IRS

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SEASON 3 EPISODE 11
Church and State
Aired 5 February 2019

IMDB
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Video
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Codec 4CC: H264
Image Size: 1280 x 720
Aspect Ratio: 1:1 (1:1)
Frame Rate: 119.890 fps
Total Duration: 00:44:00.968

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Extra data: 01 64 00 2A FF E1 00 15 67 64

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Audio
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Codec: AAC
Channels: Stereo
Bitrate: 16000 Bps / 128 kbps
Frequency: 48000 Hz
Total Duration: 00:44:00.917

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SEASON 3 EPISODE 11
Church and State
Aired 5 February 2019

IMDB
————————————————-

[00:00:02.150]
[Screen: “…during [Mike Rinder’s] tenure with the Church…[h]e had absolutely no role in the Church’s decision-making process regarding the IRS recognition. He has no involvement in the IRS administrative proceedings, the 30+ months during which the IRS examined the most minute details of the Church’s operations and finances to satisfy itself the Church qualified for tax exemption.”

(Excerpt from letter received from Scientology on 1/31/19)]

[00:00:21.820]
[Screen: “The truth is that for nearly half a century the Church of Scientology had battled the IRS to be free from IRS harassment and to be recognized as exempt from taxation, as are all religions in America….For two years, the IRS conducted the most comprehensive examination of any applicant for tax exemption in IRS history….By the end of its examination the IRS had reviewed more than one million pages of information concerning the Scientology religion. It was only then, in October of 1993, that the IRS issued exemption.

There was no “trial period,” not even for five days, much less five years as Rinder falsely claims.”

(Excerpt from letter received from Scientology on 1/31/19) ]

[Screen: “In December 1997, faced with lies perpetrated by the media, the IRS issued a press release publicly reaffirming the decision it made in 1993. The IRS stated:

‘The Church of Scientology was recognized as tax exempt after establishing that it was an organization operated exclusively for religious and charitable purposes. Recognition was based upon voluminous information provided by the Church regarding its financial and other operations to the Internal Revenue Service.”

You can find the details of this monumental achievement at
http://www.scientologyreligion.org/landmark-decisions/church-of-scientology-irs-tax exemption.html”

(Excerpt from letter received from Scientology on 1/31/19) ]

[00:01:42.710]
[Scene: Blue buildings]

Mike Rinder (MR): Neither law enforcement nor the law is designed to effectively deal with a cult or a heavily mind-controlling organization.

Leah Remini (LR): We are hitting dead ends with the police. We’re hitting dead ends with the IRS. Scientology has gotten away with what it does with their tax exempt status. People are trying to do the right thing and the authorities aren’t listening. It’s maddening.

There’s a lack of education on part of the government agencies. They need to know what they’re dealing with here.

[00:02:23.670]

[Screen: 1950
SCIENCE FICTION WRITER L. RON HUBBARD PUBLISHES “DIANETICS”

L. Ron Hubbard: I am the writer of the textbooks of Scientology.

The aim and goal is to put man in a, a mental condition ah where he him can solve his own problems.]

[Clip: Scientology promotional video

LEAH REMINI
Celebrity Centre Annual Gala 1999

LR: Without any Scientology organization, things are not going to change on this planet.]

[00:02:40.123]
FOR 35 YEARS LEAH REMINI WAS A DEVOUT SCIENTOLOGIST

[Screen: 2013

LEAH PUBLICLY SPLIT WITH THE CHURCH

Announcer: After years of slowly questioning Scientology…

Announcer: Leah Remini in her very public break with Scientology…]

[Screen: 2016

LEAH EXPOSES THE ABUSES OF SCIENTOLOGY

LR (off screen): Scientology. What they do trying to destroy people? Trying to destroy their families when they leave, they create a lot lof people who are willing to fight against them.

[Scene: Rinder and Remini B-roll in sunglasses, walking toward camera, arm in arm.]

