                    FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MICHAEL SKLAR; MARLA SKLAR,               
           Petitioners-Appellants,                No. 06-72961
               v.
                                                  Tax Ct. No.
                                                     395-01
COMMISSIONER OF INTERNAL
REVENUE,                                            OPINION
             Respondent-Appellee.
                                          
  Appeal from a Decision of the United States Tax Court

                   Argued and Submitted
           February 4, 2008—Pasadena, California

                    Filed December 12, 2008

   Before: Harry Pregerson and Kim McLane Wardlaw,
  Circuit Judges, and Ronald B. Leighton,* District Judge.

                   Opinion by Judge Wardlaw




   *The Honorable Ronald B. Leighton, United States District Judge for
the Western District of Washington, sitting by designation.

                               16341
16344                   SKLAR v. CIR


                        COUNSEL

Jeffrey I. Zuckerman (argued), Curtis, Mallet-Prevost, Colt &
Mosle, LLP, Washington, D.C., for the petitioners-appellants.

Ellen Page DelSole (argued), Eileen J. O’Connor, and Ken-
neth L. Greene, Department of Justice, Washington, D.C., for
the respondent-appellee.


                         OPINION

WARDLAW, Circuit Judge:

   Michael and Marla Sklar (“the Sklars”) appeal from a deci-
sion of the Tax Court affirming the disallowance of deduc-
                               SKLAR v. CIR                16345
tions they claimed for tuition and fees paid to their children’s
Orthodox Jewish day schools. See Sklar v. Comm’r, 125 T.C.
281 (2005). We have jurisdiction pursuant to 28 U.S.C.
§ 7482(a)(1), and we affirm.

 I.     FACTUAL AND PROCEDURAL BACKGROUND

A.      Taxpayers

   The Sklars are Orthodox Jews who in 1995 had five school-
aged children. Rather than send their children to public school
to meet California State educational requirements, the Sklars
enrolled each of their children in one of two Orthodox Jewish
day schools, Emek Hebrew Academy (“Emek”) and Yeshiva
Rav Isacsohn Torath Emeth Academy (“Yeshiva Rav”). They
did so “because of their sincerely and deeply held religious
belief that as Jews they have a religious obligation to provide
their children with an Orthodox Jewish education in an Ortho-
dox Jewish environment.” In 1995, the Sklars paid a total of
$27,283 to Emek and Yeshiva Rav which included $24,093
for tuition, $1300 for registration fees, $1715 for other man-
datory fees, and $175 for an after school Mishna program at
Emek.1 During 1995, Emek and Yeshiva Rav each were
exempt from federal income tax under I.R.C. § 501(c)(3),
which provides tax exempt status for certain institutions “or-
ganized and operated exclusively for religious, charitable, . . .
or educational purposes,” among others. Both schools also
qualified as organizations described in I.R.C. § 170(b)(1)(A),
which allows donors to deduct charitable donations to qualify-
ing institutions.

   Both schools provided daily exposure to Jewish heritage
and values. Their goals included educating their students in
Jewish heritage and values, as well as the tenets of the Jewish
faith. To this end, time was allocated in the school day for
prayers and religious studies, students were required to adhere
  1
      Mishna is the study of Jewish oral law.
16346                    SKLAR v. CIR
to Orthodox Jewish dress codes, and boys and girls attended
classes separately.

   A child’s day at each school included specified hours
devoted to courses in religious studies and specified hours
devoted to secular studies. The length of time that each stu-
dent participated in secular classes, as opposed to religious
studies, and the length of the total school day varied with the
gender and grade level of the particular student.

   Quality secular education that fulfilled the mandatory edu-
cation requirements of the State of California also was a goal
of both schools. Emek sought to provide a thorough and well-
balanced curriculum in both religious and secular studies so
that every student could succeed “in the most rigorous
yeshiva [(Jewish)] high schools and other institutions of
higher learning.” Yeshiva Rav sought to prepare its students
for matriculation to yeshiva high schools and to attend a col-
lege or seminary.

   During the school years in issue, the Sklars paid tuition and
mandatory fees to Emek and Yeshiva Rav for their children’s
education. To ensure payment, the Sklars, like other parents,
were required to contract with each school to pay, and to give
to each school postdated checks covering, the tuition for the
upcoming school year. Both schools provided tuition dis-
counts to families based on financial need, if documented by
detailed financial information submitted to the schools’ schol-
arship committees, but the Sklars did not seek or receive such
assistance. Although an Orthodox Rabbinic ruling precluded
either school from expelling students from the Jewish studies
program during the school year, nonpayment of tuition could
result in expulsion from secular studies and the schools’
refusal to allow the children to register for classes in the sub-
sequent school year.
                             SKLAR v. CIR                           16347
B.    The Prior Litigation

   In 1993, the Sklars learned of a confidential closing agree-
ment2 the Internal Revenue Service (“IRS”) had executed with
the Church of Scientology that purportedly allowed deduc-
tions for certain religious educational services such as audit-
ing and training. The Sklars subsequently amended their tax
returns for 1991 and 1992, and filed a return for 1993, includ-
ing new deductions for a portion of the tuition they had paid
to their children’s schools. See Sklar, 125 T.C. at 288. The
IRS allowed these deductions, apparently under the impres-
sion that the Sklars were Scientologists. See id. The Sklars
claimed similar deductions in 1994, but these were disal-
lowed. Id. at 288-89. The IRS Notice of Deficiency explained
that because the costs were for personal tuition expenses, they
were not deductible. The Sklars pursued an unsuccessful peti-
tion for redetermination before the Tax Court regarding their
1994 deductions, which subsequently came before us. Judge
Reinhardt, writing for our Court in an opinion joined by Judge
Pregerson, upheld the Tax Court’s denial of the deduction.
See Sklar v. Comm’r (Sklar I), 282 F.3d 610 (9th Cir. 2002),
amending and superseding Sklar v. Comm’r, 279 F.3d 697
(9th Cir. 2002).

