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Church of Scientology, Church of American Science and Church of Spiritual Engineering incorporated in Elizabeth, New Jersey by L. Ron Hubbard. Co-signatories were Mary Sue Hubbard, L. Ron Hubbard Jr. and Henrietta Hubbard. | |
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The Internal Revenue Service grants a tax exemption to the Church of Scientology of California (CSC). | |
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The Internal Revenue Service
revokes CSC's tax-exempt status, citing three reasons:
Scientology denounces the revocation, declares its intention to ignore the decision and withholds payment of taxes for the next 26 years. Ref: Church of Scientology of California vs IRS, 24 Sept 1984 judgement |
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L. Ron Hubbard devises the Snow White Program for Scientology's intelligence agency, the Guardian's Office (GO), in an effort to root out and remove "false files" about the Church and Hubbard held by governments around the world. This becomes a sophisticated worldwide espionage operation targetting 17 governments and three international organisations. | |
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Kenneth Urquhart,
"LRH Communicator", overhears L. Ron and Mary
Sue Hubbard discussing infiltrating the IRS in
Washington, DC. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 227 |
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Cindy Raymond
(Collections Officer in the US Information Bureau of the
GO) in Los Angeles, California, sends a directive to Michael
Meisner (Assistant Guardian for Information,
Washington, DC) ordering him to recruit a loyal
Scientologist to be placed as a covert agent at Internal
Revenue Service in Washington, D.C. The agent is to
obtain employment with the Internal Revenue Service for
the purpose of taking from that agency all documents
which dealt with Scientology, including those concerning
pending litigation initiated by Scientology against the
United States Government. A number of Scientologists are
interviewed as prospective agents. However, none are
found to be suitable. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 18 |
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Gerald Bennett Wolfe
is selected by Raymond to infiltrate the IRS on behalf of
the Church of Scientology. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 18 |
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Jane Kember, the
Guardian World Wide (based in East Grinstead in England)
issues Guardian Order 1361. Its "operating
targets" include the following:
It also calls for the planting of "an agent, trustworthy and well grooved in, to infiltrate the IRS LA office" (target 2). That agent is "to obtain any files on LRH, Scientology", etc. from both the Intelligence Division (target 3) and the Audit Division (target 4) of the Los Angeles IRS Office. It also calls for the location (target 20) and infiltration (target 22) of the IRS office at the US Embassy in London, England in order to "obtain all documents" (target 22). Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp. 19-21 |
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Michell Hermann, the
GO's Information Branch I Director, plants an radio
transmitting bug in the conference room of the IRS' Chief
Counsel, where a confidential meeting is to be held
concerning Scientology. The meeting is to discuss pending
legal actions involving the various churches of
Scientology and to establish general guidelines for
determination of what constituted a "religious
institution" entitled to exemption from taxation
under the Internal Revenue Code. The entire meeting is
recorded and transcribed by GO agents in a car outside
the building. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp. 23-24 |
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Scientology agent Gerald
Wolfe obtains employment at the IRS as a clerk
typist. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 18 |
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Using fake passes, Hermann
and Meisner illegally enter the Exempt
Organization Division of the IRS and steal a file on
Scientology, which they describe in a telex as "two
shipments from DC . . . about ten inches" thick. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 38 |
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Hermann orders
Wolfe to obtain all documents related to
Scientology from the IRS office of Barbara Bird, an
attorney in Refund Litigation Service. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 41 |
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Wolfe
steals thousands of documents, totalling some 10 feet in
height, freom the offices of Barbara Bird and Lewis
Hubbard of the Chief Counsel's Office and from the Chief
Counsel's file room, as well as from other offices within
the suite of offices comprising the Office of the Chief
Counsel. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 53 |
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"Project Horn" is devised by Greg Willardson (Deputy Deputy Guardian for Information) and the order to implement it given to Meisner. Its aim is to "provide a cover for PR [Public Relations] and legal for the way they obtained IRS docs." This project further implements Guardian Order 1361, Target 6, which already provides for the creation or a "suitable cover" to disguise the true manner in which stolen documents have been obtained from the IRS so that the Public Relations Bureau can use them without fear of being connected to the thefts. Meisner is ordered to steal documents concerning organizations other than Scientology. Thus, whenever any stolen IRS documents are later released, those other organizations will also be perceived as having received them and their publication will not point to the Church of Scientology alone. Additionally, the project orders the theft of IRS stationery so it might be used by the GO to draft false letters from a fictitious IRS employee disgruntled with the organization. Wolfe is tasked with the actual thefts and accomplishes them successfully. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp. 48-49 |
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Willardson
requests the Guardian's Office World-Wide to approve an
additional expenditure of funds for the excerption,
xeroxing and cross-filing of 15,000 documents stolen from
the IRS. This is so that Mary Sue Hubbard and other
senior GO personnel can be advised "as fast as
possible as to the IRS's intentions in regards to the
Church during the ongoing IRS tax exemption
negotiations." The letter adds that "[t]his was
a valuable action in that it resulted in a more real
estimate as to the IRS scene than was visable [sic] from
the Legal viewpoint." Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp. 55-56 |
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Mary Sue Hubbard
writes a letter to her deputy, Jane Kember,
on Scientology's "IRS Strategy". It states:
Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp. 65-66 |
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The GO gets wind of a major
financial audit to be made by the IRS of the Church of
Scientology of California. Accordingly, the GO decides to
obtain as much inside information as possible on the IRS'
"line of attack". Meisner
devises "Project Beetle Cleanup" for obtaining
"all DC IRS files on LRH, Scientology, etc., in the
Intelligence section, OIO [Office or International
Operations], and SSS [Special Services Staff]". The project proposes the placement of "FSMs" (Field Staff members, or agents) in the "required areas or good access developed", and further that "Pitts" (the code name for Nancy Douglass - a GO agent who had infiltrated the Drug Enforcement Agency) and "Silver" (Wolfe) attempt to obtain employment at the Internal Revenue Service Intelligence Division and Office of International Operations respectively. Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, pp.70-71 |
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The Church of Scientology
brings a Freedom of Information Act suit against the IRS.
