At exactly age 20, David MISCAVIGE took over direction of the SO as its new strong man in 1981. In May 1982, he took the first measure to ensure his power by installing the "Religious Technology Center" (RTC) in management as the highest command and control committee.

¹⁶ Transcript of the tape recording of the "Mission Holder Conference" (Jon Atack, "A Piece of Blue Sky," Internet: http://www-2.cs.cmu.edu/~dst/Cowen/essays/irslegal.html).

15

After HUBBARD's death in January 1986, the RTC not only assumed control of the political power the GO had up to that time, but, as of today, as the holder of all rights and owner of all trade and service marks, also guarantees the existence of Scientology and ensures its effectiveness.

Now it was up to MISCAVIGE to continue waging the battle to once again attain tax-exemption from the IRS, but to do it in such a way that the mistakes of the 1970s would not be repeated. The SO's refusal to pay any sort of taxes remained unchanged under the new management. In September 1984, Scientology lost the proceedings to dispute the IRS tax assessments for 1970-72. This court tax decision documented in detail how high were the amounts withdrawn by Scientology during the time in question and transferred to L. Ron HUBBARD. The judgment described the tactics as well, which were used against the IRS, such as putting the tax documents, about two million pages, out of order so that they had to be re-sorted at the cost of the American taxpayers.¹⁷

At the end of 1984, the SO came upon a new and extremely effective tactic against the IRS. They founded the front group, "National Coalition of IRS Whistle-blowers." Journalist Douglas Frantz detailed SO methods of procedure in a 9 March 1997 article in the New York Times:

"On the surface, the coalition was like many independent groups that provide support for insiders who want to go public with stories of corruption. But Stacy B. Young, a senior Scientology staff member until she defected in 1989, said she helped plan the coalition as part of Scientology's battle against the IRS in late 1984 while she was managing editor of the church's Freedom Magazine.

'The IRS was not giving Scientology its tax exemption, so they were considered to be a pretty major enemy,' Ms. Young said. 'What you do with an enemy is you go after them and harass them and intimidate them and try to expose their crimes until they decide to play ball with you. The whole idea was to create a coalition that was at arm's length from Scientology so that it had more credibility.' Ms. Young said she recruited Paul J. DesFosses, a former IRS agent who had spoken out against the agency, to serve as the group's president. DesFosses acknowledged that Scientology provided substantial financing, but he denied that the church created or ran the coalition. 'We got support from lots of church groups, including the Church of Scientology,' DesFosses said in a recent interview.

¹⁷ Jon Atack, "A Piece of Blue Sky," chapter 3,
Internet: http://www-2.cs.cmu.edu/~dst/Cowen/essays/irslegal.html

16

The coalition's biggest success came in 1989 when it helped spark congressional hearings into accusations of wrongdoing by IRS officials. Using public records and leaked IRS documents, the coalition showed that a supervisor in Los Angeles and some colleagues had bought property from a firm being audited by the agency. Soon after the purchase, the audit was dropped and the firm paid no money. Kendrick L. Moxon, a longtime church lawyer, acknowledged that the coalition was founded by Freedom Magazine. He said its work was well known and part of a campaign by Scientology and others to reform the IRS.

The church's war had a covert side, too, and its soldiers were private investigators.(...)"

Michael L. Shomers, another private investigator, said he shared none of Pena's qualms, at least initially.¹⁸ Describing his work on behalf of Scientology in a series of interviews, Shomers said that he and his boss, Thomas J. Krywucki, worked for the church for at least 18 months in 1990 and 1991. Working from his Maryland office, he said, he set up a phony operation, the Washington News Bureau, to pose as a reporter and gather information about church critics. He also said he had infiltrated IRS conferences to gather information about officials who might be skipping meetings, drinking too much or having affairs. "I was looking for vulnerabilities," Shomers said. Shomers said he had turned over information to his Scientology contact about officials who seemed to drink too much. He also said he once spent several hours wooing a female IRS official in a bar at a conference, then provided her name and personal information about her to Scientology. (...)

Moxon, the Scientology lawyer, said the IRS was well aware of the church's use of private investigators to expose agency abuses when it granted the exemptions. Moxon did not deny hiring Shomers, but he said the activities described by Shomers to The New York Times were legal and proper. Moxon and other church lawyers said the church needed to use private investigators to counter lies spread by rogue government agents."

¹⁸ PENA and SHOMERS were private investigators hired by the SO.

It was only in 1991, when the SO entered into direct negotiations with the IRS, that the intensity of the mutual attacks by each opponent began to subside.

The following steps between the parties and the associated agreement was confidential until the end of 1997. Douglas Frantz described the extraordinary turn of events in his 9 March 1997 article in the New York Times: ¹⁹

"Scientology made the initial gesture toward a cease-fire when Miscavige, the church leader, paid an unscheduled visit to the IRS commissioner, Goldberg. (...)

