IRS

After decades of arguing that Scientology did not qualify for tax-exempt status, the US tax agency reversed itself in a secret settlement. What caused the complete reversal?

IRS in the News

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November 12, 2007 A Church Accounting While religious institutions have constitutional protection against certain taxation, they are also expected not to abuse their special status. In fact, while Grassley is looking into such matters, he should add the Church of Scientology to the list. Scientology's shameful past includes a 25-year legal and psychological campaign against the IRS to be recognized as a tax- exempt religion. Scientology tactics included a criminal conspiracy in the 1970s to bug IRS offices, which led to 11 convictions of church members including founder L. Ron Hubbard's wife. Scientology filed dozens of lawsuits against the IRS, hired private investigators to dig up dirt on IRS employees and financed other IRS critics. crimes, IRS, Press, Scientology and Society
November 9, 2004 Couple Sues IRS Over Tuition Rule A lawyer for an Orthodox Jewish couple from Los Angeles claimed Monday that the Internal Revenue Service has violated the 1st Amendment by refusing to allow tax deductions for their children's religious schooling. The IRS should allow the deductions because it permits members of the Church of Scientology to write off the cost of spiritual counseling sessions, attorney Jeffrey Zuckerman said. IRS, Los Angeles, Press
March 31, 2004 One Family Goes To Tax Court To Fight For Tax Breaks For Religious Education Michael Sklar, a California accountant and Orthodox father of six, will appear in a United States tax court in Los Angeles in October as he pursues a long legal struggle to claim the cost of his children's religious education as a tax deduction. Sklar notes that the IRS allows followers of the Church of Scientology to write off the cost of religious instruction, which many say violates the First Amendment establishment clause banning government support of a religion. IRS, Press, taxes
March 24, 2004 Scientologists' Tax Break Cited in Suit Against I.R.S. A Jewish couple, Michael and Marla Sklar, have gone to court for the right to deduct the cost of religious education for their children, a tax benefit they say the federal government has granted to members of just one religion, the Church of Scientology. The 1993 IRS decision countervenes a 1989 Supreme Court decision that Scientology fees did not qualify for the charitable gift deduction because they involved a fixed price and are akin to a fee for a service. IRS, Press
October 24, 1999 IRS Examined Scientology Dollars, Not Dogma The Church of Scientology is, after all, an organization that bugged IRS offices, saw 11 of its members sent to prison and was found to be financing founder L. Ron Hubbard's lifestyle aboard a yacht. "Either Scientology changed very basically or the IRS changed. Or maybe both," former IRS commissioner Donald Alexander said of the settlement. "I hope that the IRS did not give in to intimidation," Alexander went on, alluding to the years in the 1970s when his agency battled the church. "I have great reservations, based on the public record and published stories, about this organization's activities and whether this was, is, or remains a money-making cult." crimes, IRS, Press
October 23, 1999 Scientology's Finances Detailed The Church of Scientology, the secretive international organization that recently won a decades-long drive for federal tax exemption, counts assets of about $400 million and appears to take in nearly $300 million a year from counseling fees, book sales, investments and other sources, according to documents filed with the Internal Revenue Service. The documents show that the group spends heavily on legal fees, advertising and fund-raiser commissions, and is spending $114 million to preserve the writings and tapes of its deceased founder, L. Ron Hubbard, which it calls its scripture. crimes, IRS, Press
October 23, 1999 Scientology Spends Heavily on Fund-Raisers xScientology, which recently won a decades-long drive for federal tax exemption, counts assets of about $400 million and appears to take in nearly $300 million a year from counseling fees, book sales, investments and other sources, according to documents filed with the IRS. Although leaders did not appear to make large salaries, some had relatives on the Scientology payroll. For example, in addition to his wife, [David Miscavige]'s father, stepmother, brother and sister-in-law are employed by the church. Also, his mother, two brothers-in-law and two sisters, though not employed by the church, earned commissions as fund-raisers. crimes, IRS, Press
January 9, 1998 The IRS Sold Out To Scientology For $12 1/2 Million Sun Herald : The IRS Sold Out To Scientology For $12 1/2 Million IRS
January 7, 1998 The IRS and Scientology In the closing days of 1997, the controversial Church of Scientology finally paid the Internal Revenue Service $12.5 million as part of a 1993 settlement. (The sect is also embroiled in a dispute with the German government over its religious and tax status.) Such caution is not unique to the Church of Scientology. In the past 20 years, the IRS has investigated and challenged the tax-exempt status of both the Unification Church, led by the Rev. Sun Myung Moon, and a Protestant group led by the Rev. James and Tammy Faye Bakker; in both instances, the churches were fined for tax violations. IRS, Press
January 6, 1998 Sellout to Scientology For 25 years, the Internal Revenue Service held all of the cards against the Church of Scientology. The IRS steadfastly refused to give Scientology a much-coveted tax exemption, and the courts consistently sided with the agency. Then the IRS abruptly folded in 1993, granting the tax exemption while refusing to disclose the details of the agreement. Amid such secrecy, taxpayers could only wonder what Scientology offered to persuade the IRS to abandon more than two decades of policy. IRS, Press