   In Sklar I, the Sklars made virtually identical arguments to
those they assert here, based predominantly on their theories
that a portion of their tuition payments are tax deductible
because they received in exchange only intangible religious
benefits and the Scientology Closing Agreement is an uncon-
  2
    Under § 7121 of the Internal Revenue Code, the IRS is authorized to
execute “closing agreements.” A closing agreement is “an agreement in
writing with any person relating to the liability of such person (or of the
person or estate for whom he acts) in respect of any internal revenue tax
for any taxable period.” I.R.C. § 7121(a); see also 26 C.F.R. § 301.7121-
1. Such closing agreements are intended to be “final and conclusive, and,
except upon a showing of fraud or malfeasance, or misrepresentation of
a material fact,” shall not be reopened or annulled. I.R.C. § 7121(b).
16348                    SKLAR v. CIR
stitutional establishment of religion from which they should
also benefit.

   The Sklar I panel soundly rejected the Sklars’ argument
that certain 1993 amendments to the Tax Code rendered their
tuition payments deductible as payments to exclusively reli-
gious organizations for which the Sklars received only intan-
gible religious benefits. 282 F.3d at 612-14. Specifically, the
panel noted that the amendments addressed “clearly proce-
dural provisions” and that the deduction the Sklars alleged
would be “of doubtful constitutional validity.” Id. at 613.

   Next, the Sklar I panel held that the IRS was compelled to
disclose the contents of its Closing Agreement with the
Church of Scientology, at least to the extent it fell under
I.R.C. § 6104(a)(1)(A), see 282 F.3d at 614-18, and that such
disclosure was necessary as a practical matter because the
agreement affects “not just one taxpayer or a discrete group
of taxpayers, but a broad and indeterminate class of taxpayers
with a large and constantly changing membership.” Id. at 617.
Further, the panel held “where a closing agreement sets out a
new policy and contains rules of general applicability to a
class of taxpayers, disclosure of at least the relevant part of
that agreement is required in the interest of public policy.” Id.
In Sklar I, the panel therefore rejected

    the argument that the closing agreement made with
    the Church of Scientology, or at least the portion
    establishing rules or policies that are applicable to
    Scientology members generally, is not subject to
    public disclosure. The IRS is simply not free to
    enter into closing agreements with religious or other
    tax-exempt organizations governing the deductions
    that will be available to their members and to keep
    such provisions secret from the courts, the Congress,
    and the public.

Id. at 618. The Sklar I panel nevertheless opined, without
resolving the issue, that the Tax Court’s ruling that the Clos-
                              SKLAR v. CIR                           16349
ing Agreement was irrelevant to the deductibility of the
Sklars’ tuition payments was “in all likelihood correct.” Id. It
continued:

      The Tax Court concluded that the Sklars were not
      similarly situated to the members of the Church of
      Scientology who benefitted from the closing agree-
      ment. While we have no doubt that certain taxpayers
      who belong to religions other than the Church of
      Scientology would be similarly situated to such
      members, we think it unlikely that the Sklars are.
      Religious education for elementary or secondary
      school children does not appear to be similar to the
      “auditing” and “training” conducted by the Church
      of Scientology.

Id. at 618 n.13; see also Hernandez v. Comm’r, 490 U.S. 680,
684-85 (1989) (describing “auditing” and “training”).

   The Sklar I panel then turned to the Sklars’ Establishment
Clause and administrative consistency arguments. Although it
was not required to decide those issues because the Sklars had
“failed to show that their tuition payments constitute a par-
tially deductible ‘dual payment’ under the Tax Code,” Sklar
I, 282 F.3d at 620, the panel noted that had it been required
to do so, it would have first concluded that the IRS policy
constitutes an unconstitutional denominational preference
under Larson v. Valente, 456 U.S. 228 (1982).3 See Sklar I,
  3
    Larson v. Valente established an analytical framework to assess the
constitutionality of statutes granting denominational preferences. 456 U.S.
228, 245-52 (1982). To survive an Establishment Clause challenge under
Larson, a statute which grants a denominational preference must be justi-
fied by a “compelling governmental interest” to which it is “closely fit-
ted.” Id. at 247-48, 252; see also id. at 246 (“[T]his Court has adhered to
the principle, clearly manifested in the history and logic of the Establish-
ment Clause, that no State can pass laws which aid one religion or that
prefer one religion over another.” (internal citation and quotation marks
omitted)).
16350                         SKLAR v. CIR
282 F.3d at 618-19. The panel reasoned that the denomina-
tional preference embodied in the Closing Agreement was
unconstitutional because it “cannot be justified by a compel-
ling governmental interest.” Id. However, the panel indicated
it would not be willing to extend that preference to other reli-
gious organizations for three reasons: First, an extension of
the preference would amount to state sponsorship of all reli-
gions, which the panel doubted “Congress or any agency of
the government would intend.” Id. at 619-20. Second, an
extension of the preference would be “of questionable consti-
tutional validity under Lemon,”4 because administering the
policy “could require excessive government entanglement
with religion.”5 Id. at 620. Third, the requested policy violated
appeared to violate I.R.C. § 170. Id.

