History of IRS Tax Status


Well-known member

"L. Ron Hubbard initially incorporated Scientology in April 1952 as a for-profit entity called the Hubbard Association of Scientologists (HAS).[1] It was not at first presented as a religion. However, in April 1953 Hubbard wrote to a colleague to canvass her views on pursuing "the religion angle" to improve Scientology's business prospects.[2] Soon afterwards, in December 1953, he incorporated the first Church of Scientology in Camden, New Jersey.[3]

The Internal Revenue Service awarded tax exemption to the California and Washington, D.C. churches in 1956 and 1957 respectively. In 1958, however, the Washington church lost its tax-exempt status on the grounds that its tenets and practices did not constitute an exclusively religious or educational activity.[7] A key factor in the revocation of its exemption was the issue of private inurement – the use of tax-exempt monies to benefit a non-tax-exempt individual or entity.

At the time that the CSC lost its tax exemption, Scientology faced controversy in multiple countries around the English-speaking world. It had been banned in the Australian states of Victoria and South Australia following a scathing report by a public inquiry. It faced pressure from the media, politicians and mental health professionals which led to further inquiries in Canada, New Zealand, South Africa and the United Kingdom.[22]

Hubbard determined at the end of 1966 that he would leave these problems behind by relocating Scientology's leadership, and himself, aboard a small fleet of ships that would travel around the Mediterranean and eastern Atlantic, out of reach of governments and the media. An elite group of the most committed Scientologists – the Sea Organization, or Sea Org – accompanied Hubbard, crewed the ships and received training in the most advanced levels of Scientology as they were being developed by Hubbard. He resigned as President and Executive Director of the HASI, though this supposed relinquishment of management was a fiction; he continued to issue a stream of executive directives and policy instructions and managed Scientology from his ship via a worldwide telex network.

When the Church of Scientology of California lost its tax exemption, it reverted to the status of a regular taxpayer. The church, however, did not accept its new status. Despite being told that it now needed to file income tax return forms, it continued to file the less informative Annual Information Returns as if it were still a tax-exempt organization.[9] It also withheld payment of the taxes that it owed.[12]

By the mid-1970s the church's senior leadership had become increasingly concerned that Hubbard himself faced possible indictment for tax evasion. He wrote a secret memo (? it said "secret minute" - typo, so i corrected it) to the Guardian Office on November 26, 1975 in which he told the GO: "WE COUNT ON YOU GUYS TO MOW THE IRS DOWN AND WIN ACROSS THE BOARDS".[31][11]: 7,Church entered Clearwater on path of deceit A month later, the GO issued Guardian Program Order 158, "Early Warning System", ordering the establishment of a monitoring system "so that any situation concerning governments or courts by reason of suits is known in adequate time to take defensive actions to suddenly raise the level on LRH Personal Security very high". An agent was to be inserted into the IRS Office of International Operations, whose files on L. Ron and Mary Sue Hubbard and the Church of Scientology were to be obtained.[29] At the time, Hubbard was living in seclusion in La Quinta, California to avoid possible process servers and government agents.[5]: 225, 241 

The GO initiated a new intelligence program against the IRS codenamed "Off The Hook" in June 1976, intended to get Scientology "off the hook, future threat nullified". It called for continued monitoring of IRS handling of Scientology tax exemption applications "on [Guardian Order] 1361 lines" – i.e. through the use of infiltration and theft of information – and ordered GO operatives to "ensure all attack preparation is completed and honed to razor sharp edge" in the event of any of the applications being denied. A program was also put in place to ensure "Founder's Protection from IRS Attack", requiring the "1361 Collection line" – the burglary team – to keep a close watch on the section of the IRS dealing with Hubbard's tax returns.[32][33]

