Fairman vs Thorburn Analysis and Tax Deductions

 

Tony Ortega at the Village Voice posted an analysis of the Fairman vs. Thorburn case, see Village Voice Analysis.   While I think his factual speculation about Michael’s status vis a vis Independent Scientology is inaccurate, Tony raises some interesting questions.

Particularly intriguing is his idea about Independent Scientologists claiming tax deductions for their Scientology donations in the field.  During negotiations for tax exemption in the early nineties, the church was able to persuade the IRS to grant deductions for Scientology parishioner “donations” to churches of Scientology.  This was done in the face of a then-fairly-recent U.S. Supreme Court decision upholding the denial of Scientologists’ deductions for fixed fees being charged by Scientology churches for specific services,  Hernandez v Commissioner.  Hernandez is still the law of the land on this issue.

While I don’t have time at the moment to engage in a major tax research project, I will proffer an opinion to anyone affected who can afford to have a competent tax attorney delve into this area.  In my opinion the Internal Revenue Service would have a very difficult time denying a claimed tax deduction of an Independent Scientologist making a donation for Scientology services.  Particularly when those services are provided on the basis we do.  That is, there is no fixed price.  The person donates what she feels the service was worth in accordance with her own ability to donate; knowing, as I have informed those who were particularly generous on their own determinism, that their donation makes possible the servicing of others in need who are not able to donate or to donate very much.  I have no problem testifying and providing documentary evidence that such donations are in fact used in that precise manner – to service those in need who cannot themselves donate much.  My guess is that there are other Independents out there who could do the same.

It is pretty much how “charitable contributions” have always traditionally been made – with an intent to benefit others or for the general good; as opposed to a fixed quid pro quo to attain something solely for one’s own benefit (the corporate church of Scientology model).

Just some food for thought for the future.   As Ortega noted, ground breaking legal actions such as Fairman vs Thorburn could have effects down the road not only in reforming corporate Scientology but also in establishing the rights of Independent Scientologists.

 

 

 

39 responses to “Fairman vs Thorburn Analysis and Tax Deductions

  1. It looks like nothing but opportunity to pull down the curtains and expose the vampires.

    This sure does get the wheels turning on the number of potential lawsuits there are RIGHT NOW that could be filed let alone the ones that could be looming on the horizon…

    cob’s Cantalot castle is crumbling around him and more and more people are seeing it. I’ve been surprised a few times this week already to learn of people who are religiously (no pun intended but I’ll take it) reading the blog.

    Onward and upward all.

  2. top of the vale

    When one makes a donation to an Independent entity, doesn’t that Independent entity have to be supporting a legally established 501 (c) 3 Non Profit entity for the charitable contribution to be wortwhile to the IRS?

  3. top of the vale

    Excuse the typo, “…..worthwhile to the IRS?”

  4. Don’t the deductions depend upon having a Church or other 501 registered charity? http://en.wikipedia.org/wiki/501%28c%29_organization .
    Independent Scientologists vary in their way of charging and I think from what I have seen that most charge a fixed rate.
    If one were to establish an Independent Church of Scientology it would require a fair bit of evaluation to work out a way of avoiding a recurrence of DM’s activities. There are those outside the CofS who would quite happily establish themselves as authorities and elect themselves as the new RTC if given half a chance.

  5. Are you taking donations for your services?

    Are you registered as a charity?

  6. Former Flag Customer

    http://www.tampabay.com/opinion/editorials/article1202497.ece

    The St Pete Times is calling for a review of Scientology’s Federal tax status
    based on its recent reporting.

  7. The problem is tying donations to any kind of service. Just cut that out, and you’ll have a better case. You can’t give someone money for a service rendered and claim the money as a charitable contribution. It doesn’t matter if there isn’t a set rate for the service.

    The more important point that you’re making is that the money goes into a pool that finances the servicing of people who cannot afford it. That’s where you should hang your hat.

    As long as you hold onto the pay-for-service Scientology model, it’s always going to fail the smell test. That’s part of what makes us non-Scientologists look askew at the church.

    • And yet if you ran a full-time mission and donated your services how would you pay your rent or heating and buy your food?
      We live in the real world.
      The problem isn’t pay-for-service or donations.
      The problem is the extortion of money for bad or no exchange which flows ever upwards into a disappearing hole.