Miscavige does not grant interviews, church officials said, but Rathbun²⁰ said the Goldberg meeting was an opportunity for the church to offer to end its long dispute with the agency, including the dozens of suits brought against the IRS, in exchange for the exemptions that Scientology believed it deserved. (...)

A former official in the IRS exempt organization division first disclosed the existence of the negotiating committee in a trade journal after the agreement was announced. He said in an interview that creating the group meant a settlement was almost preordained. 'Once the IRS decided to set up this rather extraordinary group, the wheels were in motion for a deal,...' Not even a stinging court decision in favor of the IRS could derail the talks. Midway through the negotiations, in June 1992, the U.S. Claims Court handed down its decision upholding the IRS denial of a tax exemption for Scientology's Church of Spiritual Technology. The ruling underscored the agency's longstanding concerns over the commercial nature of Scientology and other matters. (...)

A portion of the correspondence between the agency and church from the two years of negotiations was released when the exemptions were granted three and a half years ago. (...) The church provided extensive information on its finances and operational structure. (...)

In August 1993, the two sides reached an agreement. The church would receive its coveted exemptions for every Scientology entity in the country and end its legal assault on the IRS and its personnel.

¹⁹ New York Times, 9 March 1997, http://www-2.cs.cmu.edu/~dst/Cowen/essays/nytimes.html
²⁰ Marty RATHBUN is a high-ranking SO member.

18

There was just one more step. Scientology entities were required to submit new applications for exemption, which were to be evaluated by the agency's exempt organizations division. But something unusual occurred there, too. (...)

The agreement was announced on Oct. 13, 1993. The IRS refused to make public any of its terms, including whether the church paid any back taxes. The IRS also refused to discuss the legal reasoning behind one of the biggest turnarounds in tax history."

In 1992, Judge Ronald Swearinger of the Los Angeles district told an American lawyer's magazine he believed that Scientology had slit his tires and drowned his dog while he presided over court proceedings against the "Church." The SO contests these accusations. In 1993, Judge James M. Ideman was presiding over a suit involving Scientology in Federal District Court in Los Angeles when he took the unusual step of withdrawing from a case that concerned Scientology. He said he could no longer preside fairly because the church "has recently begun to harass my former law clerk who assisted me on this case."

Time magazine published journalist Richard Behar's article, "Scientology: Cult of Greed" in May 1991, which called the church "a hugely profitable global racket that survives by intimidating members and critics in a Mafia-like manner." ²¹ The "church" and a member sued Time magazine and Behar for libel. This process cost each side several million dollars. The SO complaint was dismissed by a federal court judge in 1996, but Scientology appealed. The proceedings finally came to a close ten years later, on 12 January 2001. A US appeals court found that Behar's article had not been maliciously libelous. ²²

²¹ http://www.cs.cmu.edu/~dst/Fishman/time-behar.html
²² http://laws.lp.findlaw.com/2nd/989522.html

19

How much of a threat Scientology viewed this cover story in their battle for tax exemption is expressed in three events. Behar was subjected to strong attacks on the part of the SO, which he wrote about in his article "The Scientologists and Me":

"For the TIME story, at least 10 attorneys and six private detectives were unleashed by Scientology and its followers in an effort to threaten, harass and discredit me. (...)
By day's end, I later learned, a copy of my personal credit report -- with detailed information about my bank accounts, home mortgage, credit-card payments, home address and Social Security number -- had been illegally retrieved from a national credit bureau called Trans Union. (...)
Two detectives contacted me, posing as a friend and a relative of a so-called cult victim, to elicit negative statements from me about Scientology."

When MISCAVIGE was giving his 8 October 1993 speech on tax exemption in Los Angeles, he mentioned Behar in connection to unfair methods of procedure by the IRS:

"His name is Richard Behar. The same SP who later wrote the "Time" article. (...) Just when it looked like the investigation was waning, Behar was brought on the scene to write a total hatchet job article accusing us of all manner of crimes. The plan was to fan the flames so that senior law enforcement officials would be pressured to make a move."²⁴

How strong this pressure was felt by the SO and how much MISCAVIGE was set on countering Behar's "accusations" manifested itself in a subsequent event. Ted Koppel, the reporter on ABC News Nightline, tried for almost nine months to get an interview with MISCAVIGE on Richard Behar's article. When MISCAVIGE finally consented to an interview on 14 February 1992, it was a sensation, since this was his first appearance on television. When he spoke with Koppel it was quite evident that MISCAVIGE adhered to HUBBARD's "Tech" and simply raised assertions that couldn't be proved, true to the motto, "Never defend, always attack."

"KOPPEL: -but why were you so —what was it about the Time magazine story that so upset you?

