology operates for "
charitable purposes'" and puts the
"public interest above the private interest." Brief for Respondent
30. See also Neher, supra, at 855. Moreover, the
stipulations establish that the payments made by petitioners are
fixed donations made by individuals to a tax-exempt religious
organization in order to participate in religious services, and are
not based on "market prices set to reap the profits of a commercial
money-making venture." Staples v. Commissioner, 821 F.2d
1324, 1328 (CA8 1987), cert. pending, No. 87-1382. The Tax
Court, however, appears to have ignored the stipulations. It
concluded, perhaps relying on its previous opinion in Church of
Scientology, that "Scientology operates in a commercial manner
in providing [auditing and training]. In fact, one of its
articulated goals is to make money." 83 T.C. at 578. The Solicitor
General has duplicated the error here, referring on numerous
occasions to the commercial nature of Scientology in an attempt to
negate the effect of the stipulations. See Brief for
Respondent 13-14, 23, 25, 44.
It must be emphasized that the IRS' position here is not based
upon the contention that a portion of the knowledge received from
auditing or training is of secular, commercial, nonreligious value.
Thus, the denial of a deduction in these cases bears no resemblance
to the denial of a deduction for religious school tuition up to the
market value of the secularly useful education received.
See
Oppewal v. Commissioner, 468 F.2d 1000 (CA1 1972);
Winters
v. Commissioner, 468 F.2d 778 (CA2 1972);
DeJong v.
Commissioner, 309 F.2d 373 (CA9 1962). Here the IRS denies
deductibility solely on the basis that the exchange is a
quid
pro quo, even though the
quid is exclusively of
spiritual or religious worth. Respondent
Page 490 U. S. 706
cites no instances in which this has been done before, and there
are good reasons why.
When a taxpayer claims as a charitable deduction part of a fixed
amount given to a charitable organization in exchange for benefits
that have a commercial value, the allowable portion of that claim
is computed by subtracting from the total amount paid the value of
the physical benefit received. If at a charity sale one purchases
for $1,000 a painting whose market value is demonstrably no more
than $50, there has been a contribution of $950. The same would be
true if one purchases a $1,000 seat at a charitable dinner where
the food is worth $50. An identical calculation can be made where
the
quid received is not a painting or a meal, but an
intangible such as entertainment, so long as that intangible has
some market value established in a noncontributory context. Hence,
one who purchases a ticket to a concert, at the going rate for
concerts by the particular performers, makes a charitable
contribution of zero even if it is announced in advance that all
proceeds from the ticket sales will go to charity. The performers
may have made a charitable contribution, but the audience has paid
the going rate for a show.
It becomes impossible, however, to compute the "contribution"
portion of a payment to a charity where what is received in return
is not merely an intangible, but an intangible (or, for that matter
a tangible) that is not bought and sold except in donative
contexts, so that the only "market" price against which it can be
evaluated is a market price that always includes donations.
Suppose, for example, that the charitable organization that
traditionally solicits donations on Veterans Day, in exchange for
which it gives the donor an imitation poppy bearing its name, were
to establish a flat rule that no one gets a poppy without a
donation of at least $10. One would have to say that the "market"
rate for such poppies was $10, but it would assuredly not be true
that everyone who "bought" a poppy for $10 made no contribution.
Similarly, if one buys a $100 seat at a prayer breakfast
Page 490 U. S. 707
-- receiving as the
quid pro quo food for both body and
soul -- it would make no sense to say that no charitable
contribution whatever has occurred simply because the "going rate"
for all prayer breakfasts (with equivalent bodily food) is $100.
The latter may well be true, but that "going rate"
includes a contribution.
Confronted with this difficulty, and with the constitutional
necessity of not making irrational distinctions among taxpayers,
and with the even higher standard of equality of treatment among
religions that the First Amendment imposes, the Government
has only two practicable options with regard to distinctively
religious
quids pro quo: to disregard them all or to tax
them all. Over the years, it has chosen the former course.