   The panel also indicated it would reject the Sklars’ admin-
istrative consistency claim because it “seriously doubted” that
the Sklars were similarly situated to the Scientologists.6 The
  4
     In Lemon v. Kurtz, 403 U.S. 602 (1971), the Supreme Court established
a three-prong test to determine whether the state has violated the Estab-
lishment Clause: “First, the statute must have a secular legislative purpose;
second, its principal or primary effect must be one that neither advances
nor inhibits religion; finally, the statute must not foster an excessive gov-
ernment entanglement with religion.” Id. at 612-13 (1971) (internal cita-
tions and quotation marks omitted).
   5
     In Hernandez v. Commissioner, 490 U.S. 680 (1989), the Supreme
Court rejected the claim that payments made to the Church of Scientology
for purely religious education and training were deductible as gifts or con-
tributions under I.R.C. § 170. Id. at 692-94. Among other reasons it gave
for its decision, the Court explained that “the deduction petitioners seek
might raise problems of entanglement between church and state.” Id. at
694; see also infra Part II.B (discussing § 170 and Hernandez).
   6
     Judge Silverman, concurring, concluded that the question of whether
the Sklars were “similarly situated” to the Scientologists had “no bearing
on whether the tax code permits the Sklars to deduct the costs of their chil-
dren’s religious education as a charitable contribution.” Sklar I, 282 F.3d
at 622. Rather, he concluded that the Sklars were absolutely barred from
taking the deduction by the Internal Revenue Code and Supreme Court
precedent. See id. at 622-23.
                         SKLAR v. CIR                      16351
panel further stated that even if the Sklars were similarly situ-
ated, “because the treatment they seek is of questionable stat-
utory and constitutional validity under § 170 of the IRC,
under Lemon, and under Hernandez, we would not hold that
the unlawful policy set forth in the closing agreement must be
extended to all religious organizations.” Id. at 620.

   Finally, relying on United States v. American Bar Endow-
ment, 477 U.S. 105 (1986), the Sklar I panel rejected the argu-
ment that the Sklars’ tuition payments were deductible as a
“dual payment” or “quid pro quo payment,” a payment made
in part as consideration for goods and services and in part for
charitable purposes. In American Bar Endowment, the
Supreme Court held that the taxpayer must satisfy a two-part
test to be entitled to the § 170 deduction for a quid pro quo
payment:

     First, the payment is deductible only if and to the
     extent it exceeds the market value of the benefit
     received. Second, the excess payment must be made
     with the intention of making a gift.

477 U.S. at 117 (internal citation and quotation marks omit-
ted). The Sklar I panel held that the Sklars failed to introduce
evidence demonstrating both “that any dual tuition payments
they may have made exceeded the market value of the secular
education their children received,” 282 F.3d at 621, or “that
they intended to make a gift by contributing such ‘excess pay-
ment.’ ” Id. The panel also suggested that for the purpose of
demonstrating the first part of the American Bar Endowment
test, the “market value” for the tuition payments would be the
cost of a comparable secular education offered by private
schools, evidence the Sklars had failed to introduce, perhaps,
because of the “practical realities of the high cost of educa-
tion.” Id.

C.   The Current Litigation

  On their 1995 tax return, the Sklars claimed $15,000 in
deductions for purported charitable contributions that com-
16352                    SKLAR v. CIR
prised a portion of their five children’s tuition at Emek and
Yeshiva Rav. The deduction was based on their estimate that
55% of the tuition payments were for purely religious educa-
tion, an estimate supported by letters submitted two years
later (in 1997) that were drafted by each of the schools at the
Sklars’ request. Sklar, 125 T.C. at 288-89.

   The IRS disallowed the $15,000 deduction. The IRS also
determined the Sklars had “failed to meet the substantiation
requirements of Internal Revenue Code Section 170(f)(8) with
respect to the disallowed $15,000.00 of claimed charitable
contributions.” The Sklars petitioned the Tax Court for a rede-
termination of deficiency, asserting that (1) the tuition and fee
payments to exclusively religious schools are deductible
under a dual payment analysis to the extent the payments
exceeded the value of the secular education their children
received (a question left somewhat open in Sklar I); (2) Sec-
tions 170(f)(8) and 6115 of the Internal Revenue Code, as
enacted in 1993, authorized the deduction of tuition payments
for religious education made to exclusively religious schools
(an issue all but foreclosed by Sklar I); and (3) that the 1993
Closing Agreement between the Commissioner and the
Church of Scientology constitutionally and administratively
requires the IRS to allow other taxpayers to take the same
charitable deductions for tuition payments to their religious
schools (a question the panel discussed at length but declined
to decide in Sklar I). Before the Tax Court, the Sklars and the
IRS stipulated that in 1993 the IRS had executed a confiden-
tial closing agreement with the Church of Scientology, set-
tling several outstanding issues between the IRS and the
Church of Scientology. See id. at 298. Under this agreement,
members of the Church of Scientology were authorized to
deduct as charitable contributions at least 80% of the fees for
qualified religious services provided by the Church of Scien-
tology. See id. at 298-99.

  The Tax Court again rejected the Sklars’ arguments, hold-
ing that the tuition and fee payments to the Jewish Day
                           SKLAR v. CIR                      16353
Schools were not deductible under any of the Sklars’ theories.7
First, the Tax Court rejected the Sklars’ effort to prove that
the tuition and fee payments so exceeded the market value of
the secular education their children received that they took on
a “dual character,” i.e. that the payments had the character of
both a purchase of education and a charitable contribution. Id.
at 291-94; see also American Bar Endowment, 477 U.S. at
117. It found that the Sklars’ expert report regarding tuition
at various Los Angeles area schools demonstrated only that

      (1) Some schools charge more tuition than Emek and
      Yeshiva Rav Isacsohn, and some charge less; and (2)
      the amount of tuition petitioners paid is unremark-
      able and is not excessive for the substantial benefit
      they received in exchange; i.e., an education for their
      children.

