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Auditing Scientology: Reexamining Tax Exemption Eligibility

February 17, 2021 By Mike Rinder 47 Comments

IRS exemption scientology

One of our commenters (ISNOINews) forward me a link to a wonderful piece by Taylor Holley, a Juris Doctorate candidate at Texas Tech University Law School written for the Law Review.

It is titled for the Auditing Scientology: Reexamining the Church’s 501(c)3 Tax Exemption Eligibility.

If you click on the link above, you can download the full paper — it is 27 pages long and summarizes all the facts and legal arguments as to why scientology should NOT enjoy tax exempt status.

Below I include her abstract summarizing the paper:

Abstract

The Church of Scientology is one of the most discussed religions of the modern era, and its beliefs and practices have been shrouded in controversy since its emergence in the 1950’s. Shortly thereafter, the Internal Revenue Service recognized Scientology as a valid religion, thus granting certain governmental protections and benefits afforded to religious organizations in this country, including tax exemption. After a decades-long battle between the Church and the IRS, the IRS eventually granted a blanket tax exemption to all Scientology organizations under Section 501(c)(3) of the Internal Revenue Code.

However, the Church’s current practices and activities raise significant concerns that warrant a reexamination of its tax exemption eligibility. The Church engages in activities that are substantially commercial by requiring payment from Scientologists to practice the religion and improve their spiritual standing. Additionally, the Church violates the fundamental national public policy that freedom of speech should not be suppressed simply because two parties disagree, a foundation of our nation that is trounced by Scientology’s Fair Game policy. Further, the Church facilitates private inurement of top executives and influential celebrity members by expending excessive funds for their personal benefit.

For these reasons, the IRS should reevaluate the tax exemption status of each individual Scientology organization, or risk undermining judicial decisions and creating the dangerous precedent that persistent attacks on governmental agencies will in turn lead to leniency and submission. Should the IRS investigate and determine that all Scientology organizations comply with the requirements of Section 501(c)(3), then retention of their tax exemption status would be completely warranted; however, to permit such activities to continue without question would undoubtedly defeat the principles behind tax exemption and raise legitimate concerns regarding the fairness of IRS decisions.

This is a terrific resource. Use it to brief elected officials. Send it to the IRS. To the media.

It lays out the arguments, with supporting citations to facts and law.

 

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Filed Under: Special Feature Tagged With: 501(c)3, irs, Law Review, Scientology, scientology tax exemption, Tax exempt status, Tax Exemption, Taylor Holley, Texas Tech

Comments

  1. Sheryl Keefe Elam says

    March 1, 2021 at 1:21 am

    I tried to link a change . Org petition to ask the IRS to re-examine Scientology’s tax exempt status. I’m not sure if it’s a horrible idea but it seems like it would bring attention to the issues.

    Reply
  2. Mark Visk says

    February 27, 2021 at 4:36 am

    Very simply I want to thank Mike and Leah for the courage and tenacity to do want they have done and continue to do. Thank the Lord I was never involved with Scientology, but several of my biological sisters and their families are Jehovahs Witnesses. I see some of the similarities, however, in a much less extreme manifestation. Fortunately their involvement in JH has not interfered in any significant way in our family interactions.

    I am sure Mike and Leah have had a huge impact on the people who are sitting on the fence and trying to find a way out of Scientology. I am rooting for them and can’t thank you enough for taking responsibility and stepping out into the unknown, risking so much to help others!

    Reply
  3. Foreal says

    February 23, 2021 at 1:22 pm

    Joe got the petitions when he was VeeP about 5 years ago and did nothing. Don’t think as PotUS he’ll do anything either.

    Reply
  4. Balletlady says

    February 18, 2021 at 11:08 am

    Looks like Pastor Joel Osteen has had a change of heart….the LAST hurricane fiasco he left his church CLOSED to the suffering who needed shelter……but NOW……I guess “the Lord does move in mysterious ways” because:

    “Joel Osteen is one of the wealthiest pastors in the U.S. According to 2012 records, he and his wife and co-pastor, Victoria Osteen, have a calculated net worth of $55 million. The church itself draws in a revenue of over $70 million annually. If a massive corporation like that (and when a megachurch makes tens of millions of dollars and doesn’t pay its fair share in taxes, it’s a corporation) can’t help feed and house people to keep them from starving or freezing to death, then what’s the point of its existence outside of making the Osteens obscenely wealthy?”

    A MEGA church….makes tens of millions of dollars & doesn’t pay it’s fair share in taxes???….sounds all too familiar…..