[Scientology cross; dark background]

[00:03:07.441] NOW LEAH WILL GIVE A VOICE TO…

[00:03:09.477] NOW LEAH WILL GIVE A VOICE TO… SURVIVORS
[00:03:09.510] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.543] NOW LEAH WILL GIVE A VOICE TO… VICTIMS
[00:03:09.577] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.644] NOW LEAH WILL GIVE A VOICE TO… FIGHTERS
[00:03:09.677] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.710] NOW LEAH WILL GIVE A VOICE TO…SURVIVORS
[00:03:09.744] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.810] NOW LEAH WILL GIVE A VOICE TO… FIGHTERS
[00:03:09.844] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.877] NOW LEAH WILL GIVE A VOICE TO… SURVIVORS
[00:03:09.911] NOW LEAH WILL GIVE A VOICE TO…
[00:03:09.977] NOW LEAH WILL GIVE A VOICE TO… VICTIMS
[00:03:10.011] NOW LEAH WILL GIVE A VOICE TO…
[00:03:10.044] NOW LEAH WILL GIVE A VOICE TO… FIGHTERS
[00:03:10.077] NOW LEAH WILL GIVE A VOICE TO…
[00:03:10.211] [Silhouette of Robert Almblad] VICTIMS
[End subliminal sequence]

RA: Scientology takes tax-free dollars and ruins people’s lives.

[00:03:16.884] [Dark screen; Scientology cross]
[00:03:16.918] SURVIVORS
[00:03:16.984] [No text]
[00:03:17.018] VICTIMS
[00:03:17.051] [No text]
[00:03:17.084] HERETICS
[00:03:17.151] [No text]
[00:03:17.184] SURVIVORS
[00:03:17.218] [No text]
[00:03:17.251] VICTIMS
[00:03:17.318] [No text]
[00:03:17.351] HERETICS
[00:03:17.385] [No text]
[End subliminal sequence]

[Silhouette of Valerie Haney] SURVIVORS

VH: This is not the life that I want to live. I wanted to end my life.

[00:03:23.524] [Scientology cross; dark background]
[00:03:23.557] [ VICTIMS
[00:03:23.591] [No text]
[00:03:23.624] HERETICS
[00:03:23.691] [No text]
[00:03:23.724] SURVIVORS
[00:03:23.758] [No text]
[00:03:23.824] VICTIMS
[00:03:23.858] [No text]
[00:03:23.891] HERETICS
[00:03:23.925] [No text]
[00:03:23.958] [Silhouette of Janis Grady] FIGHTERS
[End subliminal sequence]

Janis Grady: Some people it takes a year. Some people it takes ten years of just peeling that onion of how you were manipulated and made to think.

LR: This season we really needed to focus on the reason why Scientology is able to do the things that they do, is because they have tax exempt status.

[00:03:44.895] [Black screen]

[Scientology cross; dark background]

[00:03:45.229] [fading in]
AS THEY CHALLENGE

[00:03:46.397] [fading in]
THIS BILLION DOLLAR

[00:03:48.082] AS THEY CHALLENGE THIS BILLION DOLLAR RELIGION
[00:03:48.115] AS THEY CHALLENGE THIS BILLION DOLLAR
[00:03:48.149] AS THEY CHALLENGE THIS BILLION DOLLAR CORPORATION
[00:03:48.215] AS THEY CHALLENGE THIS BILLION DOLLAR
[00:03:48.249] AS THEY CHALLENGE THIS BILLION DOLLAR CULT
[00:03:48.282] AS THEY CHALLENGE THIS BILLION DOLLAR
[00:03:48.316] AS THEY CHALLENGE THIS BILLION DOLLAR RELIGION
[00:03:48.382] AS THEY CHALLENGE THIS BILLION DOLLAR
[00:03:48.416] AS THEY CHALLENGE THIS BILLION DOLLAR CORPORATION
[00:03:48.449] AS THEY CHALLENGE THIS BILLION DOLLAR
[00:03:48.482] AS THEY CHALLENGE THIS BILLION DOLLAR CULT
[00:03:48.549] AS THEY CHALLENGE THIS BILLION DOLLAR