Congress enacted the first charitable contribution exception to
income taxation in 1917. War Revenue Act of 1917, ch. 63, §
1201(2), 40 Stat. 330. A mere two years later, in A.R.M. 2, 1
Cum.Bull. 150 (1919), the IRS gave its first blessing to the
deductions of fixed payments to religious organizations as
charitable contributions:
"[T]he distinction of pew rents, assessments, church dues, and
the like from basket collections is hardly warranted by the act.
The act reads 'contributions' and 'gifts.' It is felt that all of
these come within the two terms."
" In substance, it is believed that these are simply methods of
contributing, although in form they may vary. Is a basket
collection given involuntarily to be distinguished from an envelope
system, the latter being regarded as "dues"? From a technical
angle, the pew rents may be differentiated, but in practice the
so-called "personal accommodation" they may afford is conjectural.
It is believed that the real intent is to contribute, and not to
hire a seat or pew for personal accommodation. In fact, basket
contributors sometimes receive the same accommodation
informally.
Page 490 U. S. 708
The IRS reaffirmed its position in 1970, ruling that
"[p]ew rents, building fund assessments and periodic dues paid
to a church . . . are all methods of making contributions to the
church, and such payments are deductible as charitable
contributions."
Rev.Rul. 70-47, 1970-1 Cum.Bull. 49. Similarly, notwithstanding
the "form" of Mass stipends as fixed payments for specific
religious services,
see infra, at 709, the IRS has allowed
charitable deductions of such payments.
See Rev.Rul.
78-366, 1978-2 Cum.Bull. 241.
These rulings, which are "official interpretation[s] of [the tax
laws] by the [IRS]," Rev. Proc. 78-24, 1978-2 Cum.Bull. 503, 504,
flatly contradict the Solicitor General's claim that there "is no
administrative practice recognizing that payments made in exchange
for religious benefits are tax deductible." Brief for Respondent
16. Indeed, an Assistant Commissioner of the IRS recently explained
in a "question and answer guidance package" to tax-exempt
organizations that
"[i]n contrast to tuition payments, religious observances
generally are not regarded as yielding private benefits to the
donor, who is viewed as receiving only incidental benefits when
attending the observances. The primary beneficiaries are viewed as
being the general public and members of the faith. Thus, payments
for saying masses, pew rents, tithes, and other payments involving
fixed donations for similar religious services, are fully
deductible contributions."
IRS Official Explains New Examination-Education Program on
Charitable Contributions to Tax-Exempt Organizations, BNA Daily
Report for Executives, Special Report No. 186, J-l, J-3 (Sept. 26,
1988). Although this guidance package may not be as authoritative
as IRS rulings,
see ante at
490 U. S. 703,
n. 13, in the absence of any contrary indications, it does reflect
the continuing adherence of the IRS to its practice of allowing
deductions for fixed payments for religious. services.
There can be no doubt that at least some of the fixed payments
which the IRS has treated as charitable deductions, or which the
Court assumes the IRS would allow taxpayers to
Page 490 U. S. 709
deduct,
ante at
490 U. S.
690-691, are as "inherently reciprocal,"
ante
at
490 U. S. 692,
as the payments for auditing at issue here. In exchange for their
payment of pew rents, Christians receive particular seats during
worship services.
See Encyclopedic Dictionary of Religion
2760 (1979). Similarly, in some synagogues attendance at the
worship services for Jewish High Holy Days is often predicated upon
the purchase of a general admission ticket or a reserved seat
ticket.
See J. Feldman, H. Fruhauf, & M. Schoen,
Temple Management Manual, ch. 4, p. 10 (1984). Religious honors
such as publicly reading from Scripture are purchased or auctioned
periodically in some synagogues of Jews from Morocco and Syria.
See H. Dobrinsky, A Treasury of Sephardic Laws and Customs
164, 175-177 (1986). Mormons must tithe their income as a necessary
but not sufficient condition to obtaining a "temple recommend,"
i.e., the right to be admitted into the temple.
