Archive Message - 1995
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Since some of the materials which describe the $cientology cult could be considered to be copywritten materials, I have censored myself and The Skeptic Tank by deleting any and all possible text files which describes the cult's hidden mythologies. I have elected to quote just a bit of the questionable text according to the "Fair Use" legal findings afforded to those who report. - Fredric L. Rice, The Skeptic Tank, 09/Sep/95 -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- From news.interserv.net!news.sprintlink.net!gatech!howland.reston.ans.net!tank.news.pipex.net!pipex!dispatch.news.demon.net!demon!not-for-mail Wed Jul 26 09:42:18 1995 Path: news.interserv.net!news.sprintlink.net!gatech!howland.reston.ans.net!tank.news.pipex.net!pipex!dispatch.news.demon.net!demon!not-for-mail From: Anonymous <nobody@replay.com> Newsgroups: alt.religion.scientology Subject: St. Petersburg Times series, won 1980 Pulitzer [03/14] NEW! Date: Wed, 26 Jul 1995 15:14:34 +0200 Organization: RePLaY aND CoMPaNY UnLimited Lines: 183 Message-ID: <199507261314.PAA21638@utopia.hacktic.nl> X-NNTP-Posting-Host: office.demon.net XComm: Replay may or may not approve of the content of this posting XComm: Report misuse of this automated service to <postmaster@REPLAY.COM> Dispute over tax status goes to court On Jan. 4, 1963, two large vans escorted by motorcycle policemen pulled up before the Washington headquarters of the Founding Church of Scientology at 19th and R streets. U.S. marshals climbed out of the vans and entered the church property. There they seized 100 "E-meters" and about 20,000 pages of church literature. They were acting for the U.S. Food and Drug Administration (FDA). Though relations between the Church of Scientology and the government had been strained for most of the 13 years since L. Ron Hubbard created the new religion, that incident marked the first formal action against the church by the government. Others followed, most of them generated by the Internal Revenue Service (IRS). The church has long claimed that it is the victim of harassment by a government angered because Hubbard refused to share with it revolutionary knowledge about freeing the mind of traumas. But the actions the government has taken against Scientology all center on a fundamental question: Is Scientology a religion, or a pseudo-scientific con game involving amateur psychology? The answer is vitally important. A valid religion, or church, pays no taxes. Scientology has been in and out of federal courts and in again in battles with IRS over its tax-exempt status. It has even resorted to illegal tactics, placing an agent in IRS headquarters where he stole thousands of documents concerning the church. The battle is fought at every level of government. Since coming to Clearwater, the church has been locked in a fight with Pinellas County officials over whether it must pay property taxes on the Fort Harrison Hotel, the old Bank of Clearwater building, and other property it has bought in the county. Last Friday, the Church of Scientology paid $126,753.82 in back taxes, a figure representing 45 percent of its total four-year tax bill in Pinellas County. The payment ended a long legal battle between the Scientologists and Property Appraiser Ron Schultz's office over the church's 1976 and 1977 tax bills. But it does not mean the church is giving up its claim to be tax-exempt as a church. Scientology President Kenneth Whitman vowed the church will pursue legal battles over its 1978 and 1979 tax bills, which total $151,157.51. Schultz said the church was certain to lose its case on the earlier tax bills and hence decided to go ahead and pay them in an effort to "buy some PR (public relations)." The Pinellas County Circuit Court held that the church had to pay its 1976 tax bill, a decision affirmed by the Court of Appeal in Lakeland. The case was pending before the Florida Supreme Court. The 1977 tax bill was pending at the Circuit Court level. There is much at stake in the tax battles. The Church of Scientology is obviously wealthy. It paid around $3-million cash for the two pieces of property in downtown Clearwater. Its funds come from the fixed donations that church members pay for auditing, the pastoral-counseling procedure designed to free their minds of painful memories. The Food and Drug Administration charged the church in 1963 with making false claims for a small device called a Hubbard Electrometer, or E-meter, a device used in some auditing sessions. The E-meter -- essentially a simple galvanometer -- is a small box bearing five knobs and a magnetic needle. It operates on a rechargeable 1 1/2-volt battery. A Y-cord from the box leads to two small cans that resemble frozen orange juice cans. The person being counseled grasps the cans as the counselor asks questions. By watching the needle on the dial, the church says, the counselor knows when the person is recalling pain. FDA accused the church of falsely claiming that the meter would "improve the health, intelligence, ability, behavior, skill and appearance" and cure arthritis, tuberculosis, ulcers and other ailments that Hubbard considered to be psychosomatic. The FDA case lingered in the courts for 10 years. It was finally settled in 1973 when U.S. District Judge Gerard A. Gesell ordered the E-meters returned to the church. He ruled that (1) the church could no longer advertise its services as a scientific cure for disease, (2) must label the E-meters as ineffective in treating illnesses, and (3) could only use the E-meter in "bona fide religious counseling." In his 14-page opinion, Gesell described Scientology as a "pseudo-science that has been adopted and adapted for religious purposes ... There is a religious substance to everything when seen with the eyes of the believer." He called Hubbard "a facile, prolific author" whose "quackery flourished throughout the United States and in various parts of the world." The judge said Hubbard first advanced "the extravagant, false claims that various physical and mental illnesses could be cured by auditing" in a science fiction magazine in the 1940s. As the church developed, he said, "auditing was guaranteed to be successful. All this was and is false -- in short, a