To Tax...
A wise man once said that “...if you want to get rich, start a religion.” This quote has been attributed to late Sci-Fi author L. Ron Hubbard for decades, and has led to much speculation on whether his founding of Scientology was born from this line of thinking. In episode 31 of American history podcast The Dollop, the hosts briefly discuss Hubbard’s well documented membership in the religion of Thelema, a religion founded by famous Satanist Aleister Crowley.
I think that his friendship with Crowley led him to understand the ins and outs of creating a religion, which in turn led to his blessing of the first Church of Scientology in February, 1954. He wasn’t making money as a Sci-Fi writer, but that was all about to change. Up until July, 1967, the Church of Scientology went untaxed by the IRS as it was not recognized as a real religion, but more a commercial enterprise. I guess they had too much income.
When the IRS revoked the tax exempt status of the church, Hubbard described it as the start of a war with the IRS, a war which the church would go to great lengths to win. Later in life, Hubbard called taxation an “alien mind implant left over from galactic tyrant Xenu’s genocide of billions of beings on earth 76 million years ago.” What a fucking nut case lol. Clearly not a man of compliance with regulations.
Or...
In the 1970s, the Church ramped up their war efforts to a degree unheard of by the United States government. Taxes weren’t the only thing the church wanted to get rid of, thus began Operation Snow White. Throughout 1973, the church attempted to use the Freedom of Information Act in order to request any and all record the US government had on Hubbard and the church, but to no avail. The church’s legislative arm, dubbed the Guardian Office, concocted a grand plan to secure the information it desired by way of infiltration and subterfuge.
According to an article from 1990 in the Los Angeles Times, “They compiled enemy lists and subjected those on the lists to smear campaigns and dirty tricks.” They went so far as to frame Paulette Cooper, author of the 1972 book “The Scandal of Scientology,” by forging bomb threats on letters using papers she had touched. The church’s spies “...penetrated such high-security agencies as the Department of Justice and Internal Revenue Service…” Throughout the operation, members of the church stole important documents using highly thought out plans, but later on got a bit sloppy using fake IRS identification.
One of the agents turned himself in after 11 months of running, which led the FBI to commence one of the largest raids in the history of the agency. “Armed with power saws, crowbars and bolt cutters, 134 agents burst into three Scientology locations in Los Angeles and Washington.” This counter operation led to the arrest and charging of Hubbard’s wife and other high level members of the church. Hubbard pleaded ignorance of the operation and was unindicted, but considered a co conspirator. In the end, Operation Snow White failed to get the tax exempt status the church craved and the war wasn’t over. That would come two decades later when the church was under new leadership.
Hubbard’s successor, David Miscavige, began the process of restructuring the church, which had been in dire straights since the failure of Operation Snow White, a big part of that being financial issues. “For 25 years, IRS agents had branded Scientology a commercial enterprise and refused to give it the tax exemption granted to churches,” according to a 1997 New York Times article. Miscavige believed that having that tax exemption came also with religious recognition that in turn would give them the protection of the First Amendment of the US Constitution.
Up to this point, much of the church’s money had been funneled to Hubbard through “hundreds of bank accounts” and the creation of a shell organization called the Religious Research Foundation. In 1987, the church formed an “audit task force” in order to “make some sense of (their) tangled finances.” In addition to this, several organizations within the church such as the Citizens for an Alternative Tax System, worked to put political pressure on the IRS and force their hand. When all else seemed to not be enough, the church began a “sweeping religious makeover” in the 1990s, which involved the display of religious paraphernalia and hold “Sunday services” at their chapels.
The church targeted religious academics and scholars, giving them access to Scientology facilities in order to coach them on church practices. At an undisclosed date prior to 1993, Miscavige and another high ranking church member had an “impromptu meeting” with IRS tax commissioner Fred T. Goldberg, Jr in which they decided to attempt a resolution to all the problems between the church and the IRS. “The IRS reversal on Sceintology was nearly as unprecedented as the long and bitter war between the organizations,” but in October 1993, the IRS announced the Church of Scientology’s tax exemption status. The war was over. Imagine that.
In the end, the Church of Scientology got what it wanted after decades of unorthodox and often illegal tactics and, maybe, a little turning of screws. The politics around religious tax exemptions have been an interest of mine for quite some time and this story is one of, if not the most, insane ones of them all (right up there with the foundation of Mormonism).
I am not writing this to put a negative light on anyone, or any organization, but as an examination of a series of events leading to a massive taxation debacle in American history and politics. I do not mean any offense to anyone, this is purely educational. People mostly know Scientology because of actor Tom Cruise, but most people may not be aware of the strange journey of this uniquely American religious organization.
This is meant to be more of an exercise in generating a discussion on US tax laws. Perhaps if an organization once seen as commercial and, at the worst of times criminal, can obtain tax exemption status, then maybe US tax laws need to be examined and updated for a modern era. Sound familiar?
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