²³ The SO designates its enemies "SP" ("Suppressive Person").
²⁴ http://www-2.cs.cmu.edu/~dst/Cowen/essays/speech.html
²⁵ Methods of procedure, Management and Social techniques according to HUBBARD.

20

Mr. MISCAVIGE: Because it wasn't reporting on anything, it was an attempt to cause something. Richard Behar is a hater.

As the interview went on, Koppel asked Mr. MISCAVIGE whether he had testified in court as to his accusations against Behar:

"KOPPEL: You have affidavits?

Mr. MISCAVIGE: From them? Of course not. You think they'd admit it?

KOPPEL: Well, I mean, you're...

Mr. MISCAVIGE: But they're the ones who said it."

The complete interview is available on the Internet, and also accessible as a video file. ²⁶

Of particular interest is a reference that, as of 1992, the US Supreme Court represented the opinion that Scientology exhibited a purely commercial character. The "agreement" addresses the form 1023, in which Scientology has to answer IRS questions. While most of this is not accessible to the public, some has been obtained through FOIA and published on the Internet.²⁸

Among other things, the IRS asks in form 1023 about lawsuits in which Scientology and its members/former members were involved, and how the objections made by SO to the judgments should be rated.

²⁸ http://www-2.cs.cmu.edu/~dst/Cowen/essays/irs1023.html

25

As an example of the sort of argument used by the SO, only the most well-known case to date will be cited, the "Church of Scientology vs. Gerald Armstrong," which had a devastating effect not only upon the SO, but on its Founder, L. Ron HUBBARD.

Armstrong was a staff member of the "Church of Scientology" from 1969 to 1982, and was not only acquainted with HUBBARD, but also worked closely together with him. In his statement of 22 July 1982, he testified:

"I was a member of the Sea Organization of Scientology from February 1971 to December 1981, during which time I held many positions and was in many locations where I directly observed L. Ron Hubbard and other Scientology executives. At no time did I ever get the impression that Mr. Hubbard or any other senior executive considered that Scientology is a religion. (...)
In January 1980, I was assigned to a project to collect materials about L. Ron Hubbard for the purpose of providing documentation for a biography to be written by Omar V. Garrison. During the following two years I read several thousand pages of documentation, much of it written by Mr. Hubbard himself. Never before had anyone within Scientology ever had all this information assembled in one place or had the opportunity to view and assimilate the whole truth about L. Ron Hubbard. From these documents and other sources I learned that Mr. Hubbard had continually misrepresented himself and had lied about his past, his accomplishments and credentials. I learned also from the documents I collected that Mr. Hubbard had lied about how and why Scientology had been established as a "religion". (...)
I learned through my study of the documentation I assembled, and from more than ten years of observation of Mr. Hubbard and the Scientology movement, that Mr. Hubbard has cruelly deceived his followers to the point where they will themselves lie and attempt to deceive others about the truth concerning him and Scientology." ²⁹

When Armstrong left Scientology at the end of 1981, he took some of the documentation that had been entrusted to him by HUBBARD so he could prove his own credibility. Later these documents were handed to biographer Omar Garrison. Armstrong was declared by the SO to be a "Suppressive Person,"³⁰ subjected to a campaign of libel and taken to court.

²⁹ http://www.whyaretheydead.net/krasel/aff_ga82.html
³⁰ See footnote 23.

26

In the civil complaint of Scientology vs. Armstrong, Judge Paul Breckenridge, Jr., presiding over the California Superior Court, issued a decision that described the methods of operation used by HUBBARD and his organization as follows:

"In addition to violating and abusing its own members civil-rights, the organization over the years with its "Fair Game" doctrine has harassed and abused those persons not in the Church whom it perceives as enemies. The organization clearly is schizophrenic and paranoid, and the bizarre combination seems to be a reflection of its founder LRH. The evidence portrays a man who has been virtually a pathological liar when it comes to his history, background, and achievements. The writings and documents in evidence additionally reflect his egoism, greed, avarice, lust for power, and vindictiveness and aggressiveness against persons perceived by him to be disloyal or hostile." ³¹

In part three of the IRS Form 1023, which is available on the Internet, the Service, in reference to this court decision, asked whether the "church" was in agreement with the court's position. Naturally it wouldn't be expected that the SO would let Judge Paul Breckenridge, Jr.'s decision go without comment or in any way agree with it, as it was this decision in particular that continued to influence the court in its decisions, which resulted in tax exemption being denied. Here the SO finally saw its big chance to present the matter from its point of view, thereby defusing that particular judgment. On Form 1023, the IRS's question was answered cleverly:

"We have included some background information here and an epilogue to the decision in question. That is because the Service has continuously thrust the Armstrong case at us, demanding an explanation. The Armstrong case decision was so inflammatory and intemperate that it was used to stigmatize the Church in the legal arena and make other outrageous decisions possible. As we shall demonstrate below, all this decision ever involved was Armstrong's state of mind, which subsequently obtained evidence proved conclusively to be one sordid, sado-masochistic nightmare. Furthermore, Armstrong's state of mind horror stories have fallen on deaf ears in recent litigation. Relying on Armstrong or the Armstrong decision is wholly unjustified."

