Since I've got to read this entire thing anyway, I thought I'd do an online analysis of what I read as I'm doing it. I should note that I am not a tax attorney, and so I'm looking for more mundane things to reach out and bite me. So this analysis is cursory, and I look forward to clarifications and explanations from professionals.

>   Form 906
>   
>   Rev. January 1987
>   
>   Department of the Treasury -- Internal Revenue Service
>   
>   Closing Agreement On Final Determination Covering Specific Matters
>   
>   Under section 7121 of the Internal Revenue Code, the parties named
>   herein and the Commissioner of Internal Revenue make the following
>   closing agreement:
>   
>   WHEREAS, the Church of Scientology and its constituent entities
>   (the"Church") and the Internal Revenue Service (the "Service") have a
>   long history of controversy spanning over 30 years;

No doubt. The Co$ got its tax exemption yanked in 1967 for financial chicanery.

>   WHEREAS, the Church has pending with the Service applications on Form
>   1023 requesting that the Service recognize certain constituent
>   entities within the Church as exempt from income taxation pursuant to
>   section 501(a) of the Internal Revenue Service Code, as exclusively
>   charitable organizations described in section 501 (c) (3) of the
>   Code;

This paragraph just says that the Co$ has submitted Form 1023 to get 501(c)3 exemptions for certain of its entities.

>   WHEREAS, the controversy between the parties includes litigation
>   (hereinafter "the section 170 litigation") in which the
>   deductibility
>   under Code section 170 of parishioners' payments to the Church in
>   connection with their participation in religious services of the
>   Scientology faith is at issue;

In other words, a lot of Scientologists were suing the IRS over the deductibility of their course fees. The IRS was denying the deductions.

>   WHEREAS, the Church signatories and individual Scientologists have
>   initiated, supported and/or otherwise participated in litigation under
>   the Freedom of Information Act (FOIA) to compel the Service to
>   disclose information withheld by the Service in response to FOIA
>   requests about its treatment of Scientologists and Churches of
>   Scientology (hereinafter "FOIA litigation");

The Co$ had instituted harassing litigation against IRS to get information that IRS had collected on the Co$.

>   WHEREAS, in October of 1991, the key officials of the Church, David
>   Miscavige and Mark Rathbun, approached the Service seeking to
>   negotiate the resolution of the above-described matters, and met
>   with the then Commissioner;

I believe the Co$ has said that this meeting never occurred?

>   WHEREAS, at this meeting, the Commissioner indicated his desire to
>   resolve all outstanding issues between the Church and the Service

Well, yeah, if you read the NYTimes article from earlier this year, it's apparent that the Co$ was into some heavy DA [Dead Agenting] against the IRS.

>   and
>   appointed the Assistant Commissioner to negotiate and conclude a
>   settlement with the Church on behalf of the Service;

Who was the Assistant Commissioner, please? Anyone know who was on the committee for the IRS?

>   WHEREAS, the Church and the Service intend this closing agreement
>   to be final and conclusive with respect to all matters but, while also
>   final and conclusive, that its provisions relating to the
>   continuing
>   duties and obligations of both parties during the transition period
>   shall generally be effective until December 31, 1999;

There's been some scuttlebutt about the Co$ being in "receivership" with the IRS. I assume that this is what the scuttlebutt was about.

>   NOW IT IS HEREBY DETERMINED AND AGREED, for purposes the Internal
>   Revenue laws of the United States, and in consideration of the
>   provisions contained herein that:

>   I. Introduction.
>   
>   The parties have entered into this Agreement in order to put the
>   past
>   controversy behind them, to extinguish all potential claims and
>   liabilities arising as a result of action or inaction prior to the
>   date of this Agreement and to structure their relationship into the
>   future. While complex, there are certain basic principles
>   underlying the Agreement that will aid in its comprehension.

This paragraph says:

• We're dealing with the past.

• We're building our relationship for the future.

  and

• This is a complex agreement, but there are some basic principles here.

>   First, under section II of the Agreement the Church will make a
>   single payment that is intended to extinguish any potential tax liability
>   that may be due and unpaid by any Scientology-related entity for
>   all tax years up to and including the tax year ending in 1992. Thus, as
>   of December 31, 1992, the Church will be current with respect to all
>   income, employment and estate tax liability.

This paragraph says that the Co$ will make one single payment (of $12.5 million) to settle all back tax claims through 12/31/92. This includes tax claims on the following, and is for any Scientology-related entity. And so, as of 12/31/92, the Co$ is adjudged to have come up to date with regards to income, employment and estate taxes.

Now, one thing that perturbs me is this. If Co$ owed money to IRS on behalf of its employees, was that amount negotiated downward from the original amount owed? After all, $12.5 million is not very much money at all. Same goes for the estate tax and for the income tax.

>   Second, under section II of the Agreement, the Church and the
>   Service will withdraw from virtually all existing controversy, including
>   ongoing examinations of Church entities, 

The IRS will drop all investigations of Co$ and entities.

>   ongoing litigation by the
>   Service to enforce summonses for Church records,

The IRS will stop seeking Co$ records that it has gone to court to ask for.

>   and all litigation by
>   the Church against the Service and its current or former personnel.

This is what the IRS got by giving up the other. Apparently (and based on the NYTimes reporting) the harassment had gotten pretty severe.

>   In addition, because the parties intend that the relationship between
>   them begin anew, and in light of the other provisions contained in
>   this Agreement, including the payment with respect to potential past
>   tax liability, the Service and the Church agree under this section
>   II of the Agreement that the Service will not examine the Church for
>   any year ending prior to January 1, 1993. 

