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Concluded
IV. Whether the Appeals Officer Abused His Discretion
In the Appeals hearing, petitioners were given the opportunity to substantiate that Mr. Pixley was employed as a Baptist minister. They failed to do so. In fact, there is no evidence that Mr. Pixley was employed as a minister when the notice of determination was issued to petitioners in March 2002 or that he has been employed as a minister at any time since.6 Consequently, even if we were to assume arguendo, as petitioners assert, that "The Southern Baptist Convention has a doctrine that its members should tithe ten percent of their income to the church", we are unpersuaded that tithing was a requirement of Mr. Pixley's employment.
We hold that the Appeals officer did not abuse his discretion in disallowing petitioners' claimed tithing expenses.
V. Petitioners' First Amendment Challenge
The First Amendment of the United States Constitution provides that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof".
Petitioners contend that respondent's disallowance of Mr. Pixley's tithing expenses for purposes of evaluating their offer in compromise violates the Free Exercise Clause of the First Amendment. The gist of petitioners' argument, as we understand it, is that by declining to make allowance for tithing expenses in evaluating petitioners' ability to pay their taxes, respondent is effectively reducing the funds that petitioners have available to support their religion and diverting those funds to the U.S. Treasury.
It may well be true that paying their taxes will leave petitioners less funds to support their religion. But this is a burden, common to all taxpayers, on their pocketbooks, rather than a recognizable burden on the free exercise of their religious beliefs. Constitutional protection of fundamental freedoms "does not confer an entitlement to such funds as may be necessary to realize all the advantages of that freedom." Harris v. McRae, 448 U.S. 297, 318 (1980); see Regan v. Taxation With Representation of Wash. [83-1 USTC ¶9365], 461 U.S. 540, 550 (1983).
In any event, even if petitioners could demonstrate a recognizable burden on the free exercise of their religious beliefs, the burden would be justified by the Government's compelling interest in collecting taxes and administering a uniform, mandatory, and sound tax system. See, e.g., Hernandez v. Commissioner [89-1 USTC ¶9347], 490 U.S. 680, 699-700 (1989) (quoting United States v. Lee [82-1 USTC ¶9205], 455 U.S. 252, 260 (1982), stating that the Government has a "`broad public interest in maintaining a sound tax system,' free of `myriad exceptions flowing from a wide variety of religious beliefs' "); United States v. Lee, supra at 260 ("Because the broad public interest in maintaining a sound tax system is of such a high order, religious belief in conflict with the payment of taxes affords no basis for resisting the tax."); Miller v. Commissioner [Dec. 53,915], 114 T.C. 511, 517 (2000); Adams v. Commissioner [Dec. 52,602], 110 T.C. 137, 139 (1998), affd. [99-1 USTC ¶50,307] 170 F.3d 173 (3d Cir. 1999). This compelling Government interest underpins the Commissioner's authority to compromise tax liabilities under section 7122 and to prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer in compromise is adequate and should be accepted to resolve a tax dispute, see sec. 7122(c)(1).7
We hold that the Appeals officer's disallowance of tithing expenses in evaluating petitioners' ability to pay their taxes did not violate Mr. Pixley's First Amendment rights to free exercise of religion.
VI. Conclusion
We sustain respondent's determination in the notice of determination that, for purposes of petitioners' offer in compromise, Mr. Pixley's tithing expenses are not allowable in determining petitioners' ability to pay their outstanding tax liabilities. Petitioners raise no additional arguments against respondent's proposed collection action. Consequently, we sustain respondent's determination to proceed with collection of petitioners' tax liabilities by levy.
Decision will be entered for respondent.
1 Unless otherwise indicated, all section references are to the Internal Revenue Code as amended, and Rule references are to the Tax Court Rules of Practice and Procedure.
2 A "tithe" is "a tenth part of something paid as a voluntary contribution or as a tax especially for the support of a religious establishment". Merriam Webster's Collegiate Dictionary 1238 (10th ed. 1997).
3 Until early 2001, Mr. Pixley was also employed by Cardiology Associates of Houston, Texas.
4 Final regulations under sec. 7122 were promulgated effective for offers in compromise pending on or submitted on or after July 18, 2002. Sec. 301.7122-1(k), Proced. & Admin. Regs.
5 On May 5, 2004, we ordered the parties to file additional supplemental stipulations of fact, including stipulations as to the portions of the Internal Revenue Manual ( IRM ), as in effect for the relevant time periods, that the parties discussed on brief. The parties made appropriate stipulations and included as exhibits copies of the relevant portions of the IRM . All references to the IRM are to these stipulated exhibits.
6 On brief, petitioners allege that after Mr. Pixley left Grace Community Church in June 2001, petitioners moved to California so that Mr. Pixley could prepare to attend a seminary, that he continued his ministry in an unpaid position as a Baptist minister, and that he continued to tithe to keep this position. There is no evidence in the record, however, to substantiate these allegations, and there is no indication that petitioners presented any such evidence to the Appeals officer. Even if we were to assume arguendo that these allegations are true, they do not establish that tithes were paid as a condition of employment.
7 The Commissioner states that the objectives of the offer in compromise program are to: (1) Effect collection of what can reasonably be collected at the earliest possible time and at the least cost to the Government; (2) achieve a resolution that is in the best interest of both the individual taxpayer and the Government; (3) provide the taxpayer a fresh start toward future voluntary compliance with all filing and payment requirements; and (4) secure collection of revenue that may not be collected through any other means. IRM sec. 5.8.1.1.4(1) (Feb. 4, 2000). These objectives are in furtherance of the Government's greater interest in collecting taxes and maintaining a uniform, mandatory, and sound tax system.
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