³¹ http://holysmoke.org/ga/breck.htm

27

Another part of that text describes how Armstrong left the "Church" at the end of 1981, taking with him confidential documents that had been entrusted to him. In summer of 1982, the SO said it had obtained proof that Armstrong had stolen thousands of documents from the archives to give to his attorney. Both these people were purported to have the intention of making money from these papers. In September 1982, Armstrong was said to have then, faced with imminent court proceedings, represented that he only took the documents to inform the public about HUBBARD and the "Church."

It says further in the SO statement:

"The Statement of Decision adopted as the facts of the case the allegations which Armstrong had made in his trial brief. These allegations included the statements on which Armstrong premised his justification defense; i.e., that defendant "... became terrified and feared that his life and the life of his wife were in danger, and he also feared he would be the target of costly and harassing lawsuits." The judge went on to pontificate on the psychological mind-set of not only Mr. Hubbard, but Scientology at large. The only lawsuit that there was to fear was the one that was ultimately filed for return of the stolen documents. It never would have been brought had Armstrong voluntarily returned the documents when asked, despite the theft."

Armstrong was correct in voicing the idea that the SO was persecuting him with annoying and extravagant court proceedings, because in 1993, when the "agreement" was settled with the IRS, SO lawsuits against Armstrong were still in progress. The organization tried (and tried), with all means, to silence Armstrong, since he was one of the few people who had been able to look at the documents about L. Ron HUBBARD, and by doing so had been cleared of any misapprehensions about the house of lies upon which HUBBARD's person as well as the SO were built. As to how the SO's explanation in Form 1023 of the Armstrong case could have satisfied the IRS to the point of bringing about a complete change of attitude on their part cannot, however, be answered here.

The "agreement" with the IRS could be one of the greatest successes of Scientology in the USA. Therefore it is not at all surprising that David MISCAVIGE announced the "spectacular victory" on 8 October 1993, at a celebration for the 9th anniversary of the "International Association of Scientologists" (IAS), in the Los Angeles Sports Arena.

28

Now if one would believe that because of the repeated assurances in the "agreement" that any mutual attack or accusation had ended, MISCAVIGE's speech would also have been conspicuous in this regard. But the manner and style of his presentation, the vehemence of his words against government authorities and especially against the IRS are far more reminiscent of settling accounts than of a factual presentation.

A special issue of "Scientology News" German-language edition Nr. 32/1993 for the celebration of the ninth anniversary of the IAS, said:

"'The war is over,' David Miscavige, the chairman of the Board of the Religious Technology Center, announced to the tumultuous applause of more than 10,000 Scientologists in Los Angeles. He said that the bitter, 40-year battle with the IRS of the United States had finally ended. The announcement was made on 8 October in the Los Angeles Sports Arena during the ninth anniversary of the International Association of Scientologists, which was the largest gathering of Scientologists ever to take place."

The transcript of David MISCAVIGE’s speech is available, however, only in the English language - on the Internet.³² MISCAVIGE began his account with 1950, the year HUBBARD came out with the "DIANETICS" book. He did not omit any of HUBBARD's "conspiracy theories," and began with the alleged attack by the "psychs," which according to HUBBARD had been extremely concerned about the publication of "DIANETICS" being so popular. Among other things, MISCAVIGE described the attack by the "psychs" and their alleged "co-conspirators," the IRS, with the following words:

"In the old days the Romans threw the Christians to the lions. So the psychs turned to the modern day, 20th century inquisitors. The creatures of the night. That's right, the vampires. And not little vampires, but the ones who suck the blood from the whole country and so the villain of this plot came on the scene - the Internal Revenue Service."

The theory that the psychiatrists caused all the difficulties between the SO and the IRS is repeatedly referred to in MISCAVIGE's speech.

MISCAVIGE also included the "false reports" that are purportedly produced and distributed worldwide:

"You've heard about false reports being spread through the world.

³² http://www-2.cs.cmu.edu/~dst/Cowen/essays/speech.html

29

And often we have talked of Interpol being the conduit for these reports abroad. That is all true. But it was always the IRS creating the documents and sending them out in the first place. Don't forget - the IRS hadn't found the Church doing anything wrong. They just wanted to get us. So they had to resort to pure lies. Picking up a technique from their mentor, Adolf Hitler, in his book, 'Mein Kampf', they subscribed to the theory that "the bigger the lie - the more easily it would be believed."

That is not the only passage in which MISCAVIGE puts the IRS in the same ballpark with Nazi ideology. He also attacked former US President Nixon, who he said the SO had given first place on its internal list of enemies.