    Reply
  5. Wayward Jacket says

    February 17, 2021 at 10:22 pm

    This paper is 99/100. It is only missing a Parker/Stone citation for the wall of fire 🙂

    Reply
  6. Michael Tilse says

    February 17, 2021 at 9:23 pm

    The malignant human rights abuse and predatory scam organizations known collectively as ‘scientology’ will not be brought down by civil courts or political legislation.

    I say this because courts and judges and politicians are human and humans are fallible. Scientology evolved an ‘intelligence agency’ that is also a ‘dirty tricks’ department, that specializes in knocking out opposition to their profit. It is simple for scientology to collect information about not only active opponents, but also potential threats. Only the squeaky clean can stand up to their active or passive threat to reveal secrets or attack those things a potential threat is protecting.

    So, unless Jesus comes back and throws them out of their temples, I don’t have much hope. Public awareness, constantly pushed, constantly exposing scientology in it’s abuse and criminality, may eventually reduce it’s influence. But look, look at all the publicity, all the testimony, all the evidence coming out of these last many years, and still no law enforcement agency state or federal has done anything *effective* that I know of. Scientology specializes in co-opting or neutralizing any agency or group that is or could be effective against it. Too few with influence stand against it, and when they do, they loose support for action due to the depth of scientology’s influence. This society simply has no effective defense against the kind of terrorist organization scientology has evolved into. If they were to blow up buildings, Government and Law enforcement would have the mandate and would stop them. But they can blow up lives all day long, year after year, decade after decade, and as long as they effectively *own* people of influence, they will never be stopped.

    Reply
  7. Dotey OT says

    February 17, 2021 at 8:04 pm

    The first year that I had the auditing, IAS or whatever contributions to the choich that exceeded 50% of AGI, and suddenly my “donations” were reducing my taxes due, I became a BELIEVER!! i looked forward to doing my taxes!!!!!! The choich even out out wonderful booklets, so that you would get it right.

    My habit got soooo bad, ended having carry forwards of donations for crissake!! I still have the spreadsheets back from when I would do the calculations. You better believe that helped in my folly of donations. IAS, Ideal Orgs, PDU, CCHR, all that alphabet front group stupidity.

    After I realized that I had lived thirty years in a lie and got TF out, I had no compunction whatever of letting those five year carry forwards keep reducing my taxes until it all sadly wore petered out, sort of like the wins that I had receiving the lie RD in L10, or the beams one gets to pull out of themselves on L12, or the little space aliens.

    But I really do miss that itemized deduction bonanza!!! IRS suckers!!!!!

    Reply
  8. Jeff Jin says

    February 17, 2021 at 7:08 pm

    Fat cats (IRS) are not likely to move their asses.

    Reply
    • Aquamarine says

      February 18, 2021 at 12:39 am

      A year ago I would have agreed with you. But now the USA is in a very different financial situation, a dire one, and I think its a possibility that CO$’s tax exempt status gets at least reviewed. Wouldn’t it be loverly, so absobloomin’ loverly.

      Reply
      • Foreal says

        February 23, 2021 at 1:27 pm

        No Ms. Aqua, Fed taxes collected were HIGHER in 2021 than in the all time record breaking year of 2020. So, there is no pressure on the gov’t to do anything to collect a few million from the Cult.

        US gov taxes collect:
        FY 2021 $3.86 trillion
        FY 2020 $3.71 trillion

        Reply
        • Aquamarine says

          February 24, 2021 at 2:30 am

          I see. Ok, got it.

          Reply
  9. Sparkay says

    February 17, 2021 at 6:54 pm

    These arguments are very valid but unfortunately the chance of anything coming from them is VERY remote. The IRS is not interested in getting into a drawn out multi million dollar court battle with slimy lawyers. The IRS is undermanned & underfunded as it is. IMHO nothing will happen until his royal lowness drops his body & that may be a long time off looking at his father’s current health.

    Reply
    • Mike Rinder says

      February 17, 2021 at 7:08 pm

      The IRS respond to political and media pressure. It’s not impossible.

      Reply
      • Sparkay says

        February 17, 2021 at 7:24 pm

        Let’s hope.

        Reply
      • Aquamarine says

        February 18, 2021 at 12:42 am

        I agree. Its not impossible. A year ago, yes, but not now. Uncle Sam’s going to be beating the bushes for much needed money very soon.

