Indiana Appeals Court Hears Oral Arguments In RFRA Defense To Tax Evasion

On Monday, the Indiana Court of Appeals heard oral arguments (video of full arguments) in Tyms-Bey v. State of Indiana. In the case, defendant charged with tax evasion filed notice that he intended to raise a religious freedom defense under Indiana's Religious Freedom Restoration Act. The trial court struck the defense and defendant filed this interlocutory appeal.  Washington Post reports in more detail on the case.

Christian Retreat Center Not Subject To Hotel Room Tax

In Susquehanna County Commissioners v. Montrose Bible Conference, (PA Commonwlth. Ct., April 21, 2016), a 3-judge appellate court panel upheld a lower court's ruling that a retreat center operated by a Christian religious organization is not subject to the county's hotel room rental tax.  While most of the decision focused on a procedural issue, in a footnote the court set out the substantive conclusion:

Even if the County had preserved its issue in a post-trial motion, the trial court properly concluded that MBC is not subject to the hotel tax because the County failed to establish that MBC is a “hotel.”... [S]ection 3 of the Ordinance defines a “hotel” as a structure that holds itself out “as being available to provide overnight lodging . . . for consideration to persons seeking temporary accommodations.” Here, MBC holds itself out as a religious facility and does not provide lodging to persons merely seeking overnight accommodations.

PennRecord reports on the decision.

Controversial Noah's Ark Theme Park Gets Kentucky Tax Incentives

According to the Louisville Courier-Journal, on Monday Kentucky's Tourism Development Finance Authority approved by a 7-0 vote the controversial sales tax rebate incentives for Ark Encounter, the Noah's Ark theme park being constructed by Answers In Genesis. While the project had received preliminary approval for tax incentives in 2014, former Governor Steve Beshear’s Tourism Arts and Heritage Cabinet rejected the application after it appeared that the theme park intended to discriminate in hiring on the basis of religion and the project became one to promote a literal reading of the Biblical book of Genesis. (See prior posting.) At that point, Ark Encounter sued and won in federal district court. (See prior posting.) Gov. Matt Bevin, elected last November expressed approval of tax incentives, and cleared the way for final action by last week replacing four members of the Finance Authority.

Puerto Rico Tax Authorities Will Begin To Audit Churches

Puerto Rico's Secretary of the Treasury Juan Zaragoza says that beginning next month his agency will begin to audit religious organizations as part of a pilot program begun last year to look at non-profits that are wrongfully avoiding taxes.  According to Ateistas de Puerto Rico (April 22), Zaroga said: "The problem is that there are churches that are family businesses where people are making a profit." [Thanks to Scott Mange and Friendly Atheist for the lead.]

Court Says Ark Encounter Cannot Be Excluded From Kentucky Tax Incentives

In Ark Encounter, LLC v. Parkinson, (ED KY, Jan. 26, 2016), a Kentucky federal district court, in a 71-page opinion, held that Kentucky improperly excluded a Noah's Ark complex from participating in tax incentives provided by the state's Tourism Development Act. The court summarized the facts and its holding as follows:

Rising on what was once farmland near the community of Williamstown, Kentucky, is what purports to be an exact replica of the ark that figures prominently in the Old Testament story of a great flood that covered the earth. The modern-day Noah that is constructing the replica hopes that its almost $100 million investment will produce a successful tourist attraction.  At first, the Kentucky Tourism Cabinet, with the same hope, approved tax incentives for the project. But then, representatives of the Commonwealth, concerned that the project was going to “advance religion,” reversed course; the reason: providing the tax incentives would be contrary to the First Amendment protection from the state establishment of religion.

So, in essence, the question presented here is this: if a tourist attraction, even one that as described here “advances religion,” meets the neutral criteria for tax incentives offered by the Commonwealth of Kentucky, can the Commonwealth still deny the incentive for Establishment Clause reasons? This opinion is long but the answer to that question is short -- no. 

At the heart of the court's lengthy opinion was the following:

The Commonwealth has forced  [Ark Encounter] to choose between expressing its religious views on its own property at the theme park and receiving the tax rebate under the KTDA. Although Defendants are correct that “the mere non-funding of private secular and religious . . . programs does not burden a person’s religion or the free exercise thereof,” ..., in this case the Commonwealth is funding the private secular programs while discriminating against the religious one because of its religiosity, which is a violation of the Free Exercise Clause.