    • Hello Jim.
      The proplem most non-Scientologiest have with Scientology as Religion (why does it cost anything) is that they don’t see how much effort is needed to deliver the individual service to people.
      Scientology services are based on expertiese and long term study. This is very unique in the field of religion.
      When fincance policy from L. Ron Hubbard is applied correctly and the practice is pure, there is still enough funds in order to help the community and the neighborhood on a voluntary basis (both, Scientologists and non-Scientologists).
      And there are still Scientology services free of any charge (rituals as the ceremonies of namings (instead of baptism), weddings and funerals, sunday services and if you’re lucky you will get a talk to a Chaplain or a well skilled ethics officer.
      Individual services in Scientology are very time consuming – imagine how long it takes to get trained as auditor.
      Just see the physics (time, energy, food you name it) needed to deliver this spiritual services.
      But today, as the Church of Scientology no longer uses finance policies, it’s no wonder that the non-Scientologist (or a new Scientologist on church lines) is in a “slight” disagreement about the “money factor”.

      See, the point with Jesus in the Christian religions, he got killed because he messed with the then money-changers (The federal reserve bank of yesterday in his region) . At least this was his biggest “mistake” as this was the establishment of his time he messed with. It’s not that he didn’t like money – he just was in a disagreement with changing money for profit. I don’t think that he was a poor man. Money isn’t bad at all. It becomes bad if it is controlled by a minority in order to enslave the many.
      See also: http://en.wikipedia.org/wiki/Cleansing_of_the_Temple

      I hope I coul help you understand.
      Scientology can do a lot of things for you without any money at all.
      But if you need the time and skill from a good auditor, you better go for it and put your own time and skill anywhere else to have the exchange funds for your desired auditor.

  8. Having a field auditors group or a kind of service mission, I can agree that fixed costs for service is a good idea and that LRH Policy should be applied where possible. Counceling as a single field auditor may differ. Of course, the individual expertise of the auditor is another factor here.

    As I remember well, the Church of Scientology has had tax exemption between late 50’ies and mid-late 60’ies (despite fixed fees for service).

    The new “donations” model within the church is no more benefitial for the single Scientologist nor for the organisations mission at all. That’s because the fees are not calculated per policy anymore:
    Scientology Pricing policies – How much should Service cost

    Single individuals should have the oppurtunity to charge as they will. If they want they can work as “volunteer ministers”, too. If they have a way to bring those people to be in-exchange with them or the “bigger picture of scientologies mission” it’s up to them. It’s a matter of the point of view and personal estimation / consideration.
    Scientology has still a religious core and no action of the current “official” church will cut it off.
    There shouldn’t be any monopoly on the subject of Scientology and its techniques for the betterment of Men.

    SKM

    • LDS church (non-profit) asks for fixed 10% of their members!

      • Hello.
        This 1/10th concept is based on the bible.
        I don’t think that this concept is applicable to Scientology where the main practice is to rise the awarness of individuals instead of “living a community life” as in original days of Christians.
        In Scientology the money is only needed to keep the practice going (at least this is the main reason for fees. Read this Post by Mr. Rinder; there is a reference by LRH “WHAT YOUR FEES BUY”).
        I like LRHs original exchange policy concepts before it has been corrupted by Corporate “Scientology”.

        By the way, to get some inside view on the 1/10th concept of the bible and how it was applied (successfully) by a christian monk in South America some centuries ago, see the movie “The Mission”(1980) with Robert deNiro. One of the very good ones (if you want to understand where PoB is going with his new inventions).

        Kind regards,
        SKM

      • Sorry, the movie is from ’86 not ’80.

  9. I applaud the courageous and lots not forget — COSTLY — stand that the Fairman’s are taking by suing their chiropractor. It’s very commendable.

    And I am inspired by Marty’s comment about pricing in the Independent field(although countered by Ralph Hilton).

    “The person donates what she feels the service was worth in accordance with her own ability to donate; knowing, as I have informed those who were particularly generous on their own determinism, that their donation makes possible the servicing of others in need who are not able to donate or to donate very much.”

    In my community – Shambhala Buddhism – it is solely through donations that the “management” body is funded. And not everyone by a long shot donates but those of us who do, do so generously knowing that our donation helps others who are unable to donate but would love to.

    Marty’s continues to show me time and again, what it means to truly embody the core essence of LRH’s work — to help ones fellow man.

    Love,
    WH

  10. I feel Marty’s approach is the same as most churches. Any donation is self determined and amounts are never discussed. We have all had lean times and it warms my heart to know that any of my donation may have gone to helping someone who reached out in need.
    In addition, Marty and Mosey work longer and harder that anyone I know devoting the majority of their lives to helping others. They are both such bright and able individuals that, I’m guessing they could make more money at a conventional job and it would probably be less work .
    But, it’s clear to me, they love what they do and they do it out of love and care for others. Sounds charitable to me.

