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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December 31, 1997$12.5 Million Deal With I.R.S. Lifted Cloud Over Scientologists The Church of Scientology paid $12.5 million to the Federal Government in 1993 as part of a settlement with the Internal Revenue Service that granted tax-exempt status to the church and ended a long and bitter battle with the agency. The payment was part of a landmark agreement, whose details had been kept secret until yesterday, that saved the church tens of millions of dollars in taxes and provided Scientology with an invaluable public relations tool in its worldwide campaign for acceptance.
November 12, 2007A 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.
December 30, 1997article about secret IRS deal New York Times (article about secret IRS deal)
April 11, 1997Can no one bring IRS under control? Human Events: Can no one bring IRS under control?
October 3, 1991Church Of Scientology Sues IRS In Greensboro Greensboro News & Record : Church Of Scientology Sues IRS In Greensboro
January 3, 1998Church Of Scientology, IRS End Dispute West County Times : Church Of Scientology, IRS End Dispute
December 31, 1997Church's Settlement With IRS Costs $12.5 Million Greensboro News & Record : Church's Settlement With IRS Costs $12.5 Million
October 21, 1993Clearwater to Keep Battling Scientology The city is still fighting the Church of Scientology. Despite a strongly worded recent court decision in favor of Scientology, city commissioners have decided to continue the decade-long legal battle over a rule that would let the city police the organization's financial records. Commissioner Fred Thomas said he was annoyed by the scores of letters sent by Scientologists to lobby him before the Tuesday meeting. He called one letter "threatening" and said it amounted to a "declaration of war" against the city.
July 24, 1990Corrupt IRS Officials Sought Greensboro News & Record : Corrupt IRS Officials Sought
November 9, 2004Couple 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.
November 11, 1987Court Rules Against Release Of IRS Files Favored By Nominee (brief mention of Scientology)
November 10, 1987Court Tightens Secrecy On IRS Forms (brief mention of Scientology)
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.
November 7, 1993Ex-Scientologists Question IRS Ruling The recent federal government decision giving the Church of Scientology tax-exempt status has the group exulting that its 40-year struggle for official respectability has at last been won. But several former members interviewed since the decision last month say they are perplexed by the decision, and that the government should not have accorded the church its new status.
November 21, 1993Exempted, Not Vindicated David Miscavige, chairman of the board for Scientology's "Religious Technology Center," said recently that the IRS decision to grant his corporate empire a tax exemption was "a major victory for us." He added: "We were under siege. ... Now we've been vindicated." His smugness aside, the business of Scientology, which is to sell vulnerable people counseling services at rates up to $800 an hour, was not vindicated by the U.S. Internal Revenue Service. It was merely exempted from taxation.
September 14, 1990Headline: IRS Foulup Could Cost $22.6 Million//Agency Failed To Sign Documents On Assessments (brief mention of Scientology)
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)
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.
March 22, 1991IRS Agents Rate Own Ethics High, Public's Dismal (brief mention of Scientology)
March 16, 1997IRS And Scientology Agency Has Some Explaining To Do Star Tribune (Mpls.-St. Paul): IRS And Scientology Agency Has Some Explaining To Do
November 11, 1987IRS Can Withhold Information, Court Rules (brief mention of Scientology)
January 30, 1991IRS Computer 'went Berserk' Watchdog Group Member Angered By $1 Billion Bill San Jose Mercury News: IRS Computer 'went Berserk' Watchdog Group Member Angered By $1 Billion Bill
October 24, 1999IRS 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."
January 30, 1991IRS Fines Cult Affiliate (brief mention of Scientology)
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IRS in the News

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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.
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.
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.
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.
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.
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.
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 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."
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 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.
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.