[00:03:48.582] [Black background] RELIGION
[End subliminal sequence]

[Scientology chapel scene fading in] RELIGION

[00:03:50.251] [New chapel scene] RELIGION
[00:03:50.718] [No text]
[00:03:50.751] CORPORATION
[00:03:50.785] [No text]
[00:03:50.818] EMPIRE
[00:03:50.885] [No text]
[00:03:50.918] RELIGION
[00:03:50.952] [No text]
[00:03:50.985] CORPORATION
[00:03:51.052] [No text]
[00:03:51.085] CULT
[00:03:51.118] [No text]
[00:03:51.152[ RELIGION
[00:03:51.218[ [No text]

[Ideal Org Kiosk scene] CORPORATION

[00:03:52.887] [Bridge assembly line scene] CORPORATION
[00:03:53.387] [No text]
[00:03:53.421] CULT
[00:03:53.454] [No text]
[00:03:53.487] RELIGION
[00:03:53.554] [No text]
[00:03:53.587] CORPORATION
[00:03:53.621] [No text]
[00:03:53.654] CULT
[00:03:53.721] [No text]
[00:03:53.754] RELIGION
[00:03:53.788] [No text]
[00:03:53.821] CORPORATION
[00:03:53.888] [No text]

[Scientology KSW event scene] EMPIRE
[End subliminal sequence]

[00:03:56.248] [Black screen]

MR: The people who have bravely come on and told their stories have not told those stories in vain. They are having an impact.

LR: We’re presenting our case to the world, to the FBI, to the IRS.

Cierra Westerman: The most important thing that has to be done is the persistent telling of the truth. And that’s what you’re doing.

LR (in studio): You have to continue to fight. You have to continue to fight for what’s right.

[00:04:21.607] [Scientology cross; dark background.]

[00:04:21.791] [Text very low opacity] BELIEVER
[00:04:21.816] ENEMY
[00:04:21.849] [No text]
[00:04:21.916] [Text low opacity] SURVIVOR
[00:04:21.949] [No text]
[00:04:21.983] OUTCAST
[00:04:22.016] [No text]
[00:04:22.083] TRAITOR
[00:04:22.116] [No text]
[00:04:22.183] BELIEVER
[00:04:22.249] TRAITOR
[00:04:22.283] [No text]
[00:04:22.350] BELIEVER
[00:04:22.416] TRAITOR
[00:04:22.450] ENEMY
[00:04:22.483] DEFECTOR
[00:04:22.516] [No text]
[End subliminal sequence]

[00:04:22.583] LEAH REMINI
[Fading in]
SCIENTOLOGY AND THE AFTERMATH

[Scene: Los Angeles, California]

[00:04:36.493]
LR: In past seasons we have shown you stories of abuse, um and the abusive policies of Scientology. And we are constantly asked, “How does the Church of Scientology continue to get away with it?”

Tonight, we’re going to try to answer that question. Because it really is about their tax exempt status.

[00:04:59.913]
[Screen: Scientology waged a war against the IRS for 30 years to gain tax exempt status.

In October of 1993, Scientology leader David Miscavige briefed Scientologists around the world on the state of the battle.]²

[00:05:16.846]
[Scene: IAS event 1993³

DM: I feel safe in stating that if you were to take all our previous external wins, those over the last four decades, and combine them all into one, they wouldn’t even approach the magnitude of what I’ll announce tonight.

[Audience cheering]

DM: Tonight what we are going to talk about is the war to end all wars.]
[00:05:41.785]

MR (in studio): Today we’re talking to Professor Jay Wexler from Boston University, who is ah, an expert in Church/State Law.

He’s written a couple of books about it.

[Scene: Book covers:

The Odd Clauses: Understanding the Constitution Through Ten of Its Most Curious Provisions by Jay Wexler

Holy Hullabaloos: A Road Trip to the Battlegrounds of the Church/State Wars by Jay Wexler]

MR: And has graciously agreed to help us and the audience understand some of the these issues, vis a vis Scientology and its tax exempt status.