        Reply
  10. Skyler23 says

    February 17, 2021 at 5:50 pm

    I hope this is a recent news event. But I just saw a headline on the Independant news web site that reads,

    “This is just the beginning’: Leah Remini reacts to Danny Masterson rape charges”

    https://www.independent.co.uk/arts-entertainment/tv/news/danny-masterson-rape-charges-sexual-harassment-leah-remini-scientology-a9572311.html

    I have included a link for those people who are interested in reading this news item.

    After Mike & Leah’s most recent podcast, I sure do hope there is a big splash about this nonsense of judges ruling against people who were abused by this cult and the judges saying they cannot be prosecuted because it’s an issue of religious nonsense under the First Ammendment.

    I hope this blows up in those judges’ faces and it is made clear to the nation why this claim that this cult can get away with bloody murder is just stupid and cannot be held up.

    I also hope it leads to the removal of their stupid Tax Exempt Status.

    Reply
    • Susan Harbison says

      February 18, 2021 at 12:00 am

      That article is from June of 2020.

      Reply
  11. Chris Shugart says

    February 17, 2021 at 1:41 pm

    Note to Taylor: Next time you check your mailbox, make sure you don’t hear anything ticking.

    Reply
    • Loosing my Religion says

      February 17, 2021 at 2:15 pm

      Chris, laughing but could be quite true.

      “Money
      It’s a crime
      Share it fairly
      But don’t take a slice of my pie”.

      I don’t think they talking about their tax holy exception.

      Reply
      • Loosing my Religion says

        February 17, 2021 at 3:27 pm

        Sorry… I meant : I don’t think they want anybody talking about their holy tax exemption.

        Reply
    • Cory says

      February 18, 2021 at 11:52 pm

      Hey Chris. Fuck off.

      Reply
  12. Jessica Wells says

    February 17, 2021 at 12:48 pm

    I doubt I’m the first one to think of this but could a petition be started to pressure the IRS to re-examine the exemption?

    Reply
    • Mike Rinder says

      February 17, 2021 at 1:37 pm

      There have been a few before. The unfortunate thing is they don’t seem to work at all. And people put their hopes in them. One had more than 100,000 signatures. It gives people the idea that something is happening when it is not.

      Reply
      • Brian says

        February 17, 2021 at 3:00 pm

        Mike thank God for what you and Leah have done. You are true heroes and inspire me daily. Im a sound mixer in LA, if you EVER need anything or me to work audio for you, i will do so for free!

        Reply
        • Mike Rinder says

          February 17, 2021 at 4:31 pm

          THanks so much Brian. Will keep you in mind!

          Reply
        • Rip Van Winkle says

          February 17, 2021 at 6:34 pm

          Right Effin On. Thank you. on behalf of us listening folk.

          (I’m only able to offer Under the Radar Pies. “Sneaky Pies”)

          Reply
    • Skyler23 says

      February 17, 2021 at 5:56 pm

      Hello Jessica. After reading many of the posts on this blog, I’m certain that almost everyone here would agree with you about the validity of their ridiculous Tax Exempt Status.

      I don’t know what it’s going to take. But I think of it as a kind of big tea pot sitting on the edge of a table and drop by drop, water is being poured into this teapot. I wager you’ve heard of the expression, “the tipping point”?

      Well, one of those drops of water will eventually cause the pot to fall over when the tipping point is reached. I think that slowly but surely, people like Mike and Leah and many others are causing the people of this planet to become educated that this cult is not a religion and it is just a criminal enterprise dedicated to enriching itself. When enough people understand that, we will see their Tax Exempt Status come crashing down.

      I hope.

      Reply
      • Peridot says

        February 18, 2021 at 9:07 am

        I am backing up what Skyler23 writes here. The drip theory, generating a tipping point, sometimes in an organization they say, “We have to get to critical mass.”

        That in my opinion is what is happening here. Each droplet, each effort, each blog post, each letter to a government official, each complaint to the IRS, each viewer of an “Aftermath” episode or a “The Real Ron Miscavige – Life After Scientology” webcast, or listener to a “Fair Game” podcast, Tweeter or re-Tweeter of truthful social media, each instance Leah goes on a talk show (and she gets invited onto many) — all these thousands of actions will add up.

        It is like Leah states so well in one of the “Aftermath” episodes: “Scientology has trained me well.”

        Including on pressing the point, again and again, and again and again some more, whatever it takes to get the result.

        #PressingThePoint #AgainAndAgain

        #AgainAndAgainSomeMore #DesiredResult

        Reply
  13. Skyler23 says

    February 17, 2021 at 12:27 pm

    This cult has held on to their ridiculous tax exempt status for an enormous amount of time – an insane amount of time.