"With Nixon finally resigning the presidency in disgrace, the IRS's problems with Scientology were just beginning to build. They had been attacking the Church with the purpose of destroying it for over a decade. Yet Scientology had only grown. And the IRS was starting to lose on the legal front.They had won the case against the Founding Church's tax exemption on a technicality but their win was short-lived, as that Church had long since ceased to be the mother church and the hoped-for destruction of Scientology didn't occur. So a new strategy was in order. In 1974, the IRS convened a meeting with all their top people. It was 'the Final Solution Conference on Scientology.'"

Even if not directly stated, the allusion to the April 1943 Wannsee Conference, which was to decide the "Final Solution to the Jewish question," cannot be overlooked. MISCAVIGE emphasized, "We now have the minutes of that meeting which make it clear just how evil their motives were. IRS agents and lawyers sat around conspiring about how to deal with the Scientology problem." MISCAVIGE did not mention that those minutes were the result of a GO eavesdropping operation (see chapter 3), which carried legal consequences with it. He was trying to present Scientology as an innocent victim only trying to defend itself from the IRS.

In another passage, MISCAVIGE complained that after the removal of the GO and the subsequent reorganization of the SO, the IRS showed no interest at all in discussion. He saw the reason for this as the IRS having had undercover agents in the GO, who were removed when it was. Then MISCAVIGE went into great detail about the "attacks" from the IRS, and accused them of the most vicious tricks, the purpose of which was supposedly to eradicate the "church." He didn't leave out the press or the courts, either:

30

"Our church staff and attorneys fought this hard in the courts and were able to get hearings before judges across the country to declare these IRS actions illegal. And, that's where we stood at the beginning of 1991. Scientologists were being harassed left, right and center and our hopes were hanging on the judicial system while judges across the country considered our motions to stop this latest and most vicious assault. And then, just when it looked like we may get a fair shake,' Time' magazine hit the newsstands. It was but a few weeks later that we found one of the judges on our case had framed the cover and placed it in his chambers. And that the IRS attorney coordinating this assault against Scientology was playing tennis with this same federal judge. And although we may not know who won those tennis matches, you can be sure it wasn't the Church of Scientology!"

MISCAVIGE was not particular about using extreme language in representing the attacks of the tax authorities or the pressure put on his organization, e.g., "A battle of life and death was being fought on a daily basis," and "The IRS had made this war so personal that they would make it dangerous to just be a Scientologist." Of course there was no mention about the methods that Scientology used on the IRS and its staff.

Afterwards MISCAVIGE came to the events of October 1991 and described the "meeting" with the IRS chief. This was the way he said the goal of tax-exemption had been achieved:

"The magnitude of this is greater than you may imagine. And it may take some time to sink in. It hasn't with me yet! It's been a long, hard war - unprecedented in fact - but it is over! The most notable point is that Scientology organizations have been recognized as bona-fide and fully qualifying for tax exemption to the fullest extent of the law. What exactly does this mean? To begin, there are no outstanding tax assessments from the IRS against any Scientology or related entity in the United States. They are all gone. It also means that all Scientology organizations organized not-for-profit have been so recognized and are tax exempt. That's right-every single one of them. There are many non-religious groups we sponsor-which use LRH's tech to improve society in areas like drug rehabilitation, study, criminal reform and morals. All such groups have been recognized as fully tax exempt!"

31

Later on MISCAVIGE described how he imagined the future of Scientology in Europe:

"And what about all those battles and wars still being fought overseas - many of which were brought about originally by IRS false reports. Well, there's good news on that front too. To begin with, we will waste no time carrying news of this new breakthrough to all foreign countries. Those battles have been being held in place by suppressive governments just quoting the IRS. The line has been 'You are an American religion. If the IRS doesn't recognize you, why should we' The answer is — 'They do. And now, you better as well!' Make no mistake — there is much work to be done on those fronts. But we have already taken the first steps in using this IRS victory to end the rest of the battles. What about all of the false reports I mentioned tonight. We are now in possession of them and will be receiving many more documents out of our files. We will diligently work to clean up all false reports."

MISCAVIGE referred to a letter that the IRS had agreed to send out "to the governments of every nation," which would include a factual report about Scientology, that the SO itself had written.

At the end of his speech, MISCAVIGE took a surprising turn and found moderate words for the IRS:

"But not everybody in the IRS is suppressive. In fact, over the years the IRS finally assembled a team of some very decent individuals to resolve these matters with us. Ones who were sick and tired of the war and who were courageous enough to stand up for what was right. (...)
The real thing I want you to understand is that we didn't just get exemption,we ended a war.We wanted to end all conflicts, to have a fresh start - to get rid of any potential future conflicts so some SP³³ couldn't start it all up again. It took time.

³³ See footnote 23.

