1997-03-09 Scientology's Puzzling Journey From Tax Rebel to Tax Exempt

1997-03-09 Douglas Frantz New York Times \Church of Scientology\US Internal Revenue Service\religious tax exemption\US-Germany relations\religious discrimination http://www.nytimes.com/1997/03/09/us/scientology-s-puzzling-journey-from-tax-rebel-to-tax-exempt.html?sec=&spon=&pagewanted=all Scientology's Puzzling Journey From Tax Rebel to Tax Exempt Scientology's Puzzling Journey From Tax Rebel to Tax Exempt  For 25 years, I.R.S. agents had branded Scientology a commercial enterprise and refused to give it the tax exemption granted to churches. The refusals had been upheld in every court. But that night the crowd learned of an astonishing turnaround. The I.R.S. had granted tax exemptions to every Scientology entity in the United States.

"The war is over," David Miscavige, the church's leader, declared to tumultuous applause.

The landmark reversal shocked tax experts and saved the church tens of millions of dollars in taxes. More significantly, the decision was an invaluable public relations tool in Scientology's worldwide campaign for acceptance as a mainstream religion. On the basis of the I.R.S. ruling, the State Department formally criticized Germany for discriminating against Scientologists. The German Government regards the organization as a business, not a tax-exempt religion, the very position maintained for 25 years by the American Government.

...

Scientology's lawyers hired private investigators to dig into the private lives of I.R.S. officials and to conduct surveillance operations to uncover potential vulnerabilities, according to interviews and documents. One investigator said he had interviewed tenants in buildings owned by three I.R.S. officials, looking for housing code violations. He also said he had taken documents from an I.R.S. conference and sent them to church officials and created a phony news bureau in Washington to gather information on church critics. The church also financed an organization of I.R.S. whistle-blowers that attacked the agency publicly.

&ldquo;Scientology's lawyers hired private investigators to dig into the private lives of I.R.S. officials and to conduct surveillance operations to uncover potential vulnerabilities ... One investigator said he had interviewed tenants in buildings owned by three I.R.S. officials, looking for housing code violations ... [and] taken documents from an I.R.S. conference and sent them to church officials and created a phony news bureau in Washington to gather information on church critics.&rdquo;   