IRS cut deal with Scientology for tax-exempt status

April 2002
By Rick Ross

The Church of Scientology paid the Internal Revenue Service only $12.5 million to establish its tax-exempt status, a church official admitted in 1998.

Mark Rathbun, director of the church's Religious Technology Center (RTC), confirmed details of the deal, which took place in 1993. The Wall Street Journal first reported the details of that deal at the beginning of 1998. The deal, called a "closure agreement," effectively ended Scientology's war with the IRS, which lasted more than thirty years. IRS previously stated that Scientology should not be tax-exempt, because they considered it simply a for-profit business created to benefit its leaders (e.g. founder L. Ron Hubbard). Scientology retaliated against the IRS by filing more than 2,000 lawsuits against the U.S. government agency.

Frank Keith an IRS spokesman claimed the decision to grant Scientology tax-exempt status was somehow "based upon voluminous information provided by the church to the IRS regarding its financial and other operations.''

Under the terms of its deal with IRS, Scientology dropped its lawsuits and paid only $12.5 million to settle any taxes owed previous to 1993. Other provisions included a "tax-compliance committee," which would supposedly monitor Scientology. Penalties could be potentially imposed for as much as $50 million for any proven violations.

Notes: This article is based upon "Scientologists Admit Church Paid IRS for Tax-Exempt Status," Salt Lake Tribune January 3, 1998