32

It took a lot of work. It resulted in a peace treaty. I even brought a copy of it to show you. This represents what it took to resolve each and every outstanding conflict with the IRS. That's how big this war was. I want you to understand something else. The power of our group is greater than you can imagine. When we stand shoulder to shoulder, there is nothing we can't accomplish."

In the Form 1023 which the SO was required to fill out by the IRS, there is a document of 16 December 1989, which concerns the "Snow White" program for the Federal Republic of Germany, and which apparently is still in effect. The objective of the program is still to find "false reports" on the Church and LRH in government files and to "expunge" them. The SO answered the question posed by the IRS in response to this program, in particular with reference to the GO's methods of operation in the years 1973 to 1977, by stating that the document in question had been stolen from church offices. In addition it was stressed that the "Snow White" program was still in use:

"In an ongoing effort to practice the Scientology religion free from the interference of misinformed government agencies, the Church continues to pursue the Snow White objectives with the legal means at its disposal. Only when the Church is free from governmental harassment and is accorded its rights will the need for Snow White activities vanish."

The agreement between the IRS and Scientology of October 1993 ended on 31 December 1999. A new agreement was settled, but the IRS is keeping it secret. From the SO viewpoint, however, the "Snow White" program has not lost validity in Germany. Since the beginning of the 1970s the SO has had establishments in Germany that receive their instructions from the USA via the European headquarters of the SO in Copenhagen. Tax exemption from the highest US tax agency and the associated briefings of the authorities in Germany has the consequence that the SO has spread their claim to acknowledgment as religion to other nations.

35

In October 1996 - before surveillance of Scientology by the Office for the Protection of the Constitution began in Germany - the press spokesperson of SO Hamburg, Gisela HACKENJOS, gave the "TAZ" newspaper an interview. In it she stated expressly what the SO strove for: "We are a church. We are a religion. Look at America. The Germans will have to wake up. Done, over and out!"

As early as June 1994 a four-page edition of the "Freedom" SO newspaper appeared in which the IRS's tax exemption was again presented and commented upon. The leading article read, "Acknowledgment for Scientology," and it once again contained the most important points of the agreement, which had previously appeared in the special edition of the "Scientology News." It was further presented that the IRS not only had granted tax exemption to Scientology and more than 150 of its associated corporations, but that it had simultaneously found that Scientology was considered to be a "charitable, religious organization."

However in none of the "agreement's" section is Scientology referred to as a religion, it just addresses tax exemption for a non-profit organization in accordance with US tax laws. The IRS October 1993 statement to Scientology contains a reference that the recognition of tax-exempt status has come about.

In the USA, the state is prohibited from deciding what is or is not a church/religion. Therefore the proceedings in the Scientology case are not surprising. At the end of an article in the "Freedom" magazine is an interesting statement which proves that the SO in Germany is in no regard separate from the management in the USA and their orders:

"But the Scientology Churches in Germany spread the same teachings in Germany, they work according to the same directives and follow the same finance system as in America. Their staff are bound to the same goals - the spiritual freedom of mankind. Their religious dogma and practices are identical."

Interestingly, only four months later a reference appeared for the first time in the US State Department's human rights report that Scientology and its adherents were discriminated against in Germany. This tactic continues to be used by the SO, whereby it does not flinch from simulating written proof, thereby deceiving the law:

36

• In November 1997 German and American media published a report about a German citizen who sought and attained asylum in the USA. The woman stated her reason for asylum was that she was a Scientologist and she had left Germany for "fear of persecution of her faith." Actually, the Scientologist woman wanted to avoid impending measures to be taken by the German tax authorities. In summer 2000 an investigation by journalists of "Stern" news magazine (issue 27/2000) revealed that the case had apparently been staged by Scientology to expose Germany internationally.
• In 1998 the "Menschenrechtsbuero der Scientology Kirche Deutschland e.V." was founded in Munich. Its stated goal was to expose supposed attacks or rights violations by German agencies against the SO and to introduce the appropriate steps. So, among other things, numerous protest actions for "Suppression of Religious Freedom" have been held by this "human rights office" in Germany, all of which indicate that Scientology received tax exemption and therewith acknowledgment as religion in America.

  In the 1980s the SO founded the "Kommission zum Schutz des Buergers gegen Datenmissbrauch e.V." ("Commission to protect citizens against data abuse") as the predecessor to this "human rights office," even though inquiries can be made at any time through the federal and state data protection laws and the government agencies also have reporting obligations. It can be surmised from this that the SO intends to bring about a general law about the viewing of government files so as to be able to determine what information about it individual agencies have. Apparently German agencies are expected to open their files in a manner similar to the "Freedom of Information Act" (FOIA).

• Laws comparable to the FOIA, called freedom of information laws, have existed in Brandenburg since 1998, in Berlin and Schleswig-Holstein since 2000 and in Nordrhein-Westfalen since 2002. At almost the same time the SO founded the "Aktion Transparente Verwaltung - Gegen Korruption und fuer Informationsfreiheit" in Munich and Hamburg. It is stated on their pages in the Internet that they are for passage of a freedom of information law, such as already exist in the states of Berlin, Brandenburg and Schleswig-Holstein.