Since we're starting afresh, IRS agrees not to audit Co$ for anything that happened before 1/1/93.

>   Similarly, no Scientology-related entity may initiate or support any 
>   legal action against the Service or any Service employee for any claim 
>   arising prior to the date of this Agreement.

The Co$ also agrees not to sue the IRS for anything that occurred before 1/1/93.

>   Third, it is the view of the Service that certain Church entities are
>   entitled to recognition of tax-exempt status as entities described in
>   section 501(c) (3) of the Internal Revenue Code. Thus, section III of
>   the Agreement contains a list of entities that will be recognized as
>   tax exempt entities, including certain entities that will receive
>   group exemption letters covering their subordinate organizations.

The IRS agrees that certain Church entities get 501(c)(3) status. Not only that, the IRS will give letters for group exemptions to certain Co$ organizaitons to cover their subordinate organizations. What that means is that some subordinate organizations can get their tax exemption on the back of their parent organization. This would probably include local orgs and missions.

>   Notwithstanding the above, in light of, inter alia, the size and
>   complexity of the Church and the Service, certain concerns of the
>   Service and the Church remain. In addition, there is a need for
>   improved communication between the parties. Thus, under section IV,
>   a Church Tax Compliance Committee (CTCC) has been created to
>   undertake certain obligations during a seven-year transition period. The CTCC
>   is to be comprised of the largest United States Church entities, as
>   well as those individuals who are the highest ecclesiastical or
>   corporate authorities within the Church. 

A Church Tax Compliance Committee is to be put in place. It will last for 7 years. It will consist of the largest U.S. church entities, plus the highest ecclesiastical or corporate authorities within the Co$.

>   The Service, through the Assistant
>   Commissioner, has agreed to meet with the CTCC upon their request
>   during the transition period to address any questions arising from
>   the ongoing performance of the parties' obligations under this
>   Agreement.

This means that the Assistant Commissioner (who is that now?) is supposed to meet with this CTCC whenever the CTCC has a request. Gosh, wouldn't it be interesting to just get lists of the meeting dates and the participants, and try to link it up to ongoing litigation?

>   The CTCC is in a position to monitor and effect the operations of
>   the  group entities that are defined as "Scientology-related entities"
>   under this Agreement.

If the tax protestors are to be believed (and I take them with a grain of salt), it seems like the Co$ really went nuts on this tax compliance. After looking at this agreement, which appears to be the definition of "sweetheart deal," no doubt DM and friends didn't want anything to screw it up.

>   Under section IV, the CTCC is responsible for certain reports produced
>   and provided annually to the Service. These reports will include a
>   report on the application of certain agreed-upon procedures by an
>   independent certified public accounting firms, 

Gosh, wonder who they got to do that?

>   as well as certain
>   other information collected and reported by the CTCC. 

And I sure do wonder what is in these reports?!

>   These reports, and the information the CTCC collects
>   from Scientology-related entities in order to prepare them, are
>   intended solely for the purposes of administration of the tax laws
>   and not for any other purpose.

I.e., we only want this information to assess compliance, and nothing else. Which means we won't be handing it over to Tax Analysts!

>   In light of the CTCC and its relationship to the whole of Scientology,
>   the CTCC has agreed under section IV to guarantee the collection of
>   taxes (including interest and penalties) from any Scientology-related
>   entity for tax liability arising during the first three years of
>   the seven-year transition period. 

The CTCC guarantees the collection of taxes for the period 1/1/93 to 12/31/96 from any Scn entity. I believe, further on in this document, that each person on the committee is made jointly and severally liable. This might also explain why they went against the "tax protestors" with a vengeance. Were the IRS to construe "Scientology-related entity" to include these tax protestors (it's a stretch, but hey, we're talking about the IRS here), then DM and the rest could be liable for any taxes owed by these people.

>   The parties have agreed under section  V
>   to keep confidential both this Agreement and all underlying
>   information that is not part of the public record under Code section
>   6104 except to the extent that disclosure is necessary to interpret
>   or apply this agreement or is permitted under the authority of law. 

This is why Tax Analysts could never get ahold of anything related to the closing agreement. The only way that it would come out is if it were:

• Under Code section 6104 or

• as part of interpretation of tax law.

>   In addition, the CTCC has agreed under section VI to certain
>   consensual  penalties intended to provide the Service intermediate sanctions
>   for activities or conduct not in accordance with the Code or with this
>   Agreement.

This section includes the "stick" that IRS will use on CTCC if CTCC acts up. To be fair to CTCC, we should look at this carefully, in light of the fact that IRS has been, shall we say, somewhat draconian in its application of the letter of the tax law to individuals. Witness the IRS hearings earlier this year, they were filled with examples of harassment of people by IRS.

>   Finally, under section VII, the Service and the Church have come to
>   an agreement with respect to the treatment of contribution by Church
>   parishioners and the extent to which those contributions are
>   deductible under section 170 of the Internal Revenue Code, as well
>   as the Service's acknowledgment of its obligation to interpret and
>   apply the "gift or contribution" requirement of Code section 170 (c)
>   equally and consistently to the fundraising practices of all religious
>   organizations that receive fixed donations from parishioners in
>   connection with participation in worship and similar religious
>   rituals or services.

What this paragraph says is that IRS has caved to Co$ and is now allowing Co$ "parishioners" to deduct the costs of their courses. This particular paragraph is filled with rhetoric about how IRS will now interpret section 170 (c) to include fixed donations "in connection with participation in worship" (!). This is a major departure for IRS.