LR: A lot of our viewers say, “I don’t understand how they continue to have tax exempt status. How they continue to get away with the abuses, the amount of money that they’re amassing through what we’re claiming is fraud.”

[00:06:17.288]

[Scene: Jay WEXLER
Law professional and author]⁴

JW (smiling): Quite remarkable ah, story. For decades, the IRS treated Scientology as not tax-exempt. You know I think it’s important for everybody to understand that being a religion, or being a church is necessary to get tax exempt status, but it’s not sufficient.

My understanding is that the IRS thought the profits of the Church of Scientology went to a private individual, which is not allowed under the tax code.

[00:06:41.098]

MR: That was specifically L. Ron Hubbard.

[Scene: Photo
L. Ron Hubbard
Founder of Scientology]

MR: And, and in the mind of Scientology, once L. Ron Hubbard died, “Oh, well great. We’ll be able to pull this off.”

[Scene: New York Times
January 29, 1986

L. Ron Hubbard Dies of Stroke; Founder of Church of Scientology]

MR: L. Ron Hubbard’s will decreed that his estate had to be distributed to a tax-exempt organization of Scientology. The Church of Spiritual Technology was created for that purpose. I was a part of the team that re-structured the entire corporate hierarchy of Scientology, including the creation of CST in the early 1980s.

[Scene: Photo
L. Ron Hubbard
Founder of Scientology]

MR: In 1986 when L. Ron Hubbard died, CST still did not have tax exempt status. His estate was held in limbo because it could not be distributed. That started a very, very intense campaign from Scientology, led by David Miscavige, to gain exemption from the IRS.

The IRS was engaged in a criminal investigation. They were issuing levies and massive tax assessments against Scientology. So Scientology did what Hubbard says to do. Attack!

LR: Attack.

MR: Attack. Fight back. They sued the IRS.

[00:07:59.468]
[Scene: Los Angeles Times
August 13, 1991

Scientologists Sue 17 IRS Officials⁵

Among those sued are IRS agents who in the mid-1980’s conducted a criminal tax investigation against Scientology founder L. Ron Hubbard.]

MR: They started putting private investigators on individual IRS agents.

[Scene: 60 Minutes
1997

Barbara Walters: Now a lot of lawyers hire private eyes to dig up dirt on people. I mean now we’re even hearing…

Ken Moxon
Scientology lawyer
60 Minutes, 1997

KM: How? I don’t know. I know, I know I’ve heard that people do that and I know that the media does that. But I don’t know that a lot of lawyers do that. I don’t do that.]

MR: L. Ron Hubbard said, “Don’t go after organizations. Go after individuals. Make it painful for the individual.” This is not something that the IRS confronts normally. I don’t think that they’ve ever had to deal with something like this before. Ever.

[00:08:43.948]

[Scene: IAS event 1993

David Miscavige (DM): We began exposing the actual Who’s. That’s right, naming names. First we filed a suit for $128 million on the IRS and the individual IRS agents committing these criminal acts. Now we were able to piece together their crimes from the bits of documents we had received.

And then the International Association of Scientologists sponsored more ads in USA Today.

[00:09:10.198]
[Scene: Scientology ads]

DM: You have no idea how much the IRS hates publicity. But to see their own faces, it was more than they could handle.]

LR: We have obtained a previously undisclosed memo from the IRS at this time. As this was going on.

[Scene: IRS memorandum
May 14, 1990]

And it reads, “We have recently received reports of harassment….

“This harassment has been in the form of photographing…employees and their family members, surveillance of residences and annoying telephone calls.

[00:09:42.068]

“These events have taken place in the National Office and Los Angeles areas. We have traced one incident to a private investigator associated with the COS.

LR: This went on for ten years. Could you imagine? You work at the IRS, and you’re doing just, you’re simply doing your job. And then all of a sudden you have PIs following you?

MR: It became frantic in 1992. It be-, it became an obsession. And ah, no holds barred assault on whatever it took to attain tax exempt status for Scientology.