  In doing this, the SO is probably predominately concerned with getting a look into the files of the Office for the Protection of the Constitution and with expunging all "false reports" from official documents. Germany has what the SO regards as a "suppressive government," which is to be treated in accordance with the organization's policies and missions.

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Since, as it has stated, the SO has obligated itself to the same goals in Germany as in America³⁵ , it may be assumed that the same path to attaining tax exemption will be pursued here as in the USA. The corresponding legal disputes in the area of German associations have been pending over seven years in Baden-Wuerttemberg.

During the course of these proceedings, the organization also attempts to give court decisions its own interpretation. A current judgment by the Cologne Revenue Court³⁶ was celebrated as an "important partial victory" by the SO. These proceedings resulted from a 1994 SO application for tax exemption of license fees for three of its German licensees under Article 12 of the Double Taxation Agreement (DTA) between the USA and the Federal Republic of Germany. Because the Federal Revenue Office turned down the corresponding exemption information, the SO filed a complaint in which the Cologne Revenue Court decided in favor of the SO for the following reasons: according to the DTA, a natural or legal person, resident to one of the agreeing nations (in this case, the USA), who draws revenue from a different agreeing nation (in this case, Germany), can claim advantages through the DTA if it is generally exempt from income tax in one of the agreeing nations. The SO submitted its approval from the IRS, from which it can be seen that the complainant has been classified as exempt from US federal income tax since 1 October 1993. This tax-exemption of the SO in the USA, the nation of residence in accordance with the DTA, has the effect, however, based on Article 28, that this tax exemption was tied to the question in dispute. The question of whether the complainant was a commercially engaged organization in Germany was not considered during the process of tax exemption in the USA. In that regard, the Cologne Revenue Court did not make a decision as to whether the SO was to be considered a charitable organization in accordance with any section, including section 51, of the German tax law. What was determined was that a certain product or service from the state of residence and its license fees had legally regulated tax advantages in accordance with Article 28 of the DTA. Questions of religion or worldview had no role in this. Besides that, the Cologne Revenue Court found, among other things, in its decision:

"The relationship between the complainant and its licensor was an economical determination, according to both the complainant's account and the presentation of the respondent. Special relations between the complainant and the licensor with reference to issues of worldview have been repeatedly and explicitly disavowed by the complainant in the proceedings at hand." ³⁷

On this item the decision points in a different direction than the SO's self-presentation.

When one considers how long the SO persevered in the United States in the fight for its tax exemption, this confirms that the writings issued by L. Ron HUBBARD continue to be in force, and this continues to be stressed by the organization in its publications.

³⁵ "FREEDOM" magazine of June 1994.
³⁶ Cologne Revenue Court, "Finanzgericht Koeln, Az.: 2 K 6626/96," available on the Internet.
³⁷ Ibid.

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In a 15 August 1960 policy letter, "Department of Government Affairs," HUBBARD explained:

"Peace is bought with an exchange of advantage, so make the advantage and then settle. Don't ever defend. Always attack."

And in "Ron's Journal" Nr. 34 of 13 March 1982, "The Future of Scientology," HUBBARD summed up by saying:

"The enemy cannot even plan for tomorrow. We work for eternity."

SO efforts have already been successful in Italy. On 25 October 2001, the Supreme Court in Rome decided that the "Scientology Church" would be acknowledged in Italy as a church community. In connection with that, the SO will enjoy extensive tax advantages.

Although the SO is still considerably far from its goal of being acknowledged in Germany as a religious community or being considered charitable, there is still reason for watchfulness in view of its ideology and its methods of operation in achieving its goals.

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1. In the following, excerpts from the agreement between the SO and the IRS are cited.

Closing Agreement On Final Determination Covering Specific Matters

Under section 7121 of the Internal Revenue Code, the parties named herein and the Commissioner of Internal Revenue make the following closing agreement:

WHEREAS, the Church of Scientology and its constituent entities (the "Church") and the Internal Revenue Service (the "Service") have a long history of controversy spanning over 30 years;

WHEREAS, the Church has pending with the Service applications on Form 1023 requesting that the Service recognize certain constituent entities within the Church as exempt from income taxation pursuant to section 501(a) of the Internal Revenue Service Code, as exclusively charitable organizations described in section 501 (c) (3) of the Code;

WHEREAS, the controversy between the parties includes litigation (hereinafter "the section 170 litigation") in which the deductibility under Code section 170 of parishioners' payments to the Church in connection with their participation in religious services of the Scientology faith is at issue;