Further on in this agreement, there is this statement (under Section IV)

>  For purposes of this subparagraph, only the following actions will be
>  considered to be a material breach by the Service:

> b. the issuance of a Regulation, Revenue Ruling or other
> pronouncement of general applicability providing that fixed donations to a
> religious organization other than a church of Scientology are fully
> deductible unless the Service has issued previously or issues
> contemporaneously a similar pronouncement that provides for consistent and uniform
> principles for determining the deductibility of fixed donations for
> all churches including the Church of Scientology;

So, only the Co$ gets this tax exemption, and nobody else can get this tax exemption unless everyone else gets this tax exemption. It could have been reasonably argued, for example, that parochial school tuition would have to be made tax deductible should this application be universal. As was pointed out to me, the IRS would be loath to grant any further exemptions because they'd lose a LOT of income. So, in a nutshell, what the Co$ got was a sweetheart deal, a tax exemption that nobody else could get.

>   II. Resolution of Outstanding Issues.
>   
>   A. In General. In general, the parties to the Agreement intend that
>   the below-described issues be finally and conclusively resolved
>   under this Agreement.

This agreement is conclusive as to the following outstanding issues.

>   B. Payment in Consideration of Resolution of Outstanding Issues.
>   
>   1. At the same time this Agreement is executed, Church of
>      Scientology International is paying by banker's draft the sum of Twelve and
>   One-Half Million United States Dollars (US$12,500,000.00), receipt
>   of which the Service hereby acknowledges, as consideration for the
>   settlement of outstanding issues with the Service as set forth in
>   this  Agreement.

The Co$ Intl. paid IRS $12.5 million for this agreement.

>   2.The amount paid under this Agreement includes recognition that
>   the Church will not collect the attorneys' fees awarded to the Church
>   in the Church of Scientology of Boston, Inc. litigation referred to in
>   Exhibit II-2, thus extinguishing the Service's liability under that
>   decision.

In exchange, Co$ will not collect attorneys' fees for the Co$ of Boston case, in which it had been awarded attorneys' fees.

>   3. The amount paid under this Agreement is not considered part of,
>   or attributable to, the federal tax liability of any
>   Scientology-related individual or Scientology parishioner, 

No individual can use this agreement as a way of getting out of their own federal tax liability.

>   and is not deductible,
>   refundable or creditable to any such individual for any purpose,

Nor can it be deducted or credited to any individual.

>   nor may the amount be the subject of any other offset of liability
>   under this Agreement.

Nor can it be applied to any other liabilities that may come owing under this agreement. I.e., Co$ can't say, "But we already paid you."

>   4. If, after application of the provisions of paragraph IX.H.

which states:

> H. Finality. This Agreement is final and conclusive except:
>   
>   1. The matter it relates to may be reopened in the event of fraud,
>   malfeasance, or misrepresentation of material fact;
>   
>   2. It is subject to the Internal Revenue Code sections that
>   expressly provide that effect be given to their provisions (including any
>   stated exception for Code section 7122) notwithstanding any other law or
>   rule of law; and
>   
>   3. If it related to a tax period ending after the date of this
>   Agreement, it is subject to any law, enacted after the Agreement
>   date that applied to that tax period.

>   the Service assesses a tax liability for a taxable year ending before
>   January 1, 1993 against any Scientology-related entity, the amount
>   paid under this Agreement shall be treated as a payment of the
>   taxes so assessed against such entity as of the date of this Agreement in
>   the manner designated by the CTCC. 

The $12.5 million is to be treated as satisfaction for any possible outstanding tax liability that might come up in the subject years before 1/1/93. How much you want to bet that they simply didn't even bother to do any more investigating?

>   Otherwise, such amount shall not be
>   considered part of, or attributable to, the federal tax liabilities
>   of any Scientology-related entity and is not deductible, refundable or
>   creditable to any such entity for any purpose, nor may the amount
>   be the subject of any other offset of liability under this Agreement.

In any other case, this money can't be applied to offset Co$ liability.

>   5. The amount paid under this Agreement may be designated as the
>   Service provides (including penalties or liquidated damages) so as
>   to avoid characterization as a refundable or creditable amount.

The IRS can call this a penalty or liquidated damages, but won't characterize it as something that could be seen as refundable or creditable. Not being a tax maven, I suspect this means that Co$ can't come back later and say that they overpaid...that this is in the nature of a penalty.

>   6. The amount paid under this Agreement shall not be deductible in
>   computing the taxable income of any Scientology-related entity or
>   Scientology parishioner and shall not be treated as compensation of
>   either income to any Scientology-related entity or Scientology
>   parishioner.

This amount is not deductible for taxable income of individual Scns or for taxable income of Scn organizations. Nor is it compensation for either income.

>   7. The performance of the various obligations under this Agreement
>   by the CTCC or by any Scientology-related entity, including (but not
>   limited to) the payment under paragraph II.B.1. hereof, shall not
>   in and of itself be considered by the Service to constitute the
>   conferring of substantial private benefits by any Scientology-related
>   entity, the private inurement of the net earnings of any
>   Scientology-related entity, nor shall such performance adversely
>   affect in any other way the tax exempt status under Code section
>   501 (c) (3) of any Scientology-related entity.

I am stumped by this paragraph, because I don't know the tax meanings of "substantial private benefits" or "private inurement." What this sounds like to me is that this is a CYA action on the part of the IRS.

>   8. No inference shall be drawn from the fact that the payment
>   provided in paragraph II.B.1 has been made with respect to whether any
>   Scientology-related entity agrees that any tax liability was
>   actually due or owing for any pre-1993 period.

IRS will not construe this as "payment of back taxes."