125 T.C. at 293-94. The Tax Court concluded that the Sklars
failed to demonstrate that any part of their tuition payments
was intended as a charitable contribution and that the well-
established law precluding deduction of tuition payments to
schools providing both secular and religious education con-
trolled. Second, the Tax Court held that the 1993 amendments
to the Code “did not change what is deductible under section
170.” Id. at 296-97. In keeping with our reasoning in Sklar I,
the Tax Court concluded that neither § 170(f)(8), nor § 6115,
as amended in 1993, nor the accompanying legislative history
suggested that Congress intended to make a substantive
change to the Code or to overrule the “long line of cases” pre-
cluding deductibility of tuition payments to religious schools.
Id. at 296. Third, the Tax Court held that the Closing Agree-
ment between the IRS and the Church of Scientology is irrele-
vant to the question of whether the Sklars are entitled to the
§ 170 deductions. Id. at 299. Finally, the Tax Court concluded
  7
    The Tax Court also ruled that the Sklars were not liable for an
accuracy-related penalty the IRS had imposed under I.R.C. § 6662, an
issue not before us on this appeal.
16354                      SKLAR v. CIR
that the Sklars’ separate payments for Mishna classes, which
were held apart from other classes at Emek, should not be
treated any differently than the tuition and fee payments. The
Sklars timely appeal.

                     II.    DISCUSSION

A.   Standard of Review

   “We review the Tax Court’s conclusions of law and its con-
struction of the tax code de novo, and no deference is owed
that court on its application of the law.” Sklar I, 282 F.3d at
612. We review the Tax Court’s factual determinations for
clear error and its evidentiary rulings for abuse of discretion.
See Sparkman v. Comm’r, 509 F.3d 1149, 1155-56 (9th Cir.
2007).

B.   The Sklars’ 1995 Tuition Payments Are Not Deductible
     as Charitable Contributions Under the Internal
     Revenue Code

   [1] Section 170 of the Internal Revenue Code allows tax-
payers to deduct “any charitable contribution,” defined as “a
contribution or gift to or for the use of” certain eligible enti-
ties enumerated in § 170(c), including those exclusively orga-
nized for religious purposes and educational purposes. I.R.C.
§ 170(a)(1), (c). “[T]o ensure that the payor’s primary pur-
pose is to assist the charity and not to secure some benefit,”
we require such contributions to be “made for detached and
disinterested motives.” Graham v. Comm’r, 822 F.2d 844,
848 (9th Cir. 1987). Therefore, “quid pro quo” payments,
where the taxpayer receives a benefit in exchange for the pay-
ment, are generally not deductible as charitable contributions.
See Hernandez v. Comm’r, 490 U.S. 680, 689-91 (1989). In
keeping with this framework, tuition payments to parochial
schools, which are made with the expectation of a substantial
benefit, or quid pro quo, “have long been held not to be chari-
table contributions under § 170.” Id. at 693; see also DeJong
                              SKLAR v. CIR                           16355
v. Comm’r, 309 F.2d 373, 376 (9th Cir. 1962) (“The law is
well settled that tuition paid for the education of the children
of a taxpayer is a family expense, not a charitable contribution
to the educating institution.”).

   [2] In Hernandez, the Supreme Court considered “whether
taxpayers may deduct as charitable contributions payments
made to branch churches of the Church of Scientology”8 in
return for services known as “auditing” and “training.” 490
U.S. at 684. Both are considered forms of religious education.
“Auditing” involves a form of spiritual counseling whereby a
person gains spiritual awareness in one-on-one sessions with
an auditor. By participating in “training,” a person studies the
tenets of Scientology, gains spiritually, and may seek to
become an auditor. Members of the Church of Scientology
sought to deduct payments for auditing and training as chari-
table contributions for religious services. The Court held that
such payments for religious educational services “do not qual-
ify as ‘contribution[s] or gift[s].’ ” Id. at 691. Rather, “[t]hese
payments were part of a quintessential quid pro quo
exchange: in return for their money, petitioners received an
identifiable benefit, namely, auditing and training sessions.”
Id. The Court reasoned “ ‘[t]he sine qua non of a charitable
contribution is a transfer of money or property without ade-
quate consideration.’ ” Id. (quoting American Bar
Endowment, 477 U.S. at 118).

   [3] The Court further rejected the taxpayers’ argument that
a quid pro quo analysis was not even appropriate, because the
  8
    In Hernandez, the Commissioner had stipulated before the Tax Court
that “the branch churches of Scientology are religious organizations enti-
tled to receive tax-deductible charitable contributions under the relevant
sections of the Code.” 490 U.S. at 686. This stipulation isolated the statu-
tory issue of “whether payments for auditing or training sessions constitute
‘contribution[s] or gift[s]’ under § 170.” Id. Similarly, the parties to the
current litigation stipulated before the Tax Court “that an agreement dated
October 1, 1993, between the Commissioner and the Church of Scien-
tology settled several longstanding issues.” 125 T.C. at 298.
16356                    SKLAR v. CIR
payments for auditing and training services resulted in receipt
of a purely religious benefit. Id. at 692-93. The Court first
found no support in the language of § 170, which makes “no
special preference for payments made in the expectation of
gaining religious benefits or access to a religious service.” Id.
at 693. Second, the Court reasoned that accepting the taxpay-
ers’ “deductibility proposal would expand the charitable con-
tribution deduction far beyond what Congress has provided.”
Id. at 693. For example, “some taxpayers might regard their
tuition payments to parochial schools as generating a religious
benefit or as securing access to a religious service,” which
would be incorrect because “such payments . . . have long
been held not to be charitable contributions under § 170.” Id.
Finally, the Court noted that “the deduction petitioners seek
might raise problems of entanglement between church and
state” because it would “inexorably force the IRS and review-
ing courts to differentiate ‘religious’ benefits from ‘secular’
ones.” Id. at 694. While declining to pass on the constitution-
ality of such hypothetical inquiries, the Court noted that
“ ‘pervasive monitoring’ for ‘the subtle or overt presence of
religious matter’ is a central danger against which we have
held the Establishment Clause guards.” Id. (quoting Aguilar
v. Felton, 473 U.S. 402, 413 (1985)). Thus, the Hernandez
decision clearly forecloses the Sklars’ argument that there is
an exception in the Code for payments for which one receives
purely religious benefits.

