L. Ron. Hubbard
Lafayette Ron Hubbard

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Scientology IRS Secret Deal

The Religious Technology Center and the Inland Revenue Servise of the UD hatched a deal whereby the church would not be harrased for any further tax and would, in effect, be able to operate tax free.

This deal includes:

"Notwithstanding the above, in light of, inter alia, the size and complexity of the Church and the Service, certain concerns of the Service and the Church remain. In addition, there is a need for improved communication between the parties. Thus, under section IV, a Church Tax Compliance Committee (CTCC) has been created to undertake certain obligations during a seven-year transition period. The CTCC is to be comprised of the largest United States Church entities, as well as those individuals who are the highest ecclesiastical or corporate authorities within the Church. The Service, through the Assistant Commissioner, has agreed to meet with the CTCC upon their request during the transition period to address any questions arising from the ongoing performance of the parties' obligations under this Agreement."

"A. In General. In general, the parties to the Agreement intend that the below-described issues be finally and conclusively resolved under this Agreement."

"B. Payment in Consideration of Resolution of Outstanding Issues."

"1. At the same time this Agreement is executed, Church of Scientology International is paying by banker's draft the sum of Twelve and One-Half Million United States Dollars (US$12,500,000.00), receipt of which the Service hereby acknowledges, as consideration for the settlement of outstanding issues with the Service as set forth in this Agreement."

So this deal included a one off payment of 12.5 million US dollars to the IRS. Chicken feed as the RTC holds sway over what is estimated to be close on a billion dollars. But the future import of this means that much of the tax the RTC woudl have had to pay they do not and this has increased the coffers of the church to unimaginable heights.

Some further interesting extracts follow.

IV. Obligations and Undertakings During the Transition Period.

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 to ensure that Scientology-related entities, including those recognized under section III of this Agreement as tax-exempt continue to be organized and operated in conformity with the requirements of Code section 501 (c) (3) and the provisions of this Agreement. Further, the CTCC is to ensure that no Scientology-related entity, regardless of whether the entity is described in Code section 501 (c) (3), engages in any conduct that may endanger the tax-exempt status of any other Scientology-related entity or that would otherwise be in contravention of this Agreement. The membership of the CTCC shall guarantee the obligations of any Scientology-related entity as to necessary compliance with the Code and the requirements of this Agreement. In addition, the CTCC will facilitate communication between the parties to this Agreement.

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.

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.

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. Mr. Starkey, as trustee, may retain sufficient cash and securities to cover any remaining actual or contingent liabilities of the Trust until those liabilities have been resolved or satisfied. The members of the CTCC shall use their best efforts to assure that such transfer is accomplished.

Here is the full document showing the secret deal between the RTC and the IRS.

Closing Agreement

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