>   C. Effect of Agreement on Prior Tax Years and Waiver of Rights of
>   Action.
>   
>   1. The Service agrees not to commence an examination or assess any
>   tax liability under subtitles A, B, or C of the Code or under Chapter
>   42 of subtitle D of the Code for any taxable period ending on or
>   before December 31, 1992, with respect to any Scientology-related entity.

The IRS will not start any new investigations of Co$ or entities for tax liability prior to 12/31/92. Nor will they assess tax liability, which guts any sort of enforcement attempts arising from previous investigations.

>   Similarly, no Scientology-related entity shall have any right to
>   refund or offset with respect to any payment made for any taxable
>   period ending prior to the date this Agreement is executed.

Scn gets no refund or offset for any payment.

>   Notwithstanding the previous sentence, any amounts held in accounts
>   under the joint signatory authority of any Scientology-related
>   entity and a representative of the Service, and any other amounts
>   otherwise in the nature of bond, to defer collection action by the Service
>   with respect to any liability assessed against a Scientology-related
>   entity for the a pre- taxable period (including, but not limited to, joint
>   signature accounts at Sumitomo Bank to serve as collateral for FICA
>   assessments against CSI, RTC, CSWUS, and CST) shall be released or
>   otherwise returned to the Scientology-related entity. 

What this is saying is that the IRS is taking the $12.5 million in satisfaction of all outstanding actions. Presumably the joint accounts and bonds referred to here are as a result of IRS collection actions. In order to continue their appeals, the Co$ had to put up money in jointly controlled escrow accounts. This says that this money will be returned to Co$. I wonder how much money this involved?

>   The Service and the CTCC shall jointly draft notice to the bank 
>   (s) to effectuate release of such funds.

The IRS and the tax committee will sign off on this.

>   2. To the extent any payments have been made and/or claims for
>   refund filed for any taxable period prior to the date of this Agreement by a
>   Scientology-related entity, the Church and Service agree that such
>   payments are not subject to refund and will not be refunded. The
>   CTCC certifies that no Scientology-related entity will continue to
>   pursue such claim for refund or file any new claim for refund for any
>   pre-1993 period.

This paragraph says that the Co$ will drop all claims of refund for pre-1993 taxes and will not file any new claims.

>   3. The Service and the Church agree that no inference is to be
>   drawn from any provision of the Agreement as to the tax treatment of any
>   activity or item relating to any liability under the Code for any
>   post-1992 periods unless expressly provided herein. 

Just because we're making this agreement doesn't mean that it will apply to any post-1992 tax problems.

>   For example,
>   the fact that the Service has not assessed any unrelated business
>   income tax for past years may not be construed to mean that activities
>   that occurred in those years did not give rise to such liability and
>   that if such activities continue into post-1992 taxable years, that they
>   will not give rise to such income. 

This is a tacit admission on the part of IRS that the Co$ had taxable income liability for its unrelated businesses. It's also a tacit admission that IRS will not go after them for the previous years' liability, but for future years' liability.

>   For further example, the fact that
>   the Church has made the payment provided in paragraph B.1. shall
>   not be construed as an admission, or otherwise used in any way as
>   evidence, that any Scientology-related entity was not exempt from
>   federal tax for any taxable period before 1993.

The $12.5 million payment cannot be used as an admission or evidence that any Scn entity was not exempt from federal taxes.

>   4. In reliance upon the covenant of good faith and fair dealing that

IRS actually trusted these people to do things in good faith and fair dealing????

>   underlies this Agreement, the Church signatories, as well as the
>   Individual At-large members of the CTCC agree to relinquish all
>   claims arising out of any action or inaction of the Service of current or
>   former Service employees that occurred prior to the date of this
>   Agreement, 

The CTCC, both individually and as organizations, will relinquish all claims against the IRS as well as individual IRS employees prior to October 1, 1993.

>   including, but not limited to, any claims of continued
>   conspiracy having a genesis prior to the date of this Agreement. 

This actually is pretty amusing--"any claims of continued conspiracy." I suspect this has to do with Freedom magazine's ongoing rants at the time about IRS conspiracy against the Co$.

>   In addition, the Church signatories, and the Individual and At-large
>   members of the CTCC certify that no Scientology-related entity or
>   Scientology-related individual shall assist (directly or indirectly)
>   any party in any suit against the United States, the Service or
>   current or former Service employees based upon any claim arising
>   out of any action or inaction of the Service or former or current
>   employees that occurred prior to the date of this Agreement
>   including, but not limited to, any claims of continued conspiracy having its
>   genesis prior to the date of this Agreement. If any
>   Scientology-related entity or Scientology-related individual
>   commences any such action or provides any such assistance, then section VI
>   shall apply.

I suspect that is is what got the Scn tax protesters in trouble. It may be that they were considered to be "Scientology-related individuals" by the CTCC. I believe that the CTCC members would have been jointly and severally liable had IRS said that Co$ was not dealing with its tax protesters. While I'm not convinced that this paragraph actually says that Co$ must deal with its tax protesters, I think it could be construed this way.

And of course, there's another bit about "conspiracies". The IRS really wanted this to stop.

>   5. The CTCC shall indemnify and hold the United States, the Service
>   or   any Service employee (former or present) harmless with respect to
>   any litigation filed or pursued in contravention of the Agreement, that
>   is, any litigation filed or pursued by or with the assistance of
>   any Scientology-related entity or Scientology-related individual.

CTCC would have to indemnify the IRS and employees (past or current) should they give any aid to people who might continue to pursue suits against the IRS.