So David Miscavige and Marty Rathbun literally walked down to 1111 Constitution Avenue. Walked into the IRS building and said, “Hi. I want to meet with the IRS commissioner.”

[00:10:39.816]
[Scene: Photo
David Miscavige
Leader of Scientology]

It’s reported that David Miscavige asked, “If we turn off the faucet of all of this Freedom Magazine’s investigating, exposing, ads in USA Today, ads–,” like, it was a major campaign, “–can you resolve our issues?”

And Fred Goldberg said, “Yes.”

[00:11:00.852]
[Scene: Photo
Fred Goldberg
Former IRS commissioner]

And ultimately, the deal was done.

LR: So this guy didn’t want to continue the fight. Because if, if they–, you know there’s, there’s documents that say, “We do not find this organization to be fitting the criteria for tax exempt status.”

And then all of a sudden, the guy signs off on it.

MR (smiles): Yeah.

[00:11:23.028]

LR: What is so insane is that Scientology used their abusive policies to gain tax exempt status.

The way that Scientology achieved their tax exempt status? Is the reason why they shouldn’t have tax exempt status. It’s, it’s actually insane.

LR (to Professor): You know, out of the dozen or so um IRS agents who were individually targeted by Scientology, ah, we have spoken to two of them.

One of them ah, was unwilling to appear on camera. And we asked him why.

And he said, “You know, after all this time, do you know that I still have make several right turns when I’m traveling anywhere. Like, that caused me emotional, like trauma, that I still haven’t gotten over. And I, I’m here talking to you guys off camera to try to help you, because I believe in what you guys are doing and I think it’s outrageous that this organization ah, received its tax exempt status.”

Which he didn’t believe they should receive, but he wanted to help, but he just didn’t want to appear on camera.

JW: Yeah, that’s, that’s a terrible story, yeah.

LR: The IRS is well aware of the tactics of Scientology, that they should be doing something about it.

[00:12:40.748]

[Screen: In October of 1993, Scientology leader David Miscavige updated Scientologists about the conflict with the IRS.]

[Scene:
David Miscavige
Leader of Scientology
1993 Scientology event

DM: There will be no billion dollar tax bill, which we can’t pay. There will be no more discrimination. There will be no more 2,500 cases against parishioners across the US. The pipeline of IRS false reports won’t keep flowing across the planet. There will be no more nothing. Because on October the first, 1993, at 8:37 PM EST, the IRS issued letters recognizing Scientology and every one of its organizations as fully tax exempt. The war is over.]

[00:13:38.672] [Dark background; Scientology cross]
00:13:39.047 [Text very low opacity] BELIEVER
00:13:39.072 ENEMY
00:13:39.106 [No text]
00:13:39.172 [Text low opacity] SURVIVOR
00:13:39.206 [No text]
00:13:39.239 OUTCAST
00:13:39.273 [No text]
00:13:39.339 TRAITOR
00:13:39.373 [No text]
00:13:39.439 BELIEVER
00:13:39.506 TRAITOR
00:13:39.540 [No text]
00:13:39.606 BELIEVER
00:13:39.673 TRAITOR
00:13:39.706 ENEMY
00:13:39.740 DEFECTOR
00:13:39.773 [No text]
[End subliminal sequence]
[00:13:39.840] LEAH REMINI
[Fading in]
SCIENTOLOGY AND THE AFTERMATH

[00:14:03.195]
[Scene: Hollywood Blvd.]

MR: The IRS acquiesced on everything and basically granted all Scientology organizations and entities religious tax exempt status. And all donations, all payments to Scientology from Scientologists as being deductible in October of 1993.

[Scene:IRS letter to Church of Scientology
October 1, 1993]

JW: That part is extraordinary, ah, from my perspective. There’s a Supreme Court case that specifically said that payment for auditing services is not deductible for the person who makes the payment, because it’s basically a quid pro quo business transaction.

[Scene: Robert L. Hernandez, Petitioner v. Commissioner of Internal Revenue

Hernandez v. IRS
Supreme Court decision
June 1989

It is readily apparent that petitioners’ payments to the Church do not qualify as contributions or gifts.

