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Wednesday, October 13, 1993 - Page updated at 12:00 AM

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IRS, Scientology End Their `Wars' -- Church And Its Corporations Are Granted Tax-Exempt Status

Los Angeles Times: St. Petersburg Times

LOS ANGELES - After decades of nasty feuding, the Internal Revenue Service has granted the Church of Scientology and more than 150 of its corporate entities tax-exempt status, ruling that they are charitable, religious organizations entitled to be free from taxation.

Marty Rathbun, president of one of the Scientology organizations that received the tax exemptions, said the government sent 30 exemption letters to Scientology groups earlier this month.

All told, the exemptions apply to 153 corporate entities, said Rathbun, who is the president of the Religious Technology Center.

"We're extremely pleased with the tax exemptions," Rathbun said, adding that because of them "we look forward to our greatest expansion ever."

The exemptions, granted as part of a larger agreement between the IRS and Scientology, are thought to be worth millions of dollars to Scientology, which can require $800 an hour to audit some of its courses. To complete the church's progression of courses, a Scientologist could conceivably spend more than $400,000.

The ruling by the IRS means church members may now deduct those costs on their tax returns, allowing Scientology to raise money more easily.

The exemptions come after after 40 years of bitter fighting between the IRS and Scientology, which at times grew so intense that Scientology's late founder, L. Ron Hubbard, incorporated his deep animosity toward the agency into the church's official teachings.

The government has long recognized Scientology as a religion. But it has consistently denied tax-exempt status to the myriad corporate entities in the the church's empire, contending that that those organizations were operating primarily as businesses and that their money was being used for the private benefit of top Scientology leaders, including Hubbard.

With that contentious history as a backdrop, Scientology's top official, David Miscavige, called followers together last weekend at the Los Angeles Sports Arena to announce the milestone exemptions. Reporters and other non-Scientologists were barred from attending.

"The war is over!" Miscavige proclaimed at the event, according to a document labeled "Executive Directive No. 750" of the Religious Technology Center. "We have brought to an end 40 years of suppression of Scientology and Scientologists. Any discrimination or biased or unfair treatment of Scientologists by the IRS is over. . . . Our road to infinite expansion is now wide open."

IRS officials, while declining to respond to Miscavige's comments, confirmed that the agency had issued the tax-exemption letters to Scientology organizations on Oct. 1.

The exemptions are part of a larger agreement between the IRS and the Scientology organizations, details of which neither government nor church officials would disclose.

Both sides agreed that dozens of federal cases involving the Church of Scientology and its entities have been resolved under the agreement.

Copyright (c) 1993 Seattle Times Company, All Rights Reserved.

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