>   For purposes of this paragraph C.5, direct or indirect assistance
>   includes, but is not limited to, financial aid, litigation support,
>   or the use in connection with litigation of documents obtained from
>   the Service by any Scientology-related entity or Scientology-related
>   individual prior to the date of this Agreement or under the
>   Inspection provisions of the Settlement Agreement entered into by the parties
>   on even date herewith.

This is what the IRS considers to be direct or indirect assistance (this is not an all inclusive list). Helping out tax protesters in these ways could be considered a violation of the agreement, and the CTCC members would be liable. The ways that assistance could be rendered include:

• financial aid

• litigation support

• use of documents that Scn got from the IRS

>   6. Subject to the requirements of section VII, paragraph G.,

(which follows here)

>   G. While recognizing that all individual Scientologists not barred by
>law or agreement are entitled to file claims for refund to recover
>amounts covered by this settlement and that the CTCC may inform
>Church parishioners of the provisions of section VII of this Agreement,
>the CTCC agrees not to promote or encourage individual Scientologists
>to file claims for refund of taxes for the taxable year 1993.
   

(very interesting)

>   nothing in the preceding two paragraphs shall be construed to prevent any
>   Scientology-related entity from conducting, supporting, or
>   participating in, directly or indirectly, any judicial proceeding
>   to construe or enforce the obligation under this Agreement, nor to
>   impose any sanction or require indemnification to the Service as a result
>   of such proceeding.

However, the IRS is not exempt from trouble should they thumb their nose at this agreement. CoS could take them to court.

>   D. Effect on Outstanding Administrative Matters.
>   
>   1. Church tax inquiries under Code section 7611. The Service shall
>   close the following church tax inquiries on a no-change basis:
>   
>   Church of Scientology International
>   
>   Church of Scientology Flag Service Organization, Inc. (two
>   outstanding inquiries)
>   
>   Church of Scientology Western United States

Not sure what a "no-change" basis means. What say ye tax experts?

>   2. Other examinations of Scientology-related entities 
>   The Service  shall close the following income or employment tax examinations on a
>   no-change basis:
>   
>   Church of Scientology Expansion Trust
>   
>   Church of Scientology Religious Trust
>   
>   Scientology Endowment Trust
>   
>   Bridge Publications, Inc.
>   
>   Applied Scholastics International
>   
>   Author's Family Trust B
>   
>   International Association of Scientologists
>   
>   Religious Technology Center
>   
>   Church of Scientology International
>   
>   Church of Spiritual Technology
>   
>   Church of Scientology Flag Service Organization, Inc.
>   
>   Church of Scientology Western United States
>   
>   Church of Scientology of California (employment)
> 
>   3. Outstanding tax assessments. The Service shall abate in their
>   entirety the following unpaid tax assessments:
>   
>   Church of Scientology of California, FICA and FUTA for all quarters
>   of the years 1976 through 1986.

CSC doesn't have to pay any owing any social security taxes for the period 1976-1986. How much money was that?!

>   Religious Technology Center,
>   Church of Scientology International,  
>   Church of Spiritual Technology, 
>   Church of Scientology Western United States, 

...FICA for all quarters of the years 1986 and 1987. How much was that?

>   Religious Technology Center, Form 1120 Corporate Income Taxes,
>   interest and penalties for the years 1982 to 1988.
>   
>   Church of Scientology International, Form 1120 Corporate Income
>   Taxes,  interest and penalties for the years 1981 to 1988.

RTC and CSI excused from paying taxes, interest and penalties for 1982 to 1988.

>   With respect to the foregoing tax assessments, the Service agrees
>   to withdraw any notices of levy and to release any notices of tax lien
>   filed or made prior to the date of this Agreement.

IRS liens and levies have been released by IRS.

>   4. Trust fund recovery penalties. The Service shall abate in their
>   entirety assessments made under Code section 6672 with respect to
>   certain FICA assessments against Church of Scientology of
>   California (1985-1986), Church of Scientology International (1988), Church of
>   Spiritual Technology (1988), Religious Technology Center (1988),
>   and Church of Scientology Western United States (1988), against the
>   following individuals: David Miscavige, Norman F. Starkey, Marc
>   Yager, Mark Ingber, Lyman Spurlock, Patrick Broeker, and Ann Marie Tidman
>   (Broeker). 

IRS abates collection of trust fund penalties from CSC, CSI, CSWUS, RTC and a whole list of people.

>   In addition, with respect to the foregoing penalty
>   assessments, the service shall (1) refund upon proper claim any
>   amounts collected, along with interest as permitted by law, 

The IRS will also refund with interest upon application.

>   (2) withdraw any notices of levy, and (3) release any notices of tax
>   lien filed.

And withdraw any notices of levy or lien.

>   5. Time period in which to effectuate paragraph D. The Service
>   shall take the actions required under this paragraph D. by April 1, 1994.

This shall take place by 4/1/94.

>   E. Effect on Outstanding Litigation Matters.
>   
>   1. In general. The Service and the CTCC agree that all litigation
>   set forth in Exhibits II-1 and II-2 shall be dismissed with prejudice
>   by stipulation of the parties (or, where appropriate, the pending
>   appeal shall be withdrawn)

All litigation to be dismissed with prejudice or appeals to be withdrawn by both sides. Unfortunately, the exhibits aren't with this agreement, so I can't see if any cases were NOT included.

>   with all litigation costs (e.g., attorney fees)
>   to be borne by the respective parties. The parties agree that no
>   damages, costs, attorney fees, or any other amounts of relief shall be
>   sought by any Scientology-related entity or Scientology-related
>   individual, the United States, the Service or any individual plaintiff in any
>   suit contained in Exhibits II-1 or II-2.