As the Tax Court found, these payments were part of a quintessential quid pro quo exchange.]⁶

JW: And the Supreme court upheld that and said that’s right. The Supreme Court held that. And then in this settlement, the Commissioner of the IRS basically said, “Forget that. And from now on you can deduct.”

LR: How do they continue to get away with “This is freedom of religion. This is our First Amendment right.”

This is the stuff that I don’t understand that giving this tax exempt status is kind of freed the path for Scientology continue to do this.

[00:15:15.394]

JW: The best way to start might be just to, to back up and think about what, you know, what is the point of having a tax exempt program in the first place?

LR: Sure.

JW: Everybody pays taxes. Individuals pay taxes. Institutions pay taxes. Corporations pay taxes. And that tax money goes to fund all of our public benefits. We through Congress, we the people have decided, you know, there’s certain categories of organizations. If you’re in of those categories, ah, and you meet all the other requirements, those groups, because they provide benefit that the government might not provide as much as we would like, they get to be tax exempt.

But we also have to realize that there’s a cost. Because that’s less money going to the public. Which either means that everybody else has to pay more taxes, right, out of their pocket, or it means we have less services. We have less defense. We have less education. We have less infrastructure. Right? Our bridges fall apart. That’s why the agencies in the IRS, the Department of Treasury have an obligation to make sure that if somebody is, if an institution is granted a tax exempt status, that there’s a good reason for it.

MR: When I say, “You, American tax payer are subsidizing the activities of Scientology,” this is exactly what I mean. This is, “Your tax dollars are a substitute (chuckles) for the tax dollars from the Church of Scientology.”

I would like to just go through these guidelines that the IRS uses to determine what is or isn’t a religion, in order to qualify under that part of the exempt code.

JW: The first thing is that the organization has to be organized formally as one of the listed types. Like it has to be formally organized as a religious organization. I don’t think that’s the particularly difficult thing for any institution or organization to get over that hurdle.

[00:17:10.813]

MR: Right.

LR: Second one is…

JW: The second one, which gets much more ah complicated and interesting I think is that you have, that the organization has to be operated for the purpose that’s it’s organized for. So if you say you are a literary organization, then you have to in fact operate as a literary organization.

To go a little further in this operational test, is it acting as a commercial entity. If you’re making tons of money, maybe you’re a business. And so that’s something that the agency has to look at. It’s not an either/or thing. You can be a church. You can be a religious organization. Um, but also, be ah, more commercial than a church. And therefore not deserve tax exempt status. For example, if an institution that says, “Our purpose is to protect against cruelty to animals,” which happens to be one of the listed things, and you do some animal cruelty prevention, but you’re also selling lots and lots of books about animals, right?

LR: Okay…

JW: And so you’re making lots and lots of money. And that money maybe is even going to the person who runs the organization, right?

LR: Right.

JW: In a sense you are still an animal rescue organization. But you’re all of these other things too. And so even though you are an animal-helping organization, you don’t get tax exempt status.

MR: If your religious organization’s primary activity is accumulating funds and buying empty real estate, that is not primarily the activity of a religion. And it’s not providing a public benefit.

[00:18:41.212]

LR: Well, let me ask you this, because people say this all the time. What’s the difference between that and real churches. You know real churches have just as much money if not more than Scientology.

MR: Well, for the most part, the, it’s the method in which they collect it. It’s the amount of money that they have accumulated over centuries. Like the assets of the Catholic Church and the buildings they have, or the, the Baptist Church or whatever, have been accumulated over a long, long period of time. Scientology arrived on the scene in the 1950s and suddenly has $3 billion. And massive real estate holdings around the world. And doesn’t have a population of people commensurate with that.

LR: This is very different, and Scientology is run as a business.

MR: You walk into a Church of Scientology and you are required to pay. And you may not participate in the main services of Scientology… yes there’s a few that they throw in that are free, to sort of be able to say that we have free stuff. But the truth of the matter is, everything you do in Scientology you are required to pay for, in advance, with discounts for the more in the advance. And discounts for the bigger amount that you give them, and that (chuckles) has been determined to not be a commercial transaction. And that is mind boggling.

