IRS Signals It Will Probe Disclosure of Church Pact

Source: Wall Street Journal
Date: January 2, 1998

The Internal Revenue Service signaled that it will investigate the disclosure of a closing agreement that gave the Church of Scientology tax-exempt status and settled numerous lawsuits.

The agreement between the church and the IRS had remained secret for about four years, until The Wall Street Journal published an article detailing the agreement's terms this week and posted the document on its Internet Web site. Under the pact, the church agreed to pay the IRS $12.5 million, set up a special tax-compliance committee and drop thousands of lawsuits filed against the IRS in exchange for tax-exempt status and the discharge of tax liens, levies, penalties and ongoing audits.

In a statement Wednesday, the IRS said that a closing agreement is confidential taxpayer information that can't be disclosed by the IRS "without proper authorization." The unauthorized disclosure of a closing agreement would violate the IRS code, the agency said.

The statement signals a pending investigation into the disclosure, but the IRS declined to say that a probe was being opened. The agency said its Office of the Chief Inspector is "charged with investigating unauthorized disclosures of confidential tax information."

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