Everyone will be responsible for their own attorneys' fees.

>   2. Zolin. The Service further agrees that following dismissal of
>   the litigation listed on Exhibit II-2 as Zolin, it shall use its best
>   efforts to return to the CTCC all materials and all copies thereof
>   produced to the Service in response to the summons at issue in that
>   litigation by no later than April 1, 1994. 

This sounds like that information that CoS or entities produced to IRS for this Zolin case will be returned to the CTCC

>   The CTCC hereby certifies that CSI shall retain all such materials 
>   during the transition period.

I assume that CSI still has these documents, since the transition period is not up for another couple of years.

>   No inference shall be drawn from the fact the Service is returning
>   these materials that they were summonsed for an improper law
>   enforcement purpose and the CTCC agrees not to assert such an
>   inference in any future litigation.

CTCC agrees that if they should bring another suit against IRS, they cannot bring up that these documents were turned over and CTCC cannot say that there was an improper law enforcement purpose in IRS having these documents.

Perhaps someone more familiar with this litigation can let me know what exactly the document production entailed.

>   3. Stipulations. At Exhibit II-3, are copies of stipulations to
>   dismiss the cases discussed at paragraph E.1. executed by counsel
>   of record for the non-governmental parties thereto. 

Well, we don't have these exhibits. I would be curious to know which cases these are, whether or not these are cases that were brought by "individual Scientologists" (actually brought on behalf of Scn at the orders of Scn). I have a sneaking suspicion, since the names of the entities involved are not used, that these are the individual cases.

>   The parties agree that, to the extent practicable, these stipulations 
>   shall be used to cause the dismissal of these cases and will provide 
>   a complete resolution of all issues arising out of the same subject matter.

Perhaps, since these cases were so similar, and there were so many of them, they were able to use a similar stipulation in all these cases.

>   The parties agree that these stipulations shall be executed by counsel
>   of record for the government and returned to the CTCC. The CTCC will
>   file the fully executed stipulations with the appropriate court within
>   30 days of its receipt of the executed stipulations. 

This says that the stipulations, made out by CTCC's counsel, will be given to government counsel for execution, and then sent back to CTCC, which will file them with the appropriate court within 30 days. This should effect the dismissal of the cases.

I suspect that these stipulations required that the dismissed cases be sealed, but that is a job for someone else out there to go out and find out about.

>   The parties
>   further agree not to undertake any further actions to prosecute or defend
>   any such litigation during the period of time following execution of
>   this Agreement until the court has acted on the parties' dismissal
>   stipulations. In addition, the parties agree to file as necessary
>   requests to stay any action on such cases pending dismissal.

There will be no further action on the cases, and any necessary motions that need to be filed pending dismissal will be filed.

>   4. Certain pending cases requiring coordination. Recognizing that
>   carrying out the provisions of this paragraph E. shall require
>   coordination with persons and agencies not parties to this
>   Agreement, the parties further agree as follows:

This portion talks about cases that are not under the direct control of the IRS legal team or of Scientology.

>   a. The Service shall use its best efforts to secure the voluntary
>   dismissal with prejudice of all litigation listed in Exhibits II-1
>   and II-2 in which the Commissioner, the Service and /or Service
>   employees are represented by the United States Department of Justice.

IRS will use its best efforts to get rid of cases where it is being represented by the Department of Justice.

>   b. The CTCC shall use its best efforts to secure the voluntary
>   dismissal with prejudice of all litigation listed in Exhibits II-1
>   and II-2 insofar as it involves litigants who are not
>   Scientology-related entities or individual members of the CTCC. 

CoS will use its best efforts to seek dismissal of all cases brought (presumably) by individual Scientologists. Possibly some of the tax protesters objected to this aspect of the agreement.

>   Following execution of
>   this agreement, the Church signatories, and the Individual and
>   At-large members of the CTCC certify that no Scientology-related
>   entity nor Scientology-related individual shall provide any further
>   support or assistance (directly or indirectly) in such litigation.

Again, this restates something that was said above, that the CoS or its entities will not support tax protesters. In effect, those people who protested against what they considered to be wrongful IRS actions were sold down the river by their Church for this agreement. In fact, I'd say that it was within the Co$'s best interest to crack down on tax protesters so as to not even give the impression of supporting their former allies against the IRS.

It would not surprise me that an unspoken part of this agreement was that the Co$ would help IRS track down tax protesters and tax cheats. itten), that the Co$ also helped the IRS to track down tax protesters

>   F. After-Discovered Cases or Examinations in Existence as of the
>   Date of this Agreement. It is the intention of the parties to cease
>   activity and dismiss with prejudice all existing cases in
>   controversy>   between the Service and any Scientology-related entity or
>   Scientology-related individual, costs to be borne by each party
>   (e.g., attorney fees), as well as all existing current examinations of
>   Scientology-related entities for years prior to 1993. Thus, if
>   there exists other civil actions that are not contained in Exhibits II-1
>   and II-2 or in the Settlement Agreement, Exhibit IV-6, or an
>   examination of a Scientology-related entity is not listed in paragraphs D.1 and
>   D.2, and the exclusion of such suit was inadvertent (i.e., not
>   specifically discussed and intentionally excluded by the parties
>   during their negotiations), the parties agree to dismiss such suit
>   or cease such examination as soon as administratively feasible.

This paragraph is a catch-all. If either CoS or IRS forgot to dismiss a case or administrative action, it would do so, as soon as was feasible. Oddly enough, it doesn't say anything about cases they can't shut down.