JW: A tax exempt organization can have money. It can have profits. It can have bank accounts and… but there has to be some sort of relat-, um, reasonable relationship, proportional relationship between the money it has and the benefits it’s providing.

[00:20:21.372]

You know, the audience should, should understand that there’s a lot of things that are clear in the law, and there are a lot of things that are, that’s mushy.

MR: –ever tell you that Scientology isn’t mushy on this subject.

LR: Exactly. Even if you didn’t have Scientology on that point, because it’s, it’s vague, right?

[Scene: Scientology promotions]

You, you still have Scientology on the other points. It’s a great business model, right? Because there’s tons and tons of “Buy now” and “You have to get this now” and you have to get, and you have to buy in advance and “50% off!” You know, it’s like ah, you know I’m sure they’re going to be running ads on their Scientology channel.

MR: –it’s like Fast Eddies–

LR: For, for ah, “Memorial Day Sale on Your Eternity.” Like, I, I’m waiting for that you know.

JW: Uh-huh…

LR: But they actually have printed sales pitches that they send out all the time.

JW: And if I understand it right, that, you know that’s a big part of the reason why the IRS treated them as not tax exempt.

MR: Exactly!

LR: And they were absolutely correct.

[00:21:14.902]

[Scene: IRS Publication #1828 ⁷
Tax guide for churches & religious organizations

Jeopardizing Tax-Exempt Status

All IRC Section 501(c)(3) organizations, including churches and religious organizations, must abide by certain rules:

*the organization’s purposes and activities may not be illegal or violate fundamental public policy]

JW: So there’s all, there’s addition restriction on if you get non-profit status, an organization should not be considered a non-profit organization if its activities are either in further of an illegal purpose or a purpose that is contrary to public policy.

LR: What is public policy?

[00:21:32.343]

JW: Well that’s the hundred thousand million dollar question.

MR: (laughing)

JW: The Supreme Court applied it in a case called Bob Jones University, which it was an investigation of whether the university could discriminate on the basis of race in its admission. It didn’t let in anybody but white people.

[Scene: Bob Jones University v. United States
Supreme Court decision
May 24, 1983]⁸

JW: It said “to warrant an exemption an institution must demonstrably serve and be in harmony with the public interest.”

“The institution’s purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred.”

MR: (nods)

[00:22:10.013]

JW: And any agency that’s looking to see if something is a violation of public policy start, should start with that definition.

MR: Look! When the IRS granted exemption to Scientology, there was a five-year [air quotes] trial period, that, that was built into the settlement. Five years Scientology had to keep showing that they were in compliance with the IRS regulations.

JW: (nods)

LR: Right.

MR: And there are a lot of things in what was presented to the IRS at that time that have changed subsequent to 1998 when any overview of Scientology ended.

And that to me is what the IRS should be going back and looking at and saying, “Wait a minute. You told us this, but that didn’t turn out to be true.”

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[00:22:56.604] LEAH REMINI
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SCIENTOLOGY AND THE AFTERMATH

[Scene: Scientology buildings in Los Angeles]

[00:23:32.354]
MR: I also want to read you something that was sent to the IRS in the, the course of seeking exemption.

This is what they said, and this is a public record document that was submitted to the IRS, saying, “You should be giving us tax exempt status.”

MR (reading): “It is time to end this shameful IRS involvement in trying to destroy Scientology.

“Why must the service follow in the footsteps of the Nazis, who spread black propaganda about the Jews so that the German people would be inured to the massacre of millions.”

[Scene: Scientology’s application for exemption
November 23, 1992]⁹

MR: This to me encapsulates the real story of this exemption. This is the arrogance, the assertion of, “We will destroy you. We will attack you.” Why would anybody put that in there? (chuckles).

JW: Conflating ah the IRS trying to make sure that a non-profit organization is in fact ah providing a public benefit is–, ah, with the Holocaust, with Nazis, is just, it’s just disgusting.