See The Book of Mormon, 3 Nephi 24:7-12 (1921);
Reorganized Church of Jesus Christ of Latter-day Saints, Book of
Doctrine and Covenants § 106:1b (1978);
Corporation of
Presiding Bishop of Church of Jesus Christ of Latter-day Saints v.
Amos, 483 U. S. 327,
483 U. S. 330,
n. 4 (1987). A Mass stipend -- a fixed payment given to a Catholic
priest, in consideration of which he is obliged to apply the fruits
of the Mass for the intention of the donor -- has similar overtones
of exchange. According to some Catholic theologians, the nature of
the pact between a priest and a donor who pays a Mass stipend is "a
bilateral contract known as
do ut facias. One person
agrees to give while the other party agrees to do something in
return." 13 New Catholic Encyclopedia, Mass Stipend, p. 715 (1967).
A finer example of a
quid pro quo exchange would be hard
to formulate.
This is not a situation where the IRS has explicitly and
affirmatively reevaluated its longstanding interpretation of § 170
and decided to analyze
all fixed religious contributions
under a
quid pro quo standard. There is no indication
whatever that the IRS has abandoned its 70-year practice with
respect
Page 490 U. S. 710
to payments made by those other than Scientologists. In 1978,
when it ruled that payments for auditing and training were not
charitable contributions under § 170, the IRS did not cite -- much
less try to reconcile -- its previous rulings concerning the
deductibility of other forms of fixed payments for religious
services or practices.
See Rev.Rul. 78-189, 1978-1
Cum.Bull. 68 (equating payments for auditing with tuition paid to
religious schools).
Nevertheless, respondent now attempts to reconcile his previous
rulings with its decision in these cases by relying on a
distinction between direct and incidental benefits in exchange for
payments made to a charitable organization. This distinction,
adumbrated as early as the IRS' 1919 ruling, recognizes that even a
deductible charitable contribution may generate certain benefits
for the donor. As long as the benefits remain "incidental" and do
not indicate that the payment was actually made for the "personal
accommodation" of the donor, the payment will be deductible. It is
respondent's view that the payments made by petitioners should not
be deductible under § 170 because the "unusual facts in these cases
. . . demonstrate that the payments were made primarily for
personal accommodation.'" Brief for Respondent 41.
Specifically, the Solicitor General asserts that "the rigid
connection between the provision of auditing and training services
and payment of the fixed price" indicates a quid pro quo
relationship and "reflect[s] the value that petitioners expected to
receive for their money." Id. at 16.
There is no discernible reason why there is a more rigid
connection between payment and services in the religious practices
of Scientology than in the religious practices of the faiths
described above. Neither has respondent explained why the benefit
received by a Christian who obtains the pew of his or her choice by
paying a rental fee, a Jew who gains entrance to High Holy Day
services by purchasing a ticket, a Mormon who makes the fixed
payment necessary for a temple recommend, or a Catholic who pays a
Mass stipend,
Page 490 U. S. 711
is incidental to the real benefit conferred on the "general
public and members of the faith," BNA Daily Report, at J-3, while
the benefit received by a Scientologist from auditing is a personal
accommodation. If the perceived difference lies in the fact that
Christians and Jews worship in congregations, whereas
Scientologists, in a manner reminiscent of Eastern religions,
see App. 78-83 (testimony of Dr. Thomas Love), gain
awareness of the "immortal spiritual being" within them in
one-to-one sessions with auditors,
ante at
490 U. S.
684-685, such a distinction would raise serious
Establishment Clause problems.
See Wallace v. Jaffree,
472 U. S. 38,
472 U. S. 69-70
(1985) (O'CONNOR, J., concurring in judgment);
Lynch v.