>   G. Finality. The provisions of this section II. are final and
>   conclusive, except as provided in section IX, paragraph H.,
>   notwithstanding the seven-year transition period set forth in other
>   provisions of this agreement.

Absent any sort of fraud, IRS code provision or it being after 1/1/93, this agreement is final. These cases and these administrative actions are finished.

>   III. Service Determinations Regarding Scientology-Related Entities.

This is the section where Co$ gets tax exemption for many of its entities. It is interesting to note which ones do NOT get exemptions here.

>   A. Issuance of Determination Letters.
>   
>   Having received and reviewed the completed Forms 1023, Applications
>   For Recognition of Exemption and the attachments thereto for the
>   entities described in paragraphs B.1, B.2, B.3, B.4, B.5, B.6, B.7,
>   B.8, and B.9 together with requests for group exemption letters and
>   the attachments thereto described in paragraphs in paragraphs C.1,
>   C.2, C.3 and C.4, on the basis of that information, the Service is
>   issuing the individual determination letters and group determination
>   letters described below and copies of which are attached at Exhibits
>   III-1 through III-30.

"We've reviewed the Co$ submission and are issuing the following determinations, either as individual or group."

>   B. Individual Determination Letters.
>  
>   1. The Service hereby issues individual determination letters (copies
>   attached as Exhibits III-1 through III-5, respectively) that the
>   following entities are organizations described in Code sections
>   501(c)(3), 170(c) (2), 509(a) (1), and 170 (b)(1)(A)(i):

Individual letters were issued for the following Scientology organizations and these organizations can be considered for all practical intents and purposes the Co$ organization.

>   Religious Technology Center ("RTC")
>   Church of Scientology International ("CSI")
>   Scientology Missions International ("SMI")
>   Church of Spiritual Technology ("CST")
>   Church of Scientology Flag Service Organization, Inc. ("CSFSO")
>
>   2. The Service hereby issues an individual determination letter
>   (copies attached as Exhibit III-6) that Foundation Church of
>   Scientology Flag Ship Service Organization ("CSFSSO") is an
>   organization described in Code sections 501(c) (3), 509(a) (1), and
>   170(b)(1) (A) (i). CSFSSO is not described in Code section 170 (c)
>   (2) because it is a foreign entity.

Would this have to do with the "Freewinds" being registered in a foreign port?

>   3. The Service hereby issues individual determination letters
>   (copies attached as Exhibits III-7 through III-14, respectively) that the
>   following Scientology-related entities are organizations described
>   in Code sections 501(c) (3), 170(c) (2), and 509(a) (3):

These are Scientology-related organizations, not really the Co$ itself, but related and auxiliary organizations.

>   Inspector General Network ("IGN")

I'm told this is one of the ways that DM and friends took control of Co$ in 1982.

>   International Hubbard Ecclesiastical League of Pastors ("IHELP")
>   Building Management Services ("BMS")
>   Bridge Publications, inc. ("BPI")
>   Dianetics Centers International ("DCI")
>   Dianetics Foundation International ("DFI")
>   Hubbard Dianetics Foundations ("HDF")

This probably explains why so many Scientology "churches" are actually called "Hubbard Dianetics Foundation". This is definitely the case in Salt Lake City and Phoenix.

>   U.S. IAS Members' Trust

This one has me curious. IAS has often been used as a warchest by Scn to collect donations to finance cases. Presumably this is just a subset of the IAS, so construed as to be tax exempt.

>   4. The Service hereby issues individual determination letters
>   (copies attached as Exhibits III-15 and III-16, respectively) that the
>   following Scientology-related entities are organizations described
>   in Code sections 501 (c) (3), 170 (c) (2), 509 (a) (1) and, 170 (b)
>   (1) (A) (vi):
>   
>   The Way to Happiness Foundation ("TWTH")
>   Association for Better Living and Education ("ABLE")
>   
>   5. The Service hereby issues individual determination letters
>   (copies
>   attached as Exhibits III-17 and III-19, respectively) that the
>   following Scientology-related entities are organizations described
>   in Code sections 501 (c) (3) and 509 (a) (3):
>   
>   Scientology International Reserves Trust ("SIRT")
>   Flag Ship Trust ("FST")
>   New Era Publications International ApS ("NEP")
>   
>   However, these organizations are not describe in Code section 170
>   (c)(2) because they are foreign entities.
>   
>   6. Pursuant to a ruling request, the Service hereby modifies the
>   individual determination letter (copy attached as Exhibit III-20)
>   that the Church of Scientology Religious Trust ("CSRT") is an
>   organization described in Code sections 501(c) (3), 170 (c) (2), 
>   and 509(a) (3).

This one is interesting because it's a conditional granting of tax-exempt status.