[00:24:42.992]

MR: Not only was the application itself weird. The granting of exemption came subsequent to court rulings, including from the United States Supreme Court that said that the IRS was absolutely correct in denying Scientology exempt status and denying the deductibility of donations to Scientology.

[Scene: CST v. United States
US Claims Court
May 26, 1992]¹⁰

MR (reading): “The Court does not question the sincerity of the belief of those who practice Scientology. Nor does the court hold that Scientology is not a religion. Plainly it is.

[00:25:13.832]

“But there is sufficient evidence in the administrative record to support the Commissioner’s finding that CST has not shown itself to be an exempt organization.”

MR (smiling): Okay, one more that I just want to mention to you.

There was a a decision also went to the United States Supreme Court, concerning these tapes, called the Mission Corporate Category Sort Out.

[Screen: “Mission Corporate Category Sort Out” (MCCS) was the name of a project Scientology undertook in the early 1980s to attempt to defraud the IRS.]

[00:25:49.882]

MR: These tapes were recordings of Scientology and its lawyers planning to construct a scheme to avoid IRS taxation. The way that these tapes were described was, “the partial transcripts demonstrate that the purpose of the MCCS project was to cover up past criminal wrong doing. The MCCS project involved the discussion and planning of future frauds against the IRS in violation of 18 U.S.C. And the figures involved in MCCS admit on the tapes that they are attempting to confuse and defraud the U.S. Government.”

[Scene: Church of Scientology v. U.S.
Supreme Court
October, 1992] ¹¹

MR: Now. Those tapes were turned over based on this decision, which was 1991. Again, two years before the exemption. And the IRS had those tapes. Again, ignored and effectively that was all thrown out and (chuckles) the IRS just folded its tent and said, “Okay we’ll give you exemption in spite of the fact that we have these.”

[00:27:01.945]

JW: I can’t, I can’t imagine what the conversations were like. Ah, because all this stuff was in the, was in the public record. And the IRS had, had a history of denying the tax exempt status for so long. The IRS comes before the Supreme Court and says, “Here’s, here are the facts.” And they’re you know, whatever what you read.

And then to just ignore that, is ah, is, is just, it’s bewildering.

MR: It is doing a disservice and injustice to (a) Every tax payer in the United States.

But more importantly, to the people who suffer the abuse at the hands of Scientology.

And this is another point that the IRS exemption brings. The lack of government oversight.

[Scene: Private investigator
John Brousseau
Former Scientologist]

So Scientology never has to answer up about how much money has it spent on private investigators, how much money has gone to lawyers to send letters to people who appear on our show…

[00:28:02.075]

JW: Religions get some autonomy to believe different things. But, but religions don’t get the authority to go outside of themselves and impose ah, harms and burdens and harassment on people who are just going about their business.

MR: Or building a mansion for L. Ron Hubbard after he’s dead! A house! No! Five houses! He’s got five houses constructed for him around the world in these CST properties.

LR: Do you want to know why?

JW: He’s coming back?

LR: Correct.

JW: That’s the kind of thing that, that, the tax exempt status analysis is about, right? And it’s just a matter of convincing the people who are in charge of enforcing that to at least take another look.

LR: You’ve answered a question for me.

[00:28:52.365]

LR: Which is very simple. Which is, it’s not that it’s, we’re going after, calling them a church, not a church, that’s our opinion. But that’s fine. We’re just saying you don’t deserve tax exempt status. And I think that’s very simple. And I think that should be achievable by the IRS. And I think that they should, it’s time for them to do something about it.

[00:29:11.835]

JW: From everything I’ve heard, and everything you’ve said, I agree, absolutely.

LR (in studio): You’re absolutely right. You believe you are a church and you are entitled to believe what you want to believe. You can believe in dogs, you can believe in pineapples. I mean if you want to pray to a pineapple, you have every right to do that. Being a religion does not guarantee that you should receive tax exempt status!

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[00:29:41.108] LEAH REMINI
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SCIENTOLOGY AND THE AFTERMATH

Notes