  1.    The 1993 Amendments to the Tax Code Did Not
        Overrule Hernandez

   To circumvent Hernandez’s clear holding, the Sklars resur-
rect their Sklar I argument that the 1993 amendments to IRS
§§ 170(f)(8) and 6115 overruled the Court’s holding in Her-
nandez that only gifts or contributions may be deducted under
§ 170. According to the Sklars, the 1993 amendments provide
for the deduction of tuition payments for which they receive
only intangible religious benefits. We agree with the Tax
                             SKLAR v. CIR                           16357
Court that the Sklar’s interpretation of the 1993 amendments
is misguided.

   [4] Amended § 170(f)(8) requires the taxpayer to “substan-
tiate[ ] the contribution by a contemporaneous written
acknowledgment of the contribution by the donee organiza-
tion.” I.R.C. § 170(f)(8)(A). This acknowledgment must
include an estimate of the value of any goods or services the
donor received in exchange, “or, if such goods or services
consist solely of intangible religious benefits, a statement to
that effect.” I.R.C. § 170(f)(8)(B)(iii). The amendment also
defines an “intangible religious benefit” as one “which is pro-
vided by an organization organized exclusively for religious
purposes and which generally is not sold in a commercial
transaction outside the donative context.” Id. As the Tax
Court correctly held, Sklar, 125 T.C. at 296-97, and as we
have previously suggested, Sklar I, 282 F.3d at 613, this
amendment creates an exception only to the new substantia-
tion requirement created by § 170(f)(8)(A).9 Nothing in the
amendment’s language suggests that Congress intended to
expand the types of payments that are deductible contribu-
tions. As the Sklar I panel explained:
  9
    Although the Sklars rely on the new substantiation requirement as sup-
port for their deduction of tuition payments, they did not fully comply
with the requirement themselves. Section 170(f)(8)(C) requires that sub-
stantiation be provided by the earlier of (1) the date on which the return
is filed or (2) the due date for filing the return. However, the Sklars did
not submit the required supporting documentation until November 1997.
The IRS argues that this untimely substantiation should serve as an abso-
lute bar to the Sklars’ claimed deductions. However, some of the Sklars’
deductions, such as payments for Mishna classes, were not subject to the
substantiation requirement because they fell below the $250 threshold
described in section 170(f)(8). “Separate contributions of less than $250
are not subject to the requirements of section 170(f)(8), regardless of
whether [they sum up to] $250 or more.” 26 C.F.R. § 1.170A-13(f)(1) (as
amended in 1996). Because we conclude that no part of the Sklars’ pay-
ments were deductible, we need not reach the issue.
16358                     SKLAR v. CIR
      Given the clear holding of Hernandez and the
      absence of any direct evidence of Congressional
      intent to overrule the Supreme Court on this issue,
      we would be extremely reluctant to read an addi-
      tional and significant substantive deduction into the
      statute based on what are clearly procedural provi-
      sions regarding the documentation of tax return
      information, particularly where the deduction would
      be of doubtful constitutional validity.

Id.

   [5] The second pertinent 1993 amendment requires donee
organizations to disclose limitations on the deductibility of
certain quid pro quo payments to the donors of such pay-
ments. See I.R.C. § 6115. Amended § 6115(a) requires any
organization that “receives a quid pro quo contribution in
excess of $75” to provide the donor with a written statement
declaring that the deductible portion of the contribution can-
not include “the value of the goods or services provided by
the organization,” along with “a good faith estimate of the
value of such goods or services.” However, § 6115(b)
explains:

      For purposes of this section, the term “quid pro quo
      contribution” means a payment made partly as a con-
      tribution and partly in consideration for goods or ser-
      vices provided to the payor by the donee
      organization. A quid pro quo contribution does not
      include any payment made to an organization, orga-
      nized exclusively for religious purposes, in return for
      which the taxpayer receives solely an intangible reli-
      gious benefit that generally is not sold in a commer-
      cial transaction outside the donative context.

I.R.C. § 6115(b) (emphasis added). The Sklars read the
exemption from the disclosure requirement for organizations
organized exclusively for religious purposes which provide
                              SKLAR v. CIR                           16359
solely an intangible religious benefit completely out of con-
text. The Sklar I panel explained why the Sklars’ reading of
the exemption is unsupportable:

       [Section] 6115 requires that tax-exempt organiza-
       tions inform taxpayer-donors that they will receive a
       tax deduction only for the amount of their donation
       above the value of any goods or services received in
       return for the donation and requires donee organiza-
       tions to give donors an estimate of this value,
       exempting from this estimate requirement contribu-
       tions for which solely intangible religious benefits
       are received.

