IRS and Scientology
Public Research Foundation Reports



Part Two

Public Research Foundation
HCR 38, BOX 66
PHONE: 702-873-2343
FAX: 702-873-2115

November 1997

Public Research Foundation (PRF) has recently disclosed that Scientology organizations are being governed in accordance with a closely-guarded "Tax Compliance Manual" (PRF PRESS RELEASE, "THE 'TAX COMPLIANCE MANUAL'--FIRST IN A SERIES").

The manual was created in 1993, the same year that the Closing Agreement was secretly signed by IRS and church officials. The Tax Compliance Manual is published by sanction of the Church of Spiritual Technology (CST)--the senior corporation which owns all the copyrights.

The manual reveals that IRS has been a knowing party to the establishment of "Tax Compliance Sections" to govern every Scientology church and mission, bringing about an unprecedented closure between church and state.

The Tax Compliance Manual says:


"The Tax Compliance Section has been formed in the Corporate and Legal Rudiments Branch of Office of Special Affairs International. It is staffed with veteran OSA INT crew who are extremely knowledgeable and experienced in tax and finance matters. There will also be a Tax Compliance Officer in each Continental OSA Office. A primary function of the Tax Compliance Section is to ensure that all churches and missions comply with all requirements of tax exemption."

Office of Special Affairs International (OSA Int) is merely a part of Church of Scientology International (CSI). And CSI (as represented by its President, Heber Jentzsch) is a signatory to the Closing Agreement, subject to the mandates of that agreement.

The Closing Agreement verifies that IRS is a party in informed consent to the creation and operation of these "Tax Compliance Sections" inside the church. The Closing Agreement requires annual reports be submitted to IRS, and part of the requirements include:

"6. Reporting of any ecclesiastical modification or the restructuring of any entity. The Annual Report shall include any the ecclesiastical management structure of the Church..."


"9. Reporting of any amendment of any directive concerning the treatment of funds. The Annual Report shall disclose the issuance, modification, amendment, or rescission of any written material relating to or involving the handling of funds by Church personnel."

The "Tax Compliance Manual" treats extensively of the handling of funds by Church personnel, and constitutes a definitive modification and restructuring of CSI to include the organizational "Tax Compliance Sections" within OSA International.

If IRS had not been informed of the Tax Compliance Manual and of the addition of the Tax Compliance Sections inside churches of Scientology, then the Church Tax Compliance Committee signatories would have been in violation of terms of the Closing Agreement, and therefore liable to extreme penalties outlined in the agreement.

But the Tax Compliance Manual also says:

"The Tax Compliance Section is concerned with the activities of church organizations throughout the world-- not just those located in the United States. Recognition of tax exemption by the IRS opens the door for similar recognition of local orgs and missions by tax authorities in many other countries."

Having already established that "There will also be a Tax Compliance Officer in each Continental OSA Office," this means that these extensions of IRS, there specifically and only to enforce compliance to IRS codes, are now situated on foreign soil, but camouflaged by their existence inside the churches.

The IRS's new power over the church's activities is perhaps best summed up in one chilling sentence from the Tax Compliance Manual:

"Any question as to whether a post qualifies as a ministerial capacity should be referred to the Tax Compliance Officer, Office of Special Affairs International."