IRS

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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 27, 1980Scientology, IRS Square Off in Court In the latest of a long series of legal battles, the Church of Scientology and the Internal Revenue Service have squared off in court here over constitutional and church-state issues. The trial in United States Tax Court is in its third week and is expected to last a month longer. The central issue is the revenue service's contention that the church did not qualify for a tax-exempt status from 1970 to 1972 and owed $1.4 million in back income taxes for the period.
April 20, 1982Scientology Founder's Wife Loses Final High Court Plea, Faces Prison The Supreme Court let stand the convictions of two former leaders of the Church of Scientology, rejecting their final efforts to contest the legality of the FBI's search of the church's Los Angeles offices in 1977. The court's action apparently clears the way for Mary Sue Hubbard - the one-time "controller" for the church group and wife of its founder, L. Ron Hubbard, who was not charged in the case - to begin serving a five-year prison term on a conspiracy charge.
November 10, 1987Justices Rebuff Scientology Bid for IRS Data In a blow to the Church of Scientology, a unanimous Supreme Court today made it easier for the Internal Revenue Service to withhold material sought by individuals or organizations under the Freedom of Information Act, a law aimed at curtailing government secrecy. In a case brought by the Scientologists, the court ruled 6 to 0 (with two justices not participating) that the IRS legally may refuse to disclose certain records even if the tax agency could delete anything linking those records to individual taxpayers.
November 10, 1987Court Tightens Secrecy On IRS Forms (brief mention of Scientology)
November 10, 1987Justices' Ruling Helps IRS Keep Certain Records Secret (brief mention of Scientology)
November 11, 1987Court Rules Against Release Of IRS Files Favored By Nominee (brief mention of Scientology)
November 11, 1987IRS Can Withhold Information, Court Rules (brief mention of Scientology)
November 11, 1987US Supreme Court rejects Church of Scientology request to obtain IRS records Los Angeles Times: US Supreme Court rejects Church of Scientology request to obtain IRS records
March 20, 1988Cult Fighters In Center Of Raging Storm The Cult Awareness Network, a low-profile and nonprofit organization that gathers information on "destructive" cults - those that allegedly employ mind control techniques, coercion and unethical or illegal practices - serves as a warehouse of information, with files containing profiles, membership lists, and even tax returns of more than 1,000 cults and suspected cults.
October 17, 1988Powers Of IRS At Stake Justices Take Case On Scientologists (brief mention of Scientology)
October 18, 1988High Court to Rule on Scientology Case The U.S. Supreme Court has agreed to hear a government appeal in a Los Angeles case involving the Church of Scientology in order to decide how far the Internal Revenue Service can go in obtaining and using confidential documents in tax-fraud inquiries. The government launched an investigation in 1984 of the tax returns of L. Ron Hubbard, the church's founder who died Jan. 24, 1986. The IRS said it suspected that millions of dollars in church funds were transferred to Hubbard in the late 1970s and early 1980s in an apparent scheme to protect the church's tax-exempt status and avoid paying taxes on the money.
January 20, 1990IRS Is Seeking Church's Records The Internal Revenue Service is seeking scores of internal documents from the Church of Scientology in Clearwater to determine whether the organization has violated its tax-exempt status. The IRS has sent a summons to the Scientologists asking for internal documents such as bank statements, minutes of Scientology board meetings, organizational charts and job descriptions. The documents could show whether the organization is involved in commercial enterprises for profit.
April 18, 1990Ruling On Scientology Case Favors IRS The Church of Scientology should hand over stacks of financial documents to the Internal Revenue Service, which is studying whether to deny the organization tax-exempt status, a federal magistrate says. The IRS says it has information indicating the Clearwater-based Church of Scientology Flag Service Organization has been involved in commercial operations that should be taxed. The inquiry concerns 1985, 1986 and 1987.
June 25, 1990The IRS sees the Church of Scientology as more of a business than a religion Los Angeles Times: The IRS sees the Church of Scientology as more of a business than a religion
June 29, 1990The 30 year war between the IRS and the cos Los Angeles Times: The 30 year war between the IRS and the cos
July 24, 1990Scientologists Set Bounty For Corrupt IRS Officials Boston Globe: Scientologists Set Bounty For Corrupt IRS Officials
July 24, 1990Corrupt IRS Officials Sought Greensboro News & Record : Corrupt IRS Officials Sought
July 24, 1990Headline: IRS Whistleblowers Sought St. Paul Pioneer Press: Headline: IRS Whistleblowers Sought
September 13, 1990Headline: Unsigned Forms Could Cost IRS Millions//Critics Claim The Loss To The Treasury Could Be As Much As $13 Billion (brief mention of Scientology)
September 14, 1990IRS Oversight Could Cost Millions (brief mention of Scientology)
September 14, 1990The Bottom Line: IRS Goofed Again (brief mention of Scientology)
September 14, 1990IRS Foulup May Cost $22 Million (brief mention of Scientology)
September 14, 1990Headline: IRS Foulup Could Cost $22.6 Million//Agency Failed To Sign Documents On Assessments (brief mention of Scientology)
January 30, 1991IRS Fines Cult Affiliate (brief mention of Scientology)
January 30, 1991Who Said IRS Is Humorless? (brief mention of Scientology)
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IRS in the News

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November 7, 1972Nibs (Lrh's Son) Retracts Testimony in IRS Trial Nibs (LRH's son) records a videotaped interview retracting his testimony against Hubbard in IRS trial.
December 5, 1974Mo Budlong, Duke Snider, Snider, 10, IRS documents. says Mo Budlong sends a telex to Duke Snider in response to a telex saying that Snider had received 10 inches of stolen IRS documents. The telex says, "Duke such news brings joy to my heart ARC Absolutely fantastic ARC I can't wait to see the data."
December 28, 1974Gerald Wolfe, Barbara Bird, IRS, Scientology-related, files, IRS Building, United States, task. Upon, photocopying, Ms. Bird's o Gerald Wolfe enters the office of Barbara Bird located in the main building of the IRS and takes many Scientology-related documents from her files. He photocopies them on a photocopying machine in the IRS Building, using United States property and paper to accomplish the task. Upon completion of the photocopying, the defendant returns the documents to Ms. Bird's office. (At a subsequent meeting with Mr. Meisner at a Lums Restaurant in nearby Virginia, Wolfe will give Meisner the stolen documents.)
June 11, 1975GO, 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.
November 17, 1975Michael 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.
November 18, 1975Michael 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.
December 20, 1976Richard 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.
August 15, 1984Lt. 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.
August 20, 1984Lt. 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.
September 24, 1984loses, 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.
March 21, 1996Tax 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.
December 30, 1997IRS, 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.
December 31, 1997IRS, 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.