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The tax status of the Church of Scientology in the United States has been the subject of decades of controversy and litigation. Although the Church of Scientology was initially partially exempted by the Internal Revenue Service (IRS) from paying federal income tax, its two principal entities in the United States lost this exemption in 1957 and 1968.
In 1967 the Internal Revenue Service revoked the Church of Scientology's tax-exempt status because it failed to meet the criteria in section 501(c)(3) of the Internal Revenue Code. [4] In 1993, the IRS granted Scientology a 501(c) nonprofit status, giving it the same favorable tax treatment as other nonprofit organizations.
After being recognized as a tax-exempt religious organization in 1957, Scientology's tax-exempt status was lost in a 1967 IRS audit. [5] As part of the effort to regain tax exemption during the late 1970s, Scientologists repeatedly infiltrated the IRS, copying large numbers of documents and at one point placing an electronic bugging device in an IRS conference room. [5]
From the time its tax exemption was removed by the IRS in 1967 to the reinstatement of the tax exemption in 1993, Scientologists filed approximately 2,500 lawsuits against the IRS. Over fifty lawsuits were still active against the IRS in 1993, although these were settled after the church negotiated a tax exemption with the government. [47] [48]
Scientology's designation as a tax-exempt religion has given it protections during FBI investigations and in court cases. In 2009, the FBI investigated Scientology on claims of human-trafficking ...
This exemption, however, is related to a German-American double-taxation agreement, and is unrelated to tax-exemption in the context of charities law. Unlike many well-established religious organizations, Scientology maintains strict control over its names, symbols, religious works and other writings.
The Founding Church of Scientology of Washington, D.C., had obtained tax-exempt status in 1956 on the claim that it was "a corporation organized and operated exclusively for religious purposes, no part of the earnings of which inures to any individual".
The Church offers the tax exemption as proof that it is a religion. (This subject is examined in the article on the Church of Scientology). In 1982, the High Court of Australia ruled the State Government of Victoria lacked the right to declare the Church of Scientology was not a religion. [64]