The wording and intent of the Internal Revenue Code should allow money given directly to LDS missionaries to be tax deductible, according to briefs filed in the U.S. Supreme Court by the LDS Church and lawyers for one of its families.
The court agreed late last year to hear a case filed by Harold and Enid Davis of Idaho Falls, who tried to deduct from their taxes the money they sent to partially support two sons on missions for The Church of Jesus Christ of Latter-day Saints.The 9th Circuit Court of Appeals based in San Francisco would not allow the deduction, saying the church lacked sufficient control over the money to ensure it was used only for charitable purposes. The U.S. Justice Department supports that decision.
But two other federal appeals courts have issued differing rulings on the same question. That has resulted in allowing such deductions in six states, including Utah; banning them in nine states, including Idaho; and allowing them in three states only if amounts of the donations match requests from the church.
One unified rule from the Supreme Court is sought in briefs filed recently in the case by the Davises' attorneys - led by Rex Lee, president of Brigham Young University and former U.S. solicitor general - and in a friend-of-the-court brief by attorneys for the church.
The brief by the Davises' attorneys says that the Internal Revenue Code allows money given "to or for the use of" an approved charity to be tax deductible.
It adds that debates in Congress when the code was passed show that wording was intended to allow third parties to receive such funds for work on behalf of the charity.
Even though the Davises' money was not given directly to the church, "the missionaries clearly received the money solely for the purpose of furthering the church's missionary goals and not for their personal use," the brief said. It noted missionaries work 75 to 100 hours a week in proselyting and preparation.
Missionaries are also duly authorized agents for the church and are empowered by it to receive such funds, the brief said, which a church First Presidency letter in 1978 said it considers as sacred donations to the church.
The church also suggests how much money should be given, makes rules for its use and requires missionaries to keep careful expense records - which the brief said shows the church has "substantial control" over use of the funds to ensure they are used toward charitable purposes.
The brief also said under the 9th Circuit Court's reasoning, "the contributions at issue here unquestionably would have been deductible if (the Davises) had sent them to the church for transmittal to the missionaries or if they had been made from the missionaries' own funds."
The result if the Davises lose, the brief said, would be "to place enormous pressure on the church to abandon its longstanding tradition of direct contributions" to allow its members tax benefits.
The church doesn't want to do that, for several reasons, the brief said, including that it would increase missionary costs by forcing creation of a new level of church bureaucracy to accept and distribute money.
Other reasons listed include that the direct-contribution system and its proscribed levels of support "fosters equality among missionaries whose families represent all levels of economic backgrounds," helps build faith among family members helping to support the missionary and helps keep the missionary frugal by knowing the sacrifices his or her family is making.
The brief also noted, "The church believes that the donor of a child's missionary service should receive the same tax treatment as the donor to a church fund whose money will be sent to a missionary unknown to the donor."
Oral arguments in the case have been scheduled for March 26. A decision is expected in the summer.