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Tax Exemption
One of the most important aspect of this protest against the Church of Scientology has to do with its tax exemption status, including the methods by which it was obtained, the details in the agreement that led to their exemption, as well as several instances where the tax exemption status they received are - in the opinion of American courts - in violation of the Constitution's Establishment Clause. I'll do my best to summarize the main points of this argument and provide links to further information.
With regard to how Scientology obtained tax exemption status, we need go back to the early 1950s. At that time, Scientology was administered by the Hubbard Association of Sceintologists (HAS), which was established in Arizona on September 10, 1952. The first organization to take on the name of "The Church of Scientology" was incorporated many years later, on December 18, 1953 in Camden, New Jersey. At this same time, he also incorporated two other "churches" under the names of The Church of Spiritual Engineering and The Church of American Science. However, all three of these organizations were soon abandoned by Hubbard. They were replaced by "The Church of Scientology" on February 18, 1954. But only a few short years later, this organization changed its name to "The Church of Scientology of California" (CSC) in 1956. It's a long and very confusing progression, leaping from one business name to another, pulling together a vast network of seemingly unrelated tax-exempt organizations spread throughout the United States.
In 1966, Hubbard transferred all of his assets to the CSC, at long last gathering Scientology under one tax-exempt roof. However, the IRS soon caught up with this helter skelter conglomeration of seemingly unrelated tax-exempt organizations. In 1967, the IRS stripped all US-based Scientology entities of their tax exemption, declaring Scientology's activities were commercial and operated for the benefit of Hubbard.
In response to this, Hubbard and his many organizations sued the IRS and lost repeatedly for twenty-six years trying to retain that tax-exempt status.
Many internal documents and personal testimonies from former upper-level members have stated that the continuous volley of law suits was a calculated effort to exhaust the IRS into submission. By 1991, the IRS was facing a mountain of litigation - Scientology has claimed to have had as many as 2500 active suits against IRS and its individual employees.
Enter David Miscavige. A meeting was arranged between Miscavige and Fred Goldberg, then Commissioner of the Internal Revenue Service. In that meeting, arrangements were made that led to a two-year review process which ultimately reinstated Scientology's tax-exempt status.
This two-year review process that came from that secretive meeting involved ordering IRS tax analysts to ignore the substantive issues regarding specific policies and behaviors of the Church of Scientology which were clearly in violation of the law. Analysts were told that despite there being continued evidence that those questionable practices were still in place to that day, they were to be ignored because of some resolution of the issues during that secret meeting.
In the end, a payment was made by the Church of Scientology to the IRS, totalling $12.5 million dollars - substantially less than the IRS had initially demanded. In addition to that one-off payment, Scientology dropped more than an estimated 2500 major lawsuits they had levvied against the IRS. In exchange for this, the church's tax exemption status was reinstated.
Despite the monumental importance of the arrangements made during that meeting, the public has never had access to the entirety of information regarding the arrangements that were made and what the terms of those agreements were. Many American courts and their judges have requested a full judicial investigation into the details of that meeting, with special attention to whether or not the deals made in that room were in violation of the Constitution. Despite multiple attempts to obtain information from that meeting through court orders and official channels, all requests have been denied and the complete details have been hidden from the public and the judicial system. Information from that meeting was only made available when a select few details were leaked to the Wall Street Journal, who then published the leaked information on its website. That information is available here - http://www.lisamcpherson.org/cos/irs-cos.htm Even with what little information we do have, it's become fairly obvious that the arrangements made between Miscavige and Goldberg weren't only against the law, they were in direct violation of the Constitution.
In Anonymous' opinion, it's high time the courts were allowed the opportunity to do their duty unhindered by any attempts to thwart their authority. A complete, thorough investigation must be allowed to progress to determine the legitimacy and legality of all aspects of Scientology's tax exemption status, including an analysis of each individual aspect of that tax exemption and how it was obtained.
Religious Education & The Establishment Clause
One of the biggest issues with the tax exemption status that Scientology enjoys has to do with their exemption for "religious education." This means that any Scientologist can deduct their expenses for Scientology courses, auditing, even all the Hubbard books they buy.
What's so interesting about that? They're the only church that enjoys that specific tax exemption status.
In 2004, a suit was filed on behalf of Michael and Marla Sklar, a Jewish couple who attempted to claim $15,000, which they claim was the cost associated with the religious component of their childrens' education. The foundation of the case was the Church of Scientology's religious education tax exemption, which served as precedent for the Sklar's deduction. Inevitably, the court's decision hinged on an investigation into the religious education exemption that allows each individual Scientologist to deduct very large sums of money spent on auditing and religious education.
At the heart of this case was a discussion regarding Scientology's tax exemption in relation to the Constitution's Establishment Clause. This clause, which is part of the First Amendment to the US Constitution, states, "Congress shall make no law respecting an establishment of religion." One of the vital aspects to this clause's interpretation includes an explicit prohibition against the establishment of any law giving preference to one religion over another. In other words, if one specific church is going to receive a specific benefit - in this case, the religious education tax exemption - then that same benefit must be freely given to all other faiths as well. If that can't be achieved, then no individual church should receive such preferential treatment, lest the law or governmental agency find themselves in violation of the Constitution.
This was the basis for the Sklar's attempt to deduct the expenses incurred for their daughter's religious education.
In response to the Sklar's claims, the IRS stated that the agreement between the IRS and the Church of Scientology is private and cannot be reviewed by any outside agency. Furthermore, in their opinion, the Sklars were not entitled to receive the same benefits that members of the Church of Scientology enjoy.
The reactions of one of the judges in the case is as follows, "The view of the IRS is that it can violate the constitution by establishing religion by treating one religion more favourably than other religions, in terms of what it allows as deductions and there can never be any judicial review of that."
A recording of the ensuing discussion resulting from that judge's statement has been made available in an Anonymous-produced video entitled, "The Road to 3/15." I would encourage everyone to take a moment to view that video, as it does a brilliant job of summarizing precisely why this religious education exemption is so objectionable and why it has posed such a risk to the Establishment Clause. The video can be viewed here.
Detailed Information & Additional Resources:
• NY Times: The Shadowy Story Behind Scientology's Tax-Exempt Status
• The Road to 3/15
• NY Times: Scientologists' Tax Break Cited in Suit Against IRS
• AP: LA Couple Seeks Same Religious Tax Break as Scientologists
• San Francisco Chronicle: Court Case Poses Challenge to Scientology Tax Break
• LA Times: Couple Lose Bid for Tax Refund Tied to Tuition
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