Since some of the materials which describe the $cientology cult could be considered to be

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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!cs.utexas.edu!swrinde!hookup!usenet.eel.ufl.edu!news.cybercom.net!dial1-18.cybercom.net!user Mon Jul 10 17:02:50 1995 Path: news.interserv.net!news.sprintlink.net!cs.utexas.edu!swrinde!hookup!usenet.eel.ufl.edu!news.cybercom.net!dial1-18.cybercom.net!user From: rnewman@cybercom.net (Ron Newman) Newsgroups: alt.religion.scientology Subject: Letter from NYC Bar official to IRS re Scientology tax exemption Date: Sat, 08 Jul 1995 10:46:24 -0500 Organization: Cyber Access Internet Communications, Inc. Lines: 136 Message-ID: NNTP-Posting-Host: dial1-9.cybercom.net IRS Should Fully Explain Its Settlement With Church of Scientology The following letter was sent by Jerome Kurtz, chairman of the Committee on Taxation of the Association of the Bar of the City of New York, to IRS Commissioner Margaret Milner Richardson on May 11, 1994. It was published in the June 27, 1994, issue of _Tax Notes_, pages 1783-84. Dear Commissioner Richardson: On behalf of the Committee on Taxation of the Association of the Bar of the City of New York, I write to express serious concern about the failure of the Internal Revenue Serivce to comment on or explain the meaning of several aspects of its settlement with the Church of Scientology. We believe that it is important to provide guidance to tax-exempt organizations and their advisers about the position of the Service on deductibility of gifts to charities when certain types of quid pro quo payments are received in exchange by the donors. Background In Rev. Rul. 78-189, 1978-1 C.B. 68, the Serivce ruled that no deduction was available when a donor gave money to the Church of Scientology [1] and received, in exchange for the donation, auditing, training and processing courses and other services. In 1978, as the ruling states, the IRS was conceding that the Church of Scientology was indeed a "church" and entitled both to tax exemption and to receive tax-deductible charitable contributions. [2] Its denial of the deduction rested on the receipt of intangible religious benefits by the donor, which it treated as a quid pro quo. Although this was in agreement with the IRS's prior general position on quid pro quo payments, as per Rev. Rul. 67-246, 1967-2 C.B. 104 [3], it was difficult to reconcile with certain other pronouncements permitting deductions to religious organizations. [4] [1] Scientology was explicitly mentioned in the ruling. [2] We take no position here on whether Scientology did or does qualify as a "church" or religious organization. [3] Rev. Rul. 67-246 is supported by G.C.M. 33497 (April 28, 1967) [4] See, e.g. A.R.M. 2, 1 C.B. 150 (1919) (deduction permitted for "pew rents"); Rev. Rul. 70-47, 1970-1 C.B. 49 (same); Rev. Rul. 78-366, 1978-2 C.B. 241 (deduction permitted for "Mass stipends" for specific religious services). Donors to Scientology challenged the valiidty of Rev. Rul. 78-189. In _Hernandez v. Commissioner_, 490 U.S. 680 (1989), the Supreme Court sustained teh IRS's denial of deductions. Five justices joined in the majority pinion, written by Justice Marshall; two recused (Justices Brennan and Kennedy); and two dissented, in an opinion by Justice O'Connor in which Justice Scalia joined. After 1978, but before the decision in _Hernandez_, the IRS had changed its position and directly attacked the tax-exempt status of Scientology organizations. It argued that they were _not_ tax-exempt because they permitted personal inurement (to the benefit of founder L. Ron Hubbard), conducted extensive commercial activities, and contravened fundamental public policy by violating the law. Here, again, the Service was sustained by the courts. E.g. _Church of Scientology of California_, 83 T.C. 381 (1984), aff'd, 823 F.2d 1310 (9th Cir. 1987), cert. denied, 486 U.S. 1015 (1988). The Supreme Court knew of this during the pendancy of the _Hernandez_ litigation. However, the government stipulated, for purposes of the _Hernandez_ case that Scientology was a tax-exempt church. As Justice O'Connor said, "[t]he cases before the Court have an air of artificiality about them that is due to the IRS' dual litigation strategy against the Church of Scientology..." Despite these litigation victories, many -- perhaps hundreds -- of donors to Scientology were litigating their own deductions. The organization itself was engaged in massive ongoing litigation with the IRS. L. Ron Hubbard died. On October 1, 1993, the Service and the Scientologists announced a settlement under which the Scientology organizations would be recognized, once more, as tax-exempt. The IRS has not commented on or explained the basis for or terms of this settlement in any way. Finally, in November of 1993, the IRS surprised many observers by issuing Rev. Rul. 93-73, 1993-34 I.R.B. 7, which declared Rev. Rul. 78-189 obsolete. No reasoning was provided by the IRS; no explanation was, or has since been, given by the Service. However, within the last months of 1993, the Church of Scientology provided its members with a booklet entitled, "Information on Taxes and Your Donations." (See _Tax Notes_, Jan. 10 1994, p. 131.) That booklet describes the settlement restoring tax-exempt status to the church. It goes on to say, in part: "the [settlement] action means that donations you make to the Church -- including donations for auditing and training -- qualify as charitable contributions and can be claimed as deductible on your federal (and state) income tax returns!" It says, further, that prior contributions -- whether in litigation or audit -- will be allowed in full, and no taxes or interest will have to be paid. Further, it says: "In those instances where donations for services were made in years prior to 1993 but were not claimed as income tax deductions, or where a claim for refund for such taxes is alredy pending but not under audit, the amount that can be claimed is limited to eighty percent of the donation." Comments Congress and the IRS have recently indicated their serious concerns about the proper tax treatment of charitable gifts when quid pro quo transfers are involved [5]. Yet the Service appears to be walking away from its victory in the Supreme Court in _Hernandez_. Declaring a ruling to be obsolete does not necessarily indicate that the ruling is overruled or incorrect. Given the importance of the question, however, in our view it is imperative that clarification be provided by the Internal Revenue Serivce. That is particularly important in light of the claims made by the Church of Scientology about the nature of the settlement and the deductibility of gifts. [5] For example, the IRS issued Publication 1391 in August 1988, and distributed it widely to 501(c)(3) organizatios. It reprinted Rev. Rul. 67-2476, and also contained a message from then-Commissioner Larry Gibbs. The Revenue Reconciliation Act of 1993 added two new provisions to the code: new section 6115 requires charities to disclose, in writing, the existence and amoutn of any quid pro quo payment in connection with any transfer of more than $75; new section 6714 imposes penalties upon charities for failure to comply with the disclosure requirements. They are effective for quid pro quo contributions made after 1993. We urge the Service to provide guidance. If for any reason the Service finds itself unable to do so -- either because of the terms of the settlement itself or because of concerns about the privacy of taxpayer information -- we would urge the appropriate congressional committees to hold hearings to elicit as much disclosure as possible, and we urge the Treasury Department to provide generalized guidance on the subject. Sincerely, Jerome Kurtz Chairman, Committee on Taxation The Association of the Bar of the City of New York New York, New York -- Ron Newman rnewman@cybercom.net Web: http://www.cybercom.net/~rnewman/home.html

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