IRS in the News

Date Title Blurb Tags
December 31, 1997 IRS, leaked. Church, leak. Scientologists, Internet, alt.religion.of, involved The IRS announces that it is to hold an internal inquiry into how the agreement was leaked. The Church of Scientology denounces the leak. Scientologists accuse unnamed participants in the Internet newsgroup alt.religion.scientology of being involved. IRS
December 30, 1997 IRS, Wall Street Journal, Web, front-page story. Newspapers, United States, story The secret IRS agreement is leaked to the Wall Street Journal, which promptly puts it on its Web site and leads with a front-page story. Newspapers across the United States report the story. IRS
March 21, 1996 Tax Analysts, March 15 Tax Analysts issues a press release announcing the March 15 decision that hundreds of "field service advice" memos used by IRS agents be released to Tax Analysts under a Freedom of Information Act request. IRS
September 24, 1984 loses, IRS, 1970-72. Tax Court, L. Ron Hubbard, question. IRS -, instance, tax-related material, IRS, US tax-payers' money Scientology loses its appeal over the IRS tax assessment for the years 1970-72. The Tax Court judge documents in detail how huge sums were moved out of Scientology accounts into those of L. Ron Hubbard during the period in question. The judgement also describes the obstructionist tactics used by Scientology to thwart the IRS - for instance, deliberately jumbling two million pages of tax-related material, so that IRS officials would have to sort it out at the cost of a great deal of time and US tax-payers' money. IRS, L. Ron Hubbard
August 20, 1984 Lt. Ray Emmons, Clearwater Police Department, IRS Criminal Investigator Al Ristuccia Lt. Ray Emmons of the Clearwater Police Department sends documents and information about Scientology to IRS Criminal Investigator Al Ristuccia. IRS
August 15, 1984 Lt. Ray Emmons, Clearwater Police Department, IRS Criminal Investigator Al Ristuccia. Emmons, inducements. IRS, Emmons' document Lt. Ray Emmons of the Clearwater Police Department meets with IRS Criminal Investigator Al Ristuccia. Emmons outlines Scientology practices as they relate to fraudulent inurement and fraudulent inducements. The IRS investigator receives copies of some of Emmons' documents. IRS
December 20, 1976 Richard Weigand, CSW (Completed Staff Work), Henning Heldt, Project Troy, possible. (Project Troy, IRS Chief Counsel.) Heldt, Pr Richard Weigand sends a CSW (Completed Staff Work) to Henning Heldt asking that Project Troy be approved as soon as possible. (Project Troy calls for the placement of a permanent bugging device in the office or the IRS Chief Counsel.) Heldt will approve Project Troy. IRS
November 18, 1975 Michael Meisner, Cindy Meisner Michael Meisner sends a memo to Cindy Meisner entitled "Re: DEA FOI Case -- D of J Data -- Figley". It summarized documents stolen from the office of IRS employee Paul Figley, who was working on Freedom of Information Act requests relating to Scientology. The stolen documents were attached to Meisner's memo. IRS, Michael Meisner
November 17, 1975 Michael Meisner, Cindy Meisner Michael Meisner sends a memo to Cindy Meisner entitled "Re: Justice Department, FOI Suits -- Figley". It summarized documents stolen from the office of IRS employee Paul Figley, who was working on Freedom of Information Act requests relating to Scientology. The stolen documents were attached to Meisner's memo. IRS, Michael Meisner
June 11, 1975 GO, IRS, Church, California. Accordingly, GO, IRS' The GO gets wind of a major financial audit to be made by the IRS of the Church of Scientology of California. Accordingly, the GO decides to obtain as much inside information as possible on the IRS' "line of attack". Michael Meisner devises "Project Beetle Cleanup" for obtaining "all DC IRS files on LRH, Scientology, etc., in the Intelligence section, OIO [Office or International Operations], and SSS [Special Services Staff]". The project proposes the placement of "FSMs" (Field Staff members, or agents) in the "required areas or good access developed", and further that "Pitts" (the code name for Nancy Douglass - a GO agent who had infiltrated the Drug Enforcement Agency) and "Silver" (Wolfe) attempt to obtain employment at the Internal Revenue Service Intelligence Division and Office of International Operations respectively. IRS, Michael Meisner