Scientology’s Tax Exemption

Today’s Scientology Fair Game podcast features law student Taylor Holley who wrote an exceptional paper discussing Scientology’s 501 c tax exemption.

During the show, Holley was asked about whether any of her instructors had answers as to why Scientology was granted the exemption in spite of the Supreme Court’s denial. Unsurprisingly, no one could could determine how the exemption ultimately happened.

In January 2020 we wrote yet another letter to the U.S. Treasury concerning this same issue. We have never received any response.

January 8, 2020
J. Russell George
Inspector General
U.S. Department of the Treasury

Office of Inspector General
1500 Pennsylvania Avenue, N.W.
Room 4436,
Washington, DC 20220

Dear Mr. George:

My name is Stefani Hutchison. I am a writer, blogger and activist dedicated to exposing the realities of Scientology.
I am currently working on an article addressing Scientology’s tax exemption. I am also challenging the legitimacy and legality of this exemption.
I, along with many other concerned people, have written ad nauseum to the U.S. Treasury and the IRS attempting to convince either of these entities to open an investigation surrounding this tax exemption.
My question for you, if you would be kind enough to provide me with some assistance, is how the IRS was legally able to set aside the Supreme Court’s decision of 1989 in Hernandez v. Commissioner, 490 U.S. 680?
The Court clearly ruled of Scientology that “Payments made to the Church’s branch churches for auditing and training services are not deductible charitable contributions under § 170. Pp. 490 U. S. 689-703.”
With this ruling still standing how can the IRS ignore the Court’s decision and allow Scientology a 501 (c) (3) exemption? The Court was clear in it’s finding. The IRS subsequently held a closed door meeting with Scientology Leader David Miscavige that not only resulted in the bypassing of the Court’s decision but went even further, granting to Scientology privileges not allowed to other religions.
In the 1980s, over the course of seven pivotal First Amendment/Free Exercise cases “the Court… made clear that government cannot, in the guise of protecting religion, give religious practices an absolute preference over other individual and societal concerns; nor may it give particular religious groups special accommodations that may not be available to nonreligious groups in similar circumstances.”
(Congressional Research Service Report 98-65
The Law of Church and State: Developments in the Supreme Court Since 1980
David M. Ackerman, American Law Division
Updated August 15, 2002, CRS-59)

What is concerning is that the Church of Scientology and it’s various entities have been denied an exemption not once, but multiple times. There is legal historical foundation for denying Scientology an exemption. Grounds that existed for the denial in 1989 have only become more true with the passage of time.
The Church fought their case all the way to the Supreme Court and lost.
For all intents and purposes, it would appear that the IRS buckled under the intense blackmail by Scientology. CSI engaged in a vicious campaign of harassment and tort litigation designed to force the IRS into submission in spite of the Court’s decision.
It apparently worked.
In 1993, bypassing the Supreme Court’s ruling, the IRS capitulated and in exchange for ceasing of the harassment and pressure, granted CSI not only the very exemption heretofore legally denied them, but also bestowed upon them exclusive tax privileges as well as an outrageous dismissal of the majority of an almost BILLION dollar tax debt.
It would appear that the IRS and U.S. Treasury allow bullying and defiance to undermine the law.
No secret, closed door meeting conducted by harassed IRS officials constitutes a legal decision able to override the United States Supreme Court. Frankly this is tantamount to negotiating with terrorists.
The bottom line is that Scientology is a multi million dollar global conglomerate who exchanges goods and services for payment. They engage in franchise activities amongst their various front groups, collecting license fees and percentages of income from one group to another that flows eventually into David Miscavige’s control. They engage in regular fundraising activities, and their entire financial structure is constructed as a business model. What other religion has been awarded DotComm Awards for “honoring excellence in web creating and digital communication”. This excellence, as stated by dotCOMM, is part of digital public relations that generate customer engagement.
Do churches have customers or parishioners?
With respect Sir, if it walks like a duck and quacks like a duck then it is, undoubtedly, a duck.
That the neither the IRS nor the U.S. Treasury sees fit to examine the circumstances surrounding the granting of this exemption is frustrating, concerning and, frankly, a serious questionable defiance of the Supreme Court’s ruling.
As a taxpayer and a Catholic who was not permitted to deduct my child’s private, religious school tuition while Scientology parents can, I personally find it angering that any attempt to communicate with either the IRS or the U.S. Treasury concerning the legitimacy or deserving of Scientology’s exemption is met with silence.
After a lengthy legal battle Scientology, who owed upwards of a billion dollars in taxes, lost their bid for an exemption yet now have more than they could have hoped for in financial perks and debt forgiveness.
I, who conscientiously pay my taxes without fail and who have not engaged in harassment or blackmail am not even granted the barest civility of a response to numerous letters concerning this subject.
I am respectfully requesting a comprehensive response to this letter. I am also requesting that an investigation be opened concerning the 501 (c) (3) exemption, legally denied to Scientology by the Supreme Court, and the exemption be revoked in accordance with the law as it stands.
I look forward to your timely response to this letter and I sincerely thank you in advance.
Sincerely,
Stefani A Hutchison