    • I agree – it works for me!
      Whenever I’ve gone to see Marty I’ve left so spiritually recharged and happy that it always seemed to me that any donations I gave him were far too small. Marty has invariably given me a slightly shocked look and told me it’s too much! LOL (it seriously never was!)
      What I can tell you is this. I was always more than happy to flow some energy to Marty to help in any way I could (even if it was to buy a couple of disposable cel phones so OSA couldn’t hound him) and I never feel like I’d been scalped.
      My ex-husband and I often used to joke about paying to suffer in Miscaviges cult.
      This is a VERY different flow 🙂

  11. Charities, and churches, must still file tax returns, even though they pay no taxes. The entity must be a registered charity and have a corporate tax ID number. The filing is simple if the charity makes under $25,000 per year, but above that it must show that no one is benefiting from the income personally. So an independent practitioner may not qualify. One way may be to organize Independent Scientologists into a fraternal organization (a type of 501(c) organization that exists for the benefit of its members) and operate under a lodge system, similar to the Masons or the Odd Fellows. Those who can afford to pay could go donate money to the fraternity or money could be raised by the fraternity through different ways of traditional fundraising to provide services to active members at no cost. But this doesn’t absolve the auditor from paying personal income taxes. I may grumble every time I write a check to the IRS or the State, but I figure it is just part of living in a community. What was that quote about the inevitability of death and taxes?

  12. As per our attorney we are not able to comment on any particulars about our lawsuit, so I won’t do that. But what I will say is this. With regard to all of the running conjecture about this subject, I simply pose this question: Does it really matter if one chooses to believe in nothing at all or worship toadstools- doesn’t one, as a human being and an American, have the right NOT to be discriminated against? Especially by one’s own doctor? This may be the only tangible/legal way to take a stand against this type of injustice…which many of us here on this blog have experienced in one way or another.

    • Joy, You are right. Absolutely right. We do have a right not to be discriminated against. I’ve never had a doctor ask me what my religious beliefs are.

    • It’s a fundamental point and though it seems small, the repercussions are huge and thought provoking.
      Scientology welcomes people from all religious denominations. That includes Independent Scientologists.
      We have become so accustomed to being attacked as ‘apostates’ that the gross civil and human rights violations can easily be overlooked.
      What you are doing is massive. Thank you. For doing this. For all of US!

  13. Even if Michael Fairman were not an independent Scientologist and had no religion at all this would be a case of religious discrimination. But the fact that he is an independent Scientologist makes it worse since it would seem to be both negative discrimination (they are being discriminated against because they left the corporate COS) and positive discrimination (they are being discriminated against because they are practicing Scientology on an independent basis).

    That’s why the fact Michael Fairman is an independent Scientologist has to be brought up in the lawsuit. It is apparently part of the reason he is being discriminated against.

  14. I think what Marty and Mosey are doing as far as cost for services is great. Some are able to donate more while some are having a really hard time and not able to give much. Those who cannot give much are able to get the same service as one who can afford to donate alot and it all works out. That is true community coming together, with all helping each other out. One who needs help should not be withheld from getting it because of circumstances. I hope it continues this way, and I am glad Marty revealed this to us today.

  15. I disagree and I think LRH did too.
    Auditors without outside funding need to have money to survive. I see no reason at all why they should be expected to provide charity.
    If, at some point, they reach a financial state where they can then yes.
    At this time I am not in a financial position to provide auditing on Marty’s terms. I deliver auditing for a fair exchange.

  16. I claim my auditing fees as a LIFE COACHING AND EDUCATION business expense. I’ve been audited by IRS four times since my leaving the Sea Org in 2005 and so far so good.

    • This reminds me of the days before the Hernandez decision, where only the self employed were getting away with deducting the org training and auditing as business deductions. Thing is, after the IRS granted the tax exemption, this business deduction stuff was no longer condoned by the church because it made ‘spiritual donations’ into business expenses.

  17. David I am bussy with december stuff, but i won’t let you off, not an Anon will let you off even if we seem docile, You are still a pathetic excuse for a human being, In Scientology terms. it seems the body we see calling itself David Miscavige is onley run by the GE (Genetic Entity, yes I know David you need help understanding)

    Your Friend Niel

  18. Back in the 80’s and 90s before the IRS approved the donations as deductable, many scientologists got audited by the IRS and had to repay monies along with penalties and interest. Unless one wants to get audited by the IRS, people should not deduct donations on their personal tax returns unless they were paid to an organization on the IRS list:
    “Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986, is a list of organizations eligible to receive tax-deductible charitable contributions. This online version is offered to help you conduct a more efficient search of these organizations.”
    http://www.irs.gov/charities/article/0,,id=96136,00.html
    I suggest the independent community auditors or trainers consider applying for non-profit charitable organization status unless they want to have their efforts be known as a business. Making it into a business negates the religious aspect of the entity.

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