282 F.3d at 613.

   Nor does the legislative history of these amendments even
mention Hernandez, and the House Report specifically states
that, although the new requirements apply only to quid pro
quo contributions for commercial benefits, “[n]o inference is
intended . . . [regarding] whether or not any contribution out-
side the scope of the bill’s substantiation or reporting require-
ments is deductible (in full or in part) under the present-law
requirements of section 170.” H.R. Rep. No. 103-111, at 786
n.170 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 1017
n.170. Thus, the House Report confirms that Congress
intended to preserve the status quo ante, and hardly serves as
support for the Sklars’ argument.10
  10
    In light of certain well-established deductible payments to religious
organizations in exchange for intangible religious benefits, such as pew
rents and church dues, see Hernandez, 490 U.S. at 701-02, it seems plausi-
ble that Congress contemplated these sorts of contributions in amending
§§ 170(f)(8) and 6115 in a manner that did not impose the arduous task
of valuing the intangible religious benefits, such as the ability to partici-
pate in religious celebrations, that donors receive in exchange for these
contributions.
16360                     SKLAR v. CIR
   [6] To put to rest the Sklars’ statutory claim, we now hold
that neither the plain language of the 1993 amendments nor
the accompanying legislative history indicates any substantive
change to Hernandez’s holding that payment for religious
education to religious organizations is not deductible. We
agree with the observation of both the Tax Court and the
Sklar I panel that had Congress intended to overrule judicial
precedent and to provide charitable contributions for tuition
and fee payments to religious organizations that provide reli-
gious education, it would have expressed its intention more
clearly. See 282 F.3d at 613; 125 T.C. at 296-97.

  2.    The Tuition Payments Were Not “Dual Payment”
        Contributions

   [7] The Tax Court correctly concluded that no part of the
Sklar’s tuition payments is deductible under a “dual payment”
analysis. See Sklar, 125 T.C. at 290-94, 299-300. In American
Bar Endowment, the Supreme Court considered the question
of the extent to which payments to organizations that bear the
“dual character” of a purchase and a contribution are deduct-
ible under § 170. 477 U.S. at 116-18. IRS Revenue Ruling 67-
246 had set forth a two-part test for determining the extent to
which such payments are deductible:

       First, the payment is deductible only if and to the
       extent it exceeds the market value of the benefit
       received. Second, the excess payment must be
       “made with the intention of making a gift.”

Id. at 117 (quoting Rev. Rul. 67-246, 1967-2 Cum. Bull. 104,
105 (1967)). The Court held that Revenue Ruling 67-246
embodied the proper standard, reasoning: “The sine qua non
of a charitable contribution is a transfer of money or property
without adequate consideration. The taxpayer, therefore, must
at a minimum demonstrate that he purposely contributed
money or property in excess of the value of any benefit he
received in return.” Id. at 118.
                            SKLAR v. CIR                         16361
   In American Bar Endowment, taxpayer members of a chari-
table organization sought to deduct under § 170 refunds from
insurance policies negotiated and purchased on their behalf by
the charitable organization, which they donated to the organi-
zation. See id. at 106-09, 116-18. They claimed that the pre-
miums paid for the insurance, part of which was subsequently
refunded due to the “experience rating” of the policies, were
dual payments. Id. The Supreme Court held that the taxpayer
members met neither prong of the two-part test for deductibil-
ity of dual payments. Stating that the “most logical test of the
value of the insurance [the benefit received in return for their
payment] is the cost of similar policies,” the Court held that
because three of the four taxpayers “failed to demonstrate that
they could have purchased similar policies for a lower cost,”
they failed to demonstrate that their payment exceeded the
market value of the benefit received. Id. at 118. Because the
fourth taxpayer, who did prove that there was a comparable
insurance program at a lower premium rate for which he was
eligible, failed to demonstrate that he knew about the avail-
able lower premium during the tax years at issue, the Court
held that he failed the second prong of the test—“that he
intentionally gave away more than he received.” Id.

   [8] The Sklars again have failed to meet their burden of sat-
isfying either prong of the two-part test for a dual payment,
and we seriously doubt that they could ever make the showing
that would support a “dual payment” deduction for tuition for
combined religious and secular education.11 In Sklar I, the
panel concluded that the Sklars failed to satisfy the require-
ments for partial deductibility of their tuition payments. Our
analysis has not changed, despite the Sklars’ effort to intro-
duce evidence as to market value.
  11
   Indeed, the Tax Court expressed skepticism as to whether a dual pay-
ment analysis would ever be appropriate in this context. See 125 T.C. at
293 (“[M]ore fundamentally, the record speaks to whether a dual pay-
ments analysis applies in this case at all.”).
16362                         SKLAR v. CIR
   [9] First, the Sklar I panel reasoned that the Sklars “failed
to show that they intended to make a gift by contributing any
such ‘excess payment.’ ” 282 F.3d at 621. In fact, the Sklars
have never even argued—not in Sklar I, not before the Tax
Court and not before us—that they intended to make a gift as
a portion of their tuition payment. Indeed, the record is to the
contrary. In their brief, the Sklars explain at length that they
pay the tuition and fees to send their children to Orthodox
Jewish schools because it is a religious imperative of Ortho-
dox Judaism. They “sent their children to Yeshiva Rav Isac-
sohn and Emek in 1995 because of their sincerely and deeply
held religious belief that as Jews they have a religious obliga-
tion to provide their children with an Orthodox Jewish educa-
tion in an Orthodox Jewish environment.” Because they paid
for religious education out of their own deeply held religious
views, and because the record demonstrates that throughout
the school day—during recess, lunch and secular, as well as
religious, classes—the schools inculcate their children with
their religion’s lifestyle, heritage, and values, the Sklars have
actually demonstrated the absence of the requisite charitable
intent.