WHEREAS, the Church signatories and individual Scientologists have initiated, supported and/or otherwise participated in litigation under the Freedom of Information Act (FOIA) to compel the Service to disclose information withheld by the Service in response to FOIA requests about its treatment of Scientologists and Churches of Scientology (hereinafter "FOIA litigation");

WHEREAS, in October of 1991, the key officials of the Church, David Miscavige and Mark Rathbun, approached the Service seeking to negotiate the resolution of the above-described matters, and met with the then Commissioner;

WHEREAS, at this meeting, the Commissioner indicated his desire to resolve all outstanding issues between the Church and the Service and appointed the Assistant Commissioner to negotiate and conclude a settlement with the Church on behalf of the Service;

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WHEREAS, the Church and the Service intend this closing agreement to be final and conclusive with respect to all matters but, while also final and conclusive, that its provisions relating to the continuing duties and obligations of both parties during the transition period shall generally be effective until December 31, 1999;

NOW IT IS HEREBY DETERMINED AND AGREED, for purposes the Internal Revenue laws of the United States, and in consideration of the provisions contained herein that: (...)

A. Establishment of Church Tax Compliance Committee

1. Purpose of Church Tax Compliance Committee. The Church Signatories and others as described below shall form a Church Tax Compliance Committee (the "CTCC"). The purpose of the CTCC is (...)

2. Membership of Church Tax Compliance Committee. The CTCC shall consist of Corporate, At-large and Individual members. (...)

b. At-large members of CTCC. The Watchdog Committee (as described in the Qualified Written Material) shall be an At-large member of the CTCC and shall be represented on the CTCC by the Chairman of the WDC. In addition, the International Finance Director and the Chief Accountant International shall serve as At-large representatives on the CTCC. (...)

c. Individual CTCC members. The individual members of the CTCC are David Miscavige, Norman Starkey, Mark Rathbun and Heber Jentzsch. No individual member of the CTCC shall be permitted to withdraw from service on the CTCC, except by reason of death, being adjudicated an incompetent, or by mutual agreement of the parties to this Agreement.

3. Responsibilities of CTCC. In general, the CTCC is responsible for overall implementation of the duties and obligations imposed with respect to the Scientology-related entities by this Agreement during the transition period. Specific responsibilities and duties of the CTCC shall include the following: (...)

4. Actions of CTCC. David Miscavige will act as the initial Chairman of the CTCC. He may be removed from this office and replaced by another individual CTCC member by majority vote of the CTCC members. The CTCC shall promptly notify the Service of any change in the Chairmanship. The Chairman may act on behalf of the CTCC, and bind the CTCC, except where a specific provision of this Agreement requires the action of more than one CTCC member. (...)

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D.2.e. Any other funds of a Scientology-related entity received from sources within the United States may be couriered overseas for deposit only if, and only to the extent, there are in place appropriate financial controls to ensure the processing, handling and tracing to such deposits to the account of the Scientology-related organization to which such payment is drawn. (...)

6. Norman F. Starkey, as Trustee of Author's Family Trust B, shall, no later than December 31, 1993, effectuate the transfer of substantially all of the corpus and income in Author's Family Trust B, including all the shares of Author Services, Inc. ("ASI") as permitted under the will of L. Ron Hubbard to the Church of Spiritual Technology ("CST") without consideration. (...)

10. The members of the CTCC shall, no later than December 31, 1995, effectuate the dissolution of WISE, Inc. and the transfer of all of its assets, including but not limited to its rights to the Scientology religious marks, to the Inspector General Network.

The date of this agreement is 1 October 1993.

It is concluded with date and signature of the "individual members" of the CTCC: David Miscavige, Norman F. Starkey, Mark Rathbun and Heber Jentzsch. Signing as CTCC "members-at-large" are Marc Yager, Chairman of the "Watchdog Committee," Jonathan Epstein, International Finance Director and Nigel Oakes, Chief Accountant International. Mark Rathbun signed as president for the "Religious Technology Center" (RTC) and Heber Jentzsch as the president of "Church of Scientology International." Other signatures are provided under power of attorney from the "Church of Spiritual Technology," the "Church of Scientology Flag Service Organization, Inc.," the "Building Management Services" and the "Church of Scientology Religious Trust."

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John E. Burke, Assistant Commissioner (Employee Plans and Exempt Organizations) and James J. McGovern, Associate Chief Counsel (Employee Benefits and Exempt Organizations) signed for the IRS.

2. Advice for Internet users

If any of the Internet addresses cited in this brochure have changed, you can search on the text cited through the popular search machines on the archive pages provided on the Internet.

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Advice for distributors

This informational material is released by the Baden-Wuerttemberg State Office for the Protection of the Constitution in the scope of its legal duties to inform the public. It may not be used by parties or candidates during elections to get votes. This applies to all German elections. (Other rules are given pertaining to German elections.)

All publications are available in the German language.
See: http://www.verfassungsschutz-bw.de