Raymond orders Meisner
to obtain information from the office of Charles Zuravin,
the IRS attorney who would be defending the FOI case.
This establishes a pattern: Scientology systematically
sues the IRS and other Federal agencies, then penetrates
the agencies' attornies' offices to steal the papers
which Scientology was trying to access through FOI in the
first place. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 233 |
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L. Ron Hubbard orders the Guardian's Office to establish an "Early Warning System" to alert him of any moves by US Federal and State authorities against Hubbard personally. This is to be achieved through the planting of agents in dozens of different official bodies. The Assistant Guardian for Information (i.e. intelligence) in Washington, DC is ordered to "Place a separate agent into the IRS Office of International Organizations (OIO) (as this office has a case preparation or investigative action going on LRH personally for income tax evasion or something similar)." | |
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U.S. Directorate Secretary
World-Wide Michael Taylor informs Greg
Willardson, that the IRS London targets have
been "handled." Ref: Stipulation of Evidence, United States of America vs Mary Sue Hubbard et al, Oct 1979, p. 21 |
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Meisner and
Wolfe are caught by the FBI after a
security guard at the US Courthouse becomes suspicious of
their (forged) IRS credentials. Meisner escapes and is
hidden from the FBI by the GO, but eventually turns
himself in. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 237 |
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Wolfe is
convicted of the forgery of credentials and is sentenced
to probation and community service. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 240 |
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The FBI raids Scientology's
headquarters in Washington, DC and Los Angeles. The GO is
taken by surprise and tens of thousands of incriminating
documents are seized, including complete records of the
infiltration and burglary of the IRS and other government
departments. Ref: Various, including Los Angeles Times and other newspaper reports |
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Eleven Scientologists,
including Mary Sue Hubbard, are convicted of conspiracy
and imprisoned for between two and six years. L. Ron
Hubbard goes into hiding in California and does not
reappear again until his death in January 1986. Ref: Various, including Los Angeles Times and other newspaper reports |
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The IRS places a lien on the
Scientology's Los Angeles headquarters, the Cedars of
Lebanon complex. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 262 |
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Scientology appeals against
the IRS tax assessment for the years 1970-72. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 262 |
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The corporate structure of
the Church of Scientology and associated entities
undergoes radical restructuring. At a Mission Holders'
Conference held in San Francisco, Warrant Officer Lyman
Spurlock is introduced as the "Corporate Affairs
Director of the Church". Spurlock starts his speech
by saying "Prior to the end of 1981, a few of us from
the CMO got together and took a look at the
corporate structure of the Church with the view in mind
of making it more defensible and more regular and
particularly not understandable by the traditional
enemies of the Church such as the IRS, and to
make an overall improvement" [my underlining]. The
phrases in italics are omitted in the transcript, but
exist in the tape of the Conference. Ref: Tape recording of the Mission Holders' Conference, San Francisco, 1982 |
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Scientology loses its appeal
over the IRS tax assessment for the years 1970-72. The
Tax Court judge documents in detail how huge sums were
moved out of Scientology accounts into those of L. Ron
Hubbard during the period in question. The judgement also
describes the obstructionist tactics used by Scientology
to thwart the IRS - for instance, deliberately jumbling
two million pages of tax-related material, so that IRS
officials would have to sort it out at the cost of a
great deal of time and US tax-payers' money. Ref: "A Piece of Blue Sky", Jon Atack (1992), p. 345 |
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The Church's new intelligence agency, the Office of Special Affairs (which superceded the discredited Guardian's Office), strikes back at the IRS with the creation of a front group - "The National Coalition of I.R.S. Whistle-blowers". According to ex-OSA member Stacy Young, Scientology's aim was to undermine the agency's credibility. The group's president, Paul J. DesFosses, says Scientology provided substantial financing, but denies that the church ran the group, which helped fuel Congressional hearings in 1989 into accusations of corruption at the I.R.S. Kendrick L. Moxon, a longtime church lawyer, acknowledges that the coalition was founded by Freedom Magazine. He says its work was well known and part of a campaign by Scientology and others to "reform" the IRS. | |
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Scientology hires private
investigators to investigate the personal lives (and, as
L. Ron Hubbard's theories on "suppressives"
would have it, the "crimes") of senior IRS
officials involved in the ongoing Scientology litigation.