The campaign put significant pressure on the targeted officials. As one put it, it was "blatant harassment". He had experienced harassment from the Scientologists since the 1970s: "They have a nasty habit of finding your unlisted telephone number and calling you at two A.M., just to let you know they're there."[4]: 166  Other IRS officials experienced unusual occurrences. The garden hoses of one assistant commissioner were repeatedly turned on at night by parties unknown, while others found their dogs and cats going missing.[4]: 166  Whether or not these incidents were connected with Scientology, they contributed to the sense of menace felt by the agency's senior officials.[51]

The IRS considered imposing a 30 percent withholding tax on funds being transferred from the United States to overseas Scientology entities, but acknowledged in a March 1967 memo that this would have little effect on the main beneficiary of the transfers. It noted, "this would net little tax and not reach the real tax target – Hubbard."[38] In 1984, the Los Angeles office of the IRS launched a criminal investigation of Hubbard, prompted by defectors from Scientology alleging that he had skimmed off millions of dollars from church funds.[39] A letter was sent to Hubbard's representatives in September 1985 warning that he faced indictment for tax fraud.[40] David Miscavige and another senior church official, Pat Broeker, were also put under investigation.[41] An IRS official, Marcus Owens, said that thousands of agency staff were involved in the investigations. However, according to other federal officials, the Department of Justice was unwilling to spend money on a prolonged conflict with Scientology.[42] The investigation was called off after Hubbard died in January 1986, as it was regarded as moot by that point.[39] The church was informed by the IRS in November 1987 that no charges would be filed against it, Miscavige or Broeker.[43]

Even as the dispute between the Church of Scientology and the IRS continued, attempts were made to find a negotiated agreement. Talks in 1977 came close to settling the dispute but foundered on the issues of CSC's record-keeping system, reporting obligations and its involvement in the GO's criminal campaign against the IRS.[9] The "war" finally came to an end after an unusual meeting between Scientology's leader and the then IRS Commissioner, Fred Goldberg. According to the church, David Miscavige and Mark Rathbun, another senior church official, walked into the IRS building in Washington on a whim and requested a meeting with the commissioner.[12] Although some reports claimed that Miscavige and Rathbun held an impromptu meeting with Goldberg that day, according to Rathbun the meeting was held a month later, after the pair had made contact with lower-level IRS officials during their walk-in visit.[70])

2011- Marty Rathbun/Richard Reiss and Kha Khan

"Richard Reiss, long-time Senior C/S Flag Service Organization has recently left his physical body. He reportedly lost a bout with cancer. Richard died at the age of 66 on March 4, 2011. He died at the Brookside Hospice House in Palm Harbor Florida. Seventeen days after his death, less than a quarter of Flag staff, and handful of public gathered for a church of Scientology memorial service.

I believe Richard deserves to have the world know about some extraordinary things about his life. Things that David Miscavige will not only not ever let be known, but as you shall see below he will likely spend more pretty pennies trying to silence.

Fast forward a couple years.

Scientologist celebrity Ann Archer took a White House tour. To her surprise she was pulled aside and lead to the Oval Office. Moments later President Bill Clinton appeared for a very rare one on one meet and greet.

Ann thanked Clinton for his administration having granted tax exemption to her church.

Clinton told Archer a little story as to why he considered it was the right thing to do. Clinton said that in the sixties when he was pursuing his Rhodes scholarship at Oxford, he hung with a fraternity of Yale University graduates. He said that a couple of the members of that fraternity were Scientologists. He said he never forgot how kind and spiritual they both were. He knew then and there – by the beingnesses and conduct of those Scientologists – that Scientology was a spiritual activity and that “Scientologists were good people.”

President Bill Clinton did not mention names. But, I’ll tell you straight-up, Richard Reiss was one of those Scientologist Yale graduate, Rhodes scholars who met Bill Clinton during those days in the sixties.

Richard never spoke to Clinton since Oxford.

Richard didn’t know him well enough to do so.

But, Richard didn’t have to.

Richard left his mark by simply being himself around some amiable genius from Arkansas.

And that is why I say Richard Reiss is Kha Khan."

Monique Yingling

(so serge is saying reiss sent a letter to clinton requesting the tax exemption. maybe rathbun didn't know?)
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