Donnelly, 465 U. S. 668,
465 U. S.
687-689 (1984) (concurring opinion). The distinction is
no more legitimate if it is based on the fact that congregational
worship services "would be said anyway," Brief for Respondent 43,
without the payment of a pew rental or stipend or tithe by a
particular adherent. The relevant comparison between Scientology
and other religions must be between the Scientologist undergoing
auditing or training on one hand, and the congregation on the
other. For some religions, the central importance of the
congregation achieves legal dimensions. In Orthodox Judaism, for
example, certain worship services cannot be performed and Scripture
cannot be read publicly without the presence of at least 10 men. 12
Encyclopaedia Judaica, Minyan, p. 68 (1972). If payments for
participation occurred in such a setting, would the benefit to the
10th man be only incidental, while for the personal accommodation
of the 11th? In the same vein, will the deductibility of a Mass
stipend turn on whether there are other congregants to hear the
Mass? And conversely, does the fact that the payment of a tithe by
a Mormon is an absolute prerequisite to admission to the temple
make that payment for admission a personal accommodation regardless
of the size of the congregation?
Given the IRS' stance in these cases, it is an understatement to
say that, with respect to fixed payments for religious
Page 490 U. S. 712
services, "the line between the taxable and the immune has been
drawn by an unsteady hand."
United States v. Allegheny
County, 322 U. S. 174,
322 U. S. 176
(1944) (Jackson, J.). This is not a situation in which a
governmental regulation "happens to coincide or harmonize with the
tenets of some or all religions,"
McGowan v. Maryland,
366 U. S. 420,
366 U. S. 442
(1961), but does not violate the Establishment Clause because it is
founded on a neutral, secular basis.
See Bob Jones University
v. United States, 461 U. S. 574,
461 U. S. 604,
n. 30 (1983). Rather, it involves the differential application of a
standard based on constitutionally impermissible differences drawn
by the Government among religions. As such, it is best
characterized as a case of the Government "put[ting] an
imprimatur on [all but] one religion."
Gillette v.
United States, 401 U. S. 437,
401 U. S. 450
(1971). That the Government may not do.
The Court attempts to downplay the constitutional difficulty
created by the IRS' different treatment of other fixed payments for
religious services by accepting the Solicitor General's invitation
to let the IRS make case-specific
quid pro quo
determinations.
See ante at
490 U. S. 702
("The IRS' application of the
contribution or gift' standard
may be right or wrong with respect to these other faiths, or it may
be right with respect to some religious practices and wrong with
respect to others"). See also Brief for Respondent 41-42.
As a practical matter, I do not think that this unprincipled
approach will prove helpful. The Solicitor General was confident
enough in his brief to argue that, "even without making a detailed
factual inquiry," Mormon tithing does not involve a quid pro
quo arrangement. Id. at 43-44. At oral argument,
however, the Deputy Solicitor General conceded that, if it was
mandatory, tithing would be distinguishable from the "ordinary case
of church dues." Tr. of Oral Arg. 36-37. If the approach suggested
by the Solicitor General is so malleable and indefinite, it is not
a panacea, and cannot be trusted to secure First Amendment rights
against arbitrary incursions by the Government.
Page 490 U. S. 713
On a more fundamental level, the Court cannot abjure its
responsibility to address serious constitutional problems by
converting a violation of the Establishment Clause into an
"administrative consistency argument,"
ante at 703, with
an inadequate record. It has chosen to ignore both longstanding,
clearly articulated IRS practice and the failure of respondent to
offer any cogent, neutral explanation for the IRS' refusal to apply
this practice to the Church of Scientology. Instead, the Court has
pretended that whatever errors in application the IRS has committed
are hidden from its gaze, and will, in any event, be rectified in
due time.
In my view, the IRS has misapplied its longstanding practice of
allowing charitable contributions under § 170 in a way that
violates the Establishment Clause. It has unconstitutionally
refused to allow payments for the religious service of auditing to
be deducted as charitable contributions in the same way it has
allowed fixed payments to other religions to be deducted. Just as
the Minnesota statute at issue in
Larson v. Valente,
456 U. S. 228
(1982), discriminated against the Unification Church, the IRS'
application of the
quid pro quo standard here -- and only
here -- discriminates against the Church of Scientology. I would
reverse the decisions below.