   Second, the Sklar I panel reasoned that “the Sklars have not
shown that any dual tuition payments they may have made
exceeded the market value of the secular education their chil-
dren received.” Id. The panel stated that the Sklars needed to
present evidence that their total payments exceeded “[t]he
market value [of] the cost of a comparable secular education
offered by private schools.” Id. Before the Tax Court, the
Sklars introduced expert testimony asserting that “Catholic
schools are the most reasonable comparison benchmarks for
the schools attended by the Sklar children.” Based on his esti-
mation of tuition paid for Archdiocesan Catholic schools12 in
   12
      The flaws in the expert report itself are too numerous to mention, but
we point out only one: the archdiocesan schools are subsidized in large
measure by the parishes in the Archdiocese in order to force down the
costs of education and to afford all Catholic children the opportunity to
attend Catholic schools. Thus, by choosing archdiocesan schools as the
basis for his comparative market value, the Sklars’ expert guaranteed that
the tuition and fees paid to the Sklars’ schools would greatly exceed the
tuition at the archdiocesan Catholic schools.
                         SKLAR v. CIR                     16363
Los Angeles County in 1995, the Sklars’ expert concluded
that the market value of the secular education the Sklars’ chil-
dren received was between $1483 and $1724, such that in
1995 the Sklars made “excess payments” of almost $5000 per
child. The Sklars’ expert also included tuition data for other
Los Angeles schools in his report. The Tax Court correctly
concluded that the evidence in the record indicated: “(1)
Some schools charge more tuition than Emek and Yeshiva
Rav Isacsohn, and some charge less; and (2) the amount of
tuition petitioners paid is unremarkable and is not excessive
for the substantial benefit they received in exchange; i.e., an
education for their children.” 125 T.C. at 293-94. Before us,
the Sklars have failed to demonstrate—or even argue on
appeal—that the Tax Court’s factual findings as to the data set
forth in their expert’s report are clearly erroneous.

   [10] Thus, the Tax Court did not err by concluding that the
Sklars failed to show that any part of their tuition fees was a
charitable deduction, subject to a dual payment analysis. We
conclude that under Hernandez and the Internal Revenue
Code, their tuition and fee payments must be treated like any
other quid pro quo transaction, even if some part of the bene-
fit received was religious in nature. See 490 U.S. at 691-94.
We therefore agree with the Tax Court that the Sklars’ tuition
is not deductible, in whole or in part, under § 170.

C.   The 1993 Closing Agreement Does Not Constitutionally
     and Administratively Require the IRS To Allow Chari-
     table Deductions for the Sklars’ Tuition Payments to
     Religious Schools

   The Sklars reassert their Sklar I argument that in light of
allegedly similar deductions allowed for members of the
Church of Scientology under a closing agreement with the
IRS, the disallowance of deductions for Orthodox Jewish reli-
gious education violates the Establishment Clause and princi-
ples of administrative consistency. They also argue that the
Tax Court abused its discretion in denying discovery about
16364                        SKLAR v. CIR
the Closing Agreement, including compelling its production.13
Before the Tax Court, the Sklars and the Commissioner “stip-
ulated that an agreement dated October 1, 1993, between the
Commissioner and the Church of Scientology settled several
longstanding issues.” 125 T.C. at 298. A letter the Sklars had
received from the IRS was also admitted. It established that
the Closing Agreement “allows individuals to claim, as chari-
table contributions, 80 percent of the cost of qualified reli-
gious services.” Id. The Sklars argued that because of the
Closing Agreement, the Commissioner is constitutionally and
administratively precluded from disallowing their deductions
for school tuition and fees, which they contend are “jurispru-
dentially indistinguishable” from the auditing and training
provided by the Church of Scientology.

   The Tax Court correctly dispatched that argument by citing
to Sklar I. See 125 T.C. at 299. There the panel stated that
“[w]e seriously doubt that the Sklars are similarly situated to
the persons who benefit from the Scientology closing agree-
ment because the religious education of the Sklars’ children
does not appear to be similar to the ‘auditing’, ‘training’ or
other ‘qualified religious services’ conducted by the Church
of Scientology.” 282 F.3d at 620; see also id. at 618 n.13. We
also conclude that tuition and fee payments to schools that
provide secular and religious education as part of one curricu-
lum are quite different from payments to organizations that
provide exclusively religious services. Because the Sklars are
situated differently than members of the Church of Scien-
tology, the Tax Court did not abuse its discretion in determin-
ing that the Closing Agreement itself was not relevant, and
therefore not discoverable in the Sklars’ redetermination pro-
ceedings.
  13
    The Sklars made several efforts to obtain the Closing Agreement. The
IRS repeatedly objected and sought protective orders on grounds of rele-
vance and in reliance on I.R.C. § 6103, which makes confidential certain
taxpayer “return information,” including closing agreements. The Tax
Court sustained the IRS’s objections, without disclosing its reasoning, and
the document was not admitted into evidence.
                               SKLAR v. CIR                            16365
   [11] Nor did the Tax Court err in its conclusion that “the
agreement reached between the [IRS] and the Church of
Scientology does not affect the result in this case,” Sklar v.
Comm’r, 125 T.C. at 299, because “the analysis in [American
Bar Endowment] controls here.” Id. (internal citation omit-
ted). The Sklar I panel previously assumed the contents of the
Closing Agreement, with reference to a Wall Street Journal
article that purported to reprint the agreement in full. See
Sklar I, 282 F.3d at 615; Scientologists and IRS Settle for
$12.5 Million, Wall St. J., Dec. 30, 1997, at A12; agreement
reprinted in Wall St. J. Interactive Edition (www.wsj.com).
The panel also held that the IRS must make the Closing
Agreement publicly available.14 282 F.3d at 614-18. The Sklar
I panel further presumed from the IRS’s failure to disclose
that the terms of the Closing Agreement were as set forth in
the Wall Street Journal article, and concluded that the Closing
Agreement constitutes an unconstitutional denominational
preference. Id. at 619. We cannot improve upon the original
panel majority’s elucidation of the principles at stake:

       Applying [Larson v. Valente, 456 U.S. at 246-47,] to
       the policy of the IRS towards the Church of Scien-
       tology, the initial inquiry must be whether the policy
       facially discriminates amongst religions. Clearly it
       does, as this tax deduction is available only to mem-
       bers of the Church of Scientology.
  14
     In Sklar I, we held that closing agreements “constitute, at least in part,
information required to be disclosed under § 6104,” 282 F.3d at 615 n.7,
and that “in appropriate circumstances, disclosure may be required under
§ 6104 or otherwise,” id. at 616. Section 6104 of the Code compels certain
501(c) and 501(d) organizations to disclose any documents submitted in
support of an application for exemption. However, § 6103 prohibits the
disclosure of closing agreements and other confidential “return informa-
tion.” Id. Considering the interaction of the two sections, we held that
“§ 6103 does not categorically prohibit the disclosure of closing agree-
ments,” but on the contrary “the disclosure prohibitions of § 6103 are sub-
ject to the mandatory disclosure requirements of § 6104.” Id. Our holding
in Sklar I is binding here, although we do not decide the extent to which
the Closing Agreement might be discoverable in an appropriate forum.
16366                    SKLAR v. CIR
    The second Larson inquiry is whether or not the
    facially discriminatory policy is justified by a com-
    pelling governmental interest. 456 U.S. at 246-47,
    102 S. Ct. 1673. Although the IRS does not concede
    that it is engaging in a denominational preference, it
    asserts in its brief that the terms of the settlement
    agreement cannot be used as a basis to find an Estab-
    lishment Clause violation because “in order to settle
    a case, both parties are required to make compro-
    mises with respect to points on which they believe
    they are legally correct.” This is the only interest that
    the IRS proffers for the alleged policy. Although it
    appears to be true that the IRS has engaged in this
    particular preference in the interest of settling a long
    and litigious tax dispute with the Church of Scien-
    tology, and as compelling as this interest might oth-
    erwise be, it does not rise to the level that would pass
    strict scrutiny. The benefits of settling a controversy
    with one religious organization can hardly outweigh
    the costs of engaging in a religious preference. Even
    aside from the constitutional considerations, a con-
    trary rule would create a procedure by which any
    denomination seeking a denominational preference
    could bypass Congressional law-making and IRS
    rulemaking by engaging in voluminous tax litigation.
    Such a procedure would likely encourage the prolif-
    eration of such litigation, not reduce it. Larson, 456
    U.S. at 248, 102 S. Ct. 1673 (holding that even
    assuming arguendo that the government has a com-
    pelling governmental interest for a denominational
    preference, it must show that the rule is “closely fit-
    ted to further the interest that it assertedly serves”).
    Because the facial preference for the Church of
    Scientology embodied in the IRS’s policy regarding
    its members cannot be justified by a compelling gov-
    ernmental interest, we would, if required to decide
    the case on the ground urged by the Sklars, first
    determine that the IRS policy constitutes an uncon-
                         SKLAR v. CIR                     16367
    stitutional denominational preference under Larson,
    456 U.S. at 230, 102 S. Ct. 1673.

282 F.3d at 618-19 (footnote omitted). However, the Sklar I
panel declined to follow the Sklars’ suggestion that they, too,
are entitled to an unconstitutional denominational preference
for three reasons:

    First, we would be reluctant ever to presume that
    Congress or any agency of the government would
    intend that a general religious preference be adopted,
    by extension or otherwise, as such preferences raise
    the highly sensitive issue of state sponsorship of reli-
    gion. In the absence of a clear expression of such
    intent, we would be unlikely to consider extending a
    policy favoring one religion where the effect of our
    action would be to create a policy favoring all. Sec-
    ond, the Supreme Court has previously stated that a
    policy such as the Sklars wish us to create would be
    of questionable constitutional validity under Lemon,
    because the administration of the policy could
    require excessive government entanglement with
    religion. Hernandez, 490 U.S. at 694, 109 S. Ct.
    2136; see Lemon, 403 U.S. at 612-13, 91 S. Ct.
    2105. Third, the policy the Sklars seek would appear
    to violate section § 170. See Hernandez, 490 U.S. at
    692-93, 109 S. Ct. 2136.

Id. at 619-20.

   The Sklar I panel also rejected the Sklars’ administrative
inconsistency claim on two grounds:

    First, in order to make an administrative inconsis-
    tency claim, a party must show that it is similarly sit-
    uated to the group being treated differently by the
    agency. United States v. Kaiser, 363 U.S. 299, 308
    [(1960)]. We seriously doubt that the Sklars are sim-
16368                    SKLAR v. CIR
    ilarly situated to the persons who benefit from the
    Scientology closing agreement because the religious
    education of the Sklars’ children does not appear to
    be similar to the “auditing”, “training” or other
    “qualified religious services” conducted by the
    Church of Scientology. Second, even if they were so
    situated, because the treatment they seek is of ques-
    tionable statutory and constitutional validity under
    § 170 of the IRC, under Lemon, and under Her-
    nandez, we would not hold that the unlawful policy
    set forth in the closing agreement must be extended
    to all religious organizations.

Id. at 620 (citation omitted).

   [12] These principles are as correct today as they were six
years ago. We adopt the full force of the conclusions they dic-
tate. To conclude otherwise would be tantamount to rewriting
the Tax Code, disregarding Supreme Court precedent, only to
reach a conclusion directly at odds with the Establishment
Clause—all in the name of the Establishment Clause. The
principle the Sklars advance does not stop with them and their
1995 taxes; its logic would extend to all members of religious
organizations who benefit from educational services that are
in whole or part religious in nature. The Tax Court correctly
held that neither the Establishment Clause nor principles of
administrative consistency allow the Sklars the deductions
they seek, and the Tax Court’s denial of discovery regarding
the Closing Agreement in proceedings involving the deduct-
ibility of the Sklars’ tuition and fees was not an abuse of dis-
cretion.

                       CONCLUSION

  The Tax Court correctly affirmed the IRS’s disallowance of
deductions the Sklars claimed for tuition and fees paid to their
children’s Orthodox Jewish day schools. The decision of the
Tax Court is AFFIRMED.
