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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.
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]
The Church of Scientology's interest is to be recognized as a religion as well as a charitable organization. Max Halupka observes "While a tax-exempt status is not a legal declaration of religious authenticity, the significance afforded the status by the public serves to color its true purpose.
The organization sued and lost repeatedly for 26 years trying to regain its tax-exempt status. The case was eventually settled in 1993, at which time the organization paid $12.5 million to the IRS—greatly less than IRS had initially demanded—and the IRS recognized the organization as a tax-exempt nonprofit organization. [159]
Based on the 1993 IRS decision granting Scientology tax-exempt status, the U.S. Department of State formally criticized Germany for discriminating against Scientologists and began to note Scientologists' complaints of harassment and discrimination in its annual Human Rights Reports, starting from the 1993 report. [113]
From 1953 to 1967, L. Ron Hubbard was the official leader of the Church of Scientology. In 1954 L. Ron Hubbard gained tax-exempt status in the United States for his Scientology organizations, and lost it in 1958 when the IRS determined Hubbard and his family were profiting unreasonably from Scientology.
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 legal status of Scientology or Scientology-related organizations differs between jurisdictions. [31] [32] [388] Scientology was legally recognized as a tax-exempt religion in Australia, [33] Portugal, [389] and Spain. [390] Scientology was granted tax-exempt status in the United States in 1993.