Hernandez v. Commissioner of Internal Revenue

Summary

The Supreme Court held that payments made to Church of Scientology branches for auditing and training sessions were not deductible charitable contributions under Internal Revenue Code § 170 because they were made in exchange for identifiable services. The Court rejected the taxpayers’ Establishment Clause and Free Exercise Clause challenges, concluding that the statute was religiously neutral and that maintaining a sound and uniform tax system justified any burden on religious practice.

Holdings

1. Payments made to Church of Scientology branch churches for auditing and training sessions are not deductible charitable contributions because they were made as part of a quid pro quo exchange for identifiable services.
2. Applying the neutral quid pro quo analysis under § 170 to payments made to religious organizations did not violate the Establishment Clause.
3. Disallowing the deductions did not violate the Free Exercise Clause because any burden on religious practice was not shown to be substantial, and in any event the uniform administration of the tax system justified the burden.
4. The taxpayers failed to establish that the IRS treated comparable payments to other religions inconsistently, and the Court therefore rejected the administrative-consistency and congressional-acquiescence arguments.

Questions Presented

1. Whether payments made to Church of Scientology branch churches for auditing and training sessions constituted deductible charitable contributions or gifts under 26 U.S.C. § 170.
2. Whether applying the quid pro quo analysis to payments for religious services violated the Establishment Clause.
3. Whether disallowing the deductions substantially burdened the taxpayers' religious exercise in violation of the Free Exercise Clause.
4. Whether the IRS's treatment of the payments was impermissibly inconsistent with the treatment of fixed payments associated with religious practices of other faiths.

Disposition

affirmed