According to Octavio Pena, a private investigator in Fort Lee, N.J., a Scientologist identifying himself as Ben Shaw visits him in the summer of 1989 to explain that the church was concerned about IRS corruption and would pay $1 million for Pena to investigate IRS officials. Pena refuses. Two more PIs, Michael L. Shomers and Thomas J. Krywucki work for Scientology for at least 18 months in 1990 and 1991. Working from his Maryland office, Shomers sets up a phony operation, the Washington News Bureau, to pose as a reporter and gather information about church critics. He infiltrates IRS conferences to gather information about officials who might be skipping meetings, drinking too much or having affairs. Scientology lawyer Kendrick Moxon - one of those cited in the Snow White scandal in 1979 - admits the use of private investigators but claims that they are needed to counter lies spread by "rogue government agents". |
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Scientology leader David Miscavige and Marty Rathbun, another senior Scientology official, claim to have held an unscheduled meeting with IRS Commissioner, Fred T. Goldberg Jr. Miscavige offers to drop all the suits against the IRS if Scientology is given tax exemption. Goldberg agrees and creates a special five-member working group under Howard M. Schoenfeld to resolve the dispute, bypassing the agency's exempt organizations division, which normally handles those matters - an exceptionally unusual arrangement. | |
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John E. Burke, the assistant commissioner for exempt organizations, agrees to Scientology's demand that its the bulk of its financial details should be kept secret. | |
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The US Claims Court upholds
the IRS' longstanding denial of a tax exemption for
Scientology's Church of Spiritual Technology. The ruling
strongly supports the agency's concerns over the
commercial nature of Scientology and other matters. It
states that the corporate structure of Scientology was
"something of a deceptus visus. Real
control is exercised less formally, but more tangibly,
through an unincorporated association, the Sea
Organization..." Scientology claims that the ruling has ignored the facts and is filled with "gratuitous comments". |
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The IRS agrees to grant tax exemptions to every Scientology entity in the United States, plus foreign entities based in the UK and Cyprus. The Church files new applications for exemptions as part of the agreement. | |
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Two IRS tax analysts write internal memoranda saying that they have been instructed to ignore substantive issues in reviewing the new Scientology applications. | |
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The agreement comes into
force. Scientology pays the IRS $12.5m in back taxes and
drops all the lawsuits brought by Church entities and
individual Scientologists against the IRS. Ref: Closing agreement on final determination covering specific matters, 1 Oct 1993 |
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David Miscavige holds a
"victory rally" attended by 10,000 cheering
Scientologists in the Los Angeles Sports Arena. He
declares that "the war is over" and explains
that he has defeated the secret "master plan"
of the psychiatrists - or rather, the "pea-brained
psych-indoctrinated mental midgets" - namely, to use
the IRS to destroy Scientology. Ref: Speech of David Miscavige to the International Association of Scientologists, 8 Oct 1993 |
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In Washington DC, the IRS
formally announces exemptions for about 150 Scientology
entities. Remarkably, this includes at least one body
which is an explicitly for-profit commercial
organisation: the IRS accepts that the publication of
Hubbard books by Bridge Publications is a charitable
activity. The IRS declares the agreement secret, despite
its legal obligation under Internal Revenue Code section
6104 to disclose information submitted to the IRS by
tax-exempt organizations. Ref: Closing agreement on final determination covering specific matters, 1 Oct 1993 |
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The consumer affairs group Tax Analysts submits a Freedom of Information request to obtain the exemption agreement. | |
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The IRS refuses the FOI request, and Tax Analysts files suit. | |
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The U.S. District Court for the District of Columbia orders the IRS to release to Tax Analysts field service advice memorandums (FSAs) prepared by the IRS Office of Chief Counsel. | |
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The secret agreement is leaked to the Wall Street Journal, which promptly puts it on its Web site and leads with a front-page story. Newspapers across the United States report the story. | |
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The IRS announces that it is to hold an internal inquiry into how the agreement was leaked. The Church of Scientology denounces the leak. Scientologists accuse unnamed participants in the Internet newsgroup alt.religion.scientology of being involved. | |
Last updated 14 January 1998
by Chris Owen (chriso@lutefisk.demon.co.uk)