Intimidating the IRS

March 11, 1997

Most taxpayers would not be rewarded if they tried to intimidate the Internal Revenue Service into giving them a break. They also would be kicked out the door if they barged into the office of the head of the IRS and demanded to be seen without an appointment. But most taxpayers are not the Church of Scientology, which succeeded in doing both.

The decision by the IRS in 1993 to give the Church of Scientology the tax exemption granted to churches surprised many tax experts and outraged opponents of the organization, which has its spiritual headquarters in Clearwater. The IRS had refused to grant the exemption for 25 years, numerous courts had upheld that position and the agency offered few details about its surprising reversal.

Now a report by the New York Times sheds new light on the circumstances surrounding the controversial decision. It raises so many disturbing questions about the integrity of the process that the IRS and Congress should review the Church of Scientology's tax-exempt status and determine whether the federal agency acted improperly.

According to the newspaper report, the Church of Scientology's leader, David Miscavige, marched into IRS headquarters in 1991 and talked his way into an unscheduled meeting with IRS Commissioner Fred Goldberg. As a result, Goldberg created a special IRS committee to negotiate with the Church of Scientology, a peculiar step that did not follow normal procedure.

When the negotiations resulted in an agreement two years later, IRS tax analysts were not allowed to give it adequate review, and the agreement was kept secret. That smacks of special treatment, particularly when the IRS required Jimmy Swaggart Ministries and an affiliate of the Rev. Jerry Falwell to publicly acknowledge they paid back taxes to settle disagreements.

Of course, the IRS had a strong motivation to resolve its differences with the Church of Scientology and not let the prospect of public disclosure derail a settlement. The organization's use of private investigators, lawsuits and other means to harass the IRS has been well-known for years.

The New York Times report reveals new details about the church's tactics. Private investigators hired by the church looked for code violations at a building owned by three IRS officials. They created a phony news bureau in Washington to collect information on church critics. The managing editor of the church's Freedom magazine helped create an IRS whistle-blowers group that was financed by the church. All of these pressure tactics raise questions about whether the IRS was improperly influenced in making its decision to grant the church tax-exempt status.

The Church of Scientology still uses harassment and intimidation to fight its critics. Freedom magazine is looking for evidence of racial problems within the Clearwater Police Department. The department just happens to be investigating the death of Lisa McPherson, a Scientologist who died in 1995 after spending 17 days at the church's Fort Harrison Hotel in Clearwater. A lawyer for the church also contacted several of the pathologists who told the Times that lab results show McPherson was severely dehydrated when she died, findings that mirror the conclusions reached by Pinellas-Pasco Medical Examiner Joan Wood. And more than two dozen Scientology critics who protested in Clearwater Saturday were surrounded by more than 200 church members.

The IRS decision to grant tax-exempt status to the Church of Scientology had an enormous ripple effect. It ended Pinellas County's battle to keep the organization's property on the local tax rolls. After Scientology paid $2.5-million in back taxes, the property appraiser agreed in 1994 to take most of the church property off the tax rolls. Would the United States be criticizing Germany, which still regards Scientology as a business, for discriminating against the organization if the IRS had not granted the tax exemption?

In Washington, the IRS should release details of its secret agreement with the Church of Scientology. The agency and Congress also should review whether harassment by the church resulted in a decision based on something other than sound tax policy.

In Clearwater, the police and the state attorney's office should continue to investigate McPherson's death without fear of intimidation.

Can anyone stand up to the Church of Scientology?

Read the New York Times Followup