    But I won’t mind that one bit if someone in the government finally decides to act and is just waiting for an opportune moment when the revocation of this TES will hurt this cult the most. If it is revoked at the correct moment, it could well become the one event that causes the complete destruction of this criminal enterprise.

    So, please do not give up hope. Just think about how long it took the Feds (specifically Rudolph Giuliani) to act against Organized Crime in the US in the 1970s. I believe he waited for the perfect moment and with just a single stroke, he was able to practically obliterate Organized Crime or at least weaken it so much that it never again held the kind of power it once did.

    If something similar happens with this crazy cult, I will be very happy and will enjoy watching the Feds hunt down Davey-Boy and slapping the irons on him and hauling him away while he does one of the following:

    Oh, can we have a kind of contest where people buy tickets and the winner will have the total amount of these tickets contributed to the Aftermath Foundation in their name?

    I will leave it up to someone like Mike or someone else who has the time and/or energy to organize this contest. It will work like this:

    Everyone who enters will pledge to send $10 or $100 or whatever the organizer decides is a suitable amount and the winner or winners will agree to have all the money donated to the Aftermath Foundation in their name.

    The question is, “When their Tax Exempt Status is finally revoked, hopefully the Feds will issue arrest warrants for Davey-Boy and maybe some of the other criminals. When they finally hunt him down and arrest him, what will be his reaction?

    1) He will cry, weep and sob saying, “Oh No! This is all a big mistake. I am totally innocent. I never beat on anyone. I never took any money and hid it in off-shore bank accounts. Please don’t arrest me. I won’t do well in prison. I will never be able to live through a prison sentence. Oh please Mr. FBI man, please let me go? Please? Please? Please? Can I interest you in a beautiful chalet in Switzerland?

    2) He will whip out an assault rifle and attempt to shoot it out with the FBI. But no one will come to his funeral.

    3) He will become extremely angry and yell and scream saying, “You can’t arrest me! I am the Poopy Head of Scamatology. My friend ElRon will come back from his current body and haunt you. He will bring a whole bunch of body thetans and they will invade your body and give you countless headaches and diseases until the day you die. And that day will be very soon. You will never be able to endure the punishments of ElRon. He is the most powerful Thetan in all the world! Just wait and see. You will be very sorry. Of course, you may have to wait for quite a while.”

    4) He will deny being Davey. What is this? I am not this person David Mistakabitch. You are making a big mistake. Huge mistake. I am the reincarnated thetan of Shelley Miscavitch and I have dropped my body a year ago and taken this form to protect her thetan from all of your thetans. You are all out ethics. Do you have any idea what will happen to you as a result of this. You must let me go and my friend Mike Rinder will vouch for me. So will my friend Leah Remini. Just ask her and she will tell you. By the way, can I interest you in a mansion in Beverly Hills?

    There are several other possibilitites. Perhaps we should ask some other people to submit other courses of events before we do anything that cannot be undone. I’m sure he will try to avoid being arrested by any number of other possibilities.

    Reply
  14. Mick Roberts says

    February 17, 2021 at 11:26 am

    “….the IRS should reevaluate the tax exemption status of each individual Scientology organization, or risk….creating the dangerous precedent that persistent attacks on governmental agencies will in turn lead to leniency and submission.”

    Bingo! They got strong-armed with an avalanche of lawsuits and they caved under pressure. The IRS (or any government agency, for that matter) should never allow any person or group to hold a proverbial gun to their heads. Otherwise, the rule of law, which is the very foundation of any civilized society, is meaningless.

    They need to once and for all take a long, hard look at the legitimacy of this organization’s tax exempt status and send a strong message that the Internal Revenue Service will not be intimidated.

    Reply
    • Kimberly says

      March 4, 2021 at 4:31 am

      A dangerous precedent indeed. Another one is having crimes committed within an organization and no repercussions. What about ‘forced confessions’ as it applies to the exit interviews to leave scientology. Why is it in a court of law these legal rights exist but no rights exist for children or people fearfully signing anything just to leave. I feel my heart break with each family broken, lies in interviews (the ex Mrs. R: Clearly not an actress winning any award for that nonsense script,) and the crimes against children/psychological help withholding/sexual crimes. I would offer what little I do have to anyone in need of a place to flee to and in need of a sliver of hope that says your life is worth more. I never knew the extent of torture this Hitler purification like “church” held over people. How can persistence in bullying be allowed and then rewarded with tax exempt status in the world we live in. Not just allowed but looked over and dismissed. Like stated on the show, “you continue to fight for what’s right.” Knowledge is power. Sharing this truth is power. I hold all the brave participants in my heart and wish them well. You are the fight.