>   7. The Service hereby issues individual determination letters  (copies
>   attached as Exhibits III-21 through III-23, respectively) that the
>   International Association of Scientologists ("IAS") and its operating
>   arms: Membership Services Administration, Ltd., and Foundation
>   International Membership Services Administration d/b/a IAS
>   Administrations, are organizations described in Code sections
>   501(c)  (3), and 509(a) (3). IAS and its operating arms are not 
>   described in Code section 170(c) (2) because they are foreign entities.
>
>   8. The Service hereby issues an individual determination letter
>   (copy attached as Exhibit III-24) that the Hubbard College of
>   Administration "HCA") is an organization described in Code 
>   sections 501(c) (3), 170 (c) (2), 509 (a) (1), and 170 (b) (1) (A) (ii).
>   
>   9. Having previously issued a determination letter to the Church of
>   Scientology Western United States ("CSWUS") (under the name Church
>   of Scientology of San Diego) recognizing CSWUS as an organization
>   described in Code sections 501(c) (3), 170 (c) (2), 509 (a) (1),
>   and 170 (b) (1) (A) (i), and having received and reviewed an updated
>   Form 1023 and attachments thereto (dated August 30, 1993), the Service
>   hereby issues a revised determination letter (copy attached as Exhibit
>   III-25) recognizing CSWUS as an organization described in Code
>   sections 501(c) (3), 170 (c) (2), 509 (a) (1), and 170 (b)(1) (A)  (i).
>   
>   10. The Service agrees that the organizations listed in paragraphs
>   B.1, B.2. and B.9. are churches described in Code section 6033 (a) 
>   (2) (A) (i). Pursuant to Code section 6033(a) (2), Treas. Reg.
>   [Section] 1.6033-2(g) (6), and Rev. Proc. 86-23, 1986-1 C.B. 564, 
>   the service
>   determines that the organizations described in paragraphs B.3, B.5,
>   B.6, B.7, and B.8. are church-affiliated organizations that need
>   not file annual Forms 990. However, nothing in this Agreement relieves
>   any Scientology-related entity from any requirement to file a return
>   (e.g., filing the Form 990-T in the event of unrelated business
>   taxable income).

What this says is that the following entities are considered "churches" in the eyes of the IRS and do not have to file form 990.

• Religious Technology Center ("RTC")
• Church of Scientology International ("CSI")
• Scientology Missions International ("SMI")
• Church of Spiritual Technology ("CST")
• Church of Scientology Flag Service Organization, Inc. ("CSFSO")
• Foundation Church of Scientology Flag Ship Service Organization ("CSFSSO")
• Church of Scientology Western United States ("CSWUS")

The following organizations are considered to be church affiliated:

• International Hubbard Ecclesiastical League of Pastors ("IHELP")
• Building Management Services ("BMS")
• Bridge Publications, inc. ("BPI")
• Dianetics Centers International ("DCI")
• Dianetics Foundation International ("DFI")
• Hubbard Dianetics Foundations ("HDF")
• U.S. IAS Members' Trust
• Scientology International Reserves Trust ("SIRT")
• Flag Ship Trust ("FST")
• New Era Publications International ApS ("NEP")
• Church of Scientology Religious Trust ("CSRT")
• International Association of Scientologists (and its arms)
• Hubbard College of Administration

This does not relieve these organizations from filing a 990-T for their taxable income.

>   C. Group Determination Letters.
>   
>   1. The Service hereby issues a group determination letter (as
>   described in Rev. Proc. 80-27, 1980-1 C.B. 677 and Treas. Reg.
>   [Section] 601.201 (n) (8) (copy attached as Exhibit III-26)) that
>   the subordinate organizations of the Church of Scientology
>   International are organizations described in Code sections 501(c) (3), 170 (c)
>   (2), 509 (a) (1), 170 (b) (1) (A) (i), and 6033 (a) (2) (A) (i).

Subordinate organizations of CSI are organizations that get tax exempt status.

>   2. The Service hereby issues a group determination letter (as
>   described in Rev. Proc. 80-27, 1980-1 C.B. 677 and Treas. Reg.
>   [Section] 601.201(n)(8) (copy attached as Exhibit III-27)) that the
>   subordinate organizations of Scientology Missions International are
>   organizations described in Code sections 501(a) (2) (A) (I), 170
>   (c)(2), 509(a)(1), 170(b) (1)(A)(i), and 6033 (a)(2)(A)(i).

Subordinate organizations of Scientology Missions International get tax exempt status.

>   3. The Service hereby issues a group determination letter (as
>   described in Rev. Proc. 80-27, 1980-1 C.B. 677 and Treas. Reg.
>   [Section] 601.201(n)(8) (copies attached as Exhibit III-28 and III-29,
>   respectively)) that the subordinate organizations of the following
>   Scientology-related entities, are organizations described in Code
>   sections 501 (c) (3), 170 (c) (2), 509 (a) (1), 170 (b) (1) (A) (ii)
>   (but are not described in Code section 6033 (a) (2) (A) (I):
>   
>   Applied Scholastics Inc.
>   
>   Hubbard College of Administration ("HCA")

Applied Scholastics and Hubbard College of Administration are subordinate organizations and get a tax exemption.

>   4. The Service hereby issues a group determination letter (as
>   described in Rev. Proc. 80-27, 1980-1 C.B. 677 and Treas. Reg.
>   Section 601.201(n)(8) (copy attached as Exhibit III-30)) that the
>   subordinate organizations of the Citizens Commission on Human 
>   Rights ("CCHR") are described in Code sections 501 (c) (3), 
>  170 (c) (2), 509 (a) (1), 170  (b) (1) (A) (vi) (but are not described 
>   in Code section 6033(a) (2) (A) (i)).

This one really chaps my hide. CCHR is tax exempt, and allowed to spread its hateful propaganda with a tax exemption.

>   5. Subordinate organizations initially covered by the group 
>   exemptions recognized under paragraphs C.1, C.2, C.3 and C.4 
>   are set forth in the following respective Exhibits:
>   
>   Church of Scientology International Exhibit III-31
>   
>   Scientology Missions International Exhibit III-32
>   
>   Applied Scholastics Inc. Exhibit III-33
>   
>   Citizens Commission on Human Rights Exhibit III-34
>   
>   Hubbard College of Administration Exhibit III-35

I wish we had those individual exhibits!

Last updated 3 January 1998
by Chris Owen (chriso@lutefisk.demon.co.uk)