AP reports on the decision. [Thanks to Tom Rutledge for the lead.]

UPDATE: Kentucky Gov. Matt Bevin's office said on Jan. 27 that it will not appeal the court's decision. (Cincinnati Enquirer).

First U.S. - Vatican Intergovernmental Agreement Signed-- To Prevent Tax Evasion

Yesterday the United States signed its first formal inter-governmental agreement with the Holy See-- an agreement to prevent tax evasion by U.S. citizens who conduct financial activities in the Vatican City State. Zenit reports that the agreement, also signed by the Holy See acting in the name and on behalf of the Vatican City State, implements requirements of the U.S. Foreign Account Tax Compliance Act (FATCA) [background].

New Zealand Think Tank Suggests Limiting Charitable Status of Some Religious Institutions

The New Zealand Initiative, a public policy think tank supported by chief executives of major New Zealand businesses, yesterday issued a new report titled Giving Charities A Helping Hand. Among the Report's recommendations was a review of the Charities Act's definition of charitable purpose, and thus of which organizations qualify for tax exemptions.  The Report went on:

In addition, the review might usefully examine whether religious and cultural institutions should continue to qualify for charitable status simply because they pursue the goal of promoting religion and culture. This is not to say that such institutions should not be considered, but the assessment criteria should be the same for all organisations seeking the status of registered charities.

German Catholic Church Threatens To Sue Famous Footballer Over Church Taxes

Catholic Herald reported this week that the German Catholic Church is threatening to take famous Italian footballer Luca Toni to court over unpaid German church taxes.  The Church claims that Toni failed to pay the Kirchensteuer (church tax) while playing for Bayern Munich from 2007 to 2010.  The Church claims that Toni owes 1.5 million Euros in back taxes plus 200,000 Euros in interest.  A proposed settlement that would have had his team paying 700,000 Euros toward the arrearages was rejected by the team.

British Tax Tribunal: Company Can Assert Religious Rights As Alter Ego of Owner

In Exmoor Coast Boat Cruises Ltd. v. Commissioners for Her Majesty's Revenue & Customs, (UK FTT, Dec. 17, 2014), the United Kingdom First-Tier Tribunal Tax Chamber held that a business entity can assert religious liberty rights where it is the alter ego of a natural person (or possibly a group of persons) whose rights are being infringed.  At issue was whether Exmoor Coast, a company, solely owned by Matthew Oxenham, could claim an exemption from mandatory electronic filing of Value Added Tax returns. VAT regulations permit paper filing by any "practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications...."

The court concluded that while the alter ego test was met, it was not shown that the electronic filing requirement interferes with Oxenham's manifestation of his religion or belief. His objections relate to the amount of CO2 created by the Internet and its impact on climate change.  However Oxenham was willing to use the Internet for some purposes.  The court concluded:

... it was [Oxenham's] belief that the internet should not be used save where he judged it economically necessary to do so.... [T]hat belief does not attain a level of cogency, seriousness, cohesion and importance such that it should be protected. This is because his belief ... is not so strongly held that he will make economic sacrifices for it; further, [Article 9 of the European Convention on Human Rights] cannot have been intended to protect a belief system which allows the practitioner to pick and chose when it suits him to adhere to his principles as that would amount to allowing people to pick and choose when they can be compelled to obey the law.

Law & Religion UK has more on the case.

In Germany, New Tax Rules Lead To Departures From Churches

Reuters reported last week that a change in Germany's tax law has prompted a large jump in the number of Germans leaving both Catholic and Protestant churches. Under Germany's tax law, church members are assessed another 8% or 9% which goes to pay the salaries of clergy, charitable services and other expenses of the church. While the church tax applies to all income, apparently many Germans have paid it only on their salaries and not on their investment income.  Under tax changes that become effective next year, banks will automatically withhold church taxes from accounts in which individuals earn more than 801 Euros in capital gains. Many are leaving their church rather than pay the increased amounts.  Leaving a church means that an individual is no longer entitled to receive sacraments or marry in the church, or receive a religious burial. [Thanks to Scott Mange for the lead.]