      Reply
  15. George M White says

    February 17, 2021 at 11:21 am

    Personally I support removing the tax exempt status for all religion in the United States. It makes no sense today to grant tax exemption to any religion. This was Blavatsky’s primary point in the 1890’s. She was correct. No Church deserves a tax exemption. Let the free market decide.

    Reply
    • Miss Dutch says

      February 17, 2021 at 12:06 pm

      The whole point of tax exemption for most (maybe all) religious organizations is to ease the burden of caring for the less fortunate. Most of these organizations are not only willing to show their books, but often do so without even being asked. I think these ‘open books’ should be mandatory. I have a feeling Scientology would not be the only group to lose tax exemption. However, if you totally do away with this exemption you had better be ready for some seriously increased personal tax bills! If churches and other charitable organizations can no longer give a tax break for donations, they will get FAR less money. And the people/groups they help will need that help from the government.

      Reply
      • GrumpyCat says

        February 17, 2021 at 1:47 pm

        Then let them get tax rebates for work proven done. It’s that simple.

        Reply
      • George M White says

        February 17, 2021 at 4:03 pm

        I still think the free market should decide. The only way is with no tax exemption. The courts are stymied by cults and should not even get involved in tax exemption.

        Reply
      • Amy says

        February 17, 2021 at 7:31 pm

        That should be a requirement for sure! The American tax payers should have the right to.see the books and how they spend money and oh PS real estate should not count. I know they have violated civil rights of their victims. That alone u would think would end their evil doings.

        Reply
    • Aquamarine says

      February 18, 2021 at 12:45 am

      Agree, George! Why shouldn’t religious organizations pay taxes like everyone else?

      Reply
      • Sherry says

        February 18, 2021 at 1:08 pm

        I believe the idea about religious groups and non-profit groups getting tax exemption is that they provide services to people in need that the government would otherwise have to provide. Most religions do this with soup kitchens, clothing drives, whatever. It’s just that the CO$ is neither a religion, nor a non-profit (haha) group, nor does it help anybody in need – instead it scorns them. They are taking advantage of a loophole but the principle of giving a tax break to people who spend their money giving it to the needy is sound.

        Reply
  16. Zee Moo says

    February 17, 2021 at 11:11 am

    Ok IRS, here’s your playbook. Now do something with it.

    Reply
  17. Peridot says

    February 17, 2021 at 10:36 am

    This is excellent from Taylor Holley. Crystal clear and so well-written. If she is willing to come on, would make for an interesting Leah & Mike discussion with Ms. Holley on the “Fair Game” podcast.

    Reply
  18. Tim says

    February 17, 2021 at 10:11 am

    Can’t find the article online.

    Reply
    • Mike Rinder says

      February 17, 2021 at 10:32 am

      Did you click on the link in the post? It works for me?

      Reply
  19. Mary Kahn says

    February 17, 2021 at 9:14 am

    I’m glad the church of scientology has became a worthy topic for Taylor Holley to write an Abstract. The light of truth is being shown on this vile group from MANY directions – FINALLY – as it should be. It’s gotten to the point where most can clearly see what this group’s tactics are, what it really stands for and the damage it does to our society, our justice system and our individual citizens. Maybe one of these days the IRS will do what’s right and revoke its 501c3.

    Reply
  20. Loosing my Religion says

    February 17, 2021 at 9:09 am

    An entity such as the IRS intended to get taxes paid is supposed to periodically check those who have received the tax exemption to see if they are still eligible.
    As for scientology, we’re talking about tens of millions of dollars a year here, not peanuts.
    Who knows if these checks are really done?
    Otherwise it would be a huge loss of revenue for the state coffers.

    Reply
    • Lorraine says

      February 18, 2021 at 11:35 am

      Joel Osteen’s MEGA CHURCH is worth millions….& so is HE & his wife Victoria

      https://www.yahoo.com/lifestyle/joel-osteen-opens-church-suffering-121537761.html

      They are tax exempt as well……WTF???

      Reply
  21. otherles says

    February 17, 2021 at 8:53 am

    If payment isn’t required for the reassessment of Scientology’s tax status, it won’t happen.

    Reply
  22. Rip Van Winkle says

    February 17, 2021 at 8:26 am

    Excellent resource. Great to hear.

    It could be a nice addition to your recommended links!

    🙂

    They could interview anyone who was staff for even a just a few years or so in any capacity, and have all the evidence they could ever need to prove it doesn’t qualify for tax exemption.

    Reply

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