fraud. Contrary to representations made, there is absolutely no scientific or medical basis in fact for the claimed cures attributed to E-meter auditing." Since Gesell had said the church was entitled to First Amendment protection as a religion and that it could use the E-meters for religious counseling, the church hailed the decision as a victory. # # # The church's fight with the Internal Revenue Service seems destined to go on forever. At present, 14 churches of Scientology in the United States -- all except one -- are recognized as tax-exempt. The Church of Scientology of California, of which the Clearwater operation is a branch, is contesting in U.S. Tax Court an IRS ruling that it must pay taxes. The IRS does not grant tax-exempt status, a spokesman explained. Churches are exempt by law as long as they comply with the law. Should IRS have reason to believe a church is not complying, then it can audit the church's records, which can lead to a determination that it must pay taxes. The crucial question is how a church makes its money and how it spends it. The income must be used for the general good and not for the profit of individuals. How this applies to Scientology is well illustrated by an IRS memorandum concerning the tax-exempt status of the Church of Scientology of Florida, headquartered in Miami. The Florida church is separate from the Clearwater operation, which is a branch of the Church of Scientology of California. The IRS memorandum, dated Sept. 1, 1972, was among the documents stolen from IRS headquarters in Washington by the church's agent. It was made public in connection with the trial in Washington of the agent and eight other Scientologists on charges of conspiring to steal government documents. The National Office Technical Advice Memorandum was sent to the IRS district director in Atlanta in reply to his request for advice on revocation of the exempt status of the Church of Scientology of Florida. The memorandum stated that almost all income of the Florida church came from fees paid for counseling and from the sale of books and artifacts. The church in turn paid 10 percent of its income "to the international organization as a 'tithe' to promulgate and defend the religion of Scientology." This money went into Swiss Trust Accounts. "In order to qualify for the claimed exemption, Scientology must establish that it is devoted exclusively to religious purposes," the memorandum said. "The presence of a single nonexempt purpose, if substantial in nature, will destroy the exemption, regardless of the number or importance of truly exempt or religious purposes ... Based on this exclusivity test, we have concluded the Church of Scientology of Florida fails to qualify for exemption because (1) its sales of books, tapes, artifacts, processing and training constitute a substantial commercial purpose, and (2) a portion of the net earnings of Scientology may inure to the benefit of L. Ron Hubbard, a private individual ... "While the information available does not specifically disclose the inurement of funds, the organization has not established that the tithing of 10 percent of its gross income to the Swiss Trust Accounts has been distributed for exempt purposes. The Trust accounts are held in the name of L. Ron Hubbard and Mary Sue Hubbard, his wife, as the sole signatories. Therefore, the organization has failed to establish that neither the legal title nor the beneficial use of the funds is held for a recognized charity or charitable purpose." The memorandum recommended revocation of the Florida church's tax exemption, but no action was taken. In an apparent effort to circumvent the objection that Scientology funds went to the benefit of Hubbard, he and representatives of five churches of Scientology -- California, Washington, D.C., Michigan, Minnesota and New York -- signed a document on June 25, 1973 "to memorialize in writing" a trust arrangement they said had been in existence since July 18, 1962. The five churches agreed to pay tithes of 10 percent of their monthly incomes to the trust fund. Hubbard, as the sole trustee, was responsible for managing, administering and disposing of the fund. A month later, a new agreement recorded the resignation of Hubbard as trustee. Responsibility for the fund was placed in the hands of a three-member board of trustees, one of whom was Mary Sue Hubbard. The agreement gave Mrs. Hubbard life tenure and the power to appoint the other two trustees who would serve two-year terms. Terms of this agreement were reported in July 1976 by St. Petersburg Times reporter Bette Orsini. She also found that 11 of the 12 churches of Scientology then holding tax-exempt status had collected a total of $3.3-million in 1974 and contributed $846,310 of that to the Church of Scientology of California. Nine of the churches had deposits totaling $1-million in bank accounts in Luxembourg. The trust agreement was put in written form at a time when the IRS was going to court to force the Church of Scientology of California to open its books for audit. Today, the California church is contesting revocation of its tax-exempt status in the U.S. Tax Court. The IRS said the church owes $1,150,458 in taxes on $8,684,452 in gross receipts for 1970, '71 and '72. To this it has added a penalty of $287,614. The church replied that the church was tax-exempt. But should it be found that it was not, the church said, the government was still wrong in its assessment of tax liability because it had understated church expenses. The church claimed it had net taxable losses for the three years totaling $8,859,165. The church asked why IRS was putting the church and the court to the time and expense of a trial "when the IRS has already acknowledged to petitioners that after an extensive 1 1/2-year audit of church records, they could find no basis for denying the church exempt status." It accused IRS of stalling and of violating the church's First Amendment rights. The case was opened in December 1977. Court observers say it won't be settled for quite some time. A decision in any court case involving the church seldom comes swiftly. In its 16-year war with the government, the church has employed tactics that reveal the dark side of Scientology.

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