The Internal Revenue Service's unexpected announcement granting tax exempt status to the Church of Scientology and scores of its affiliates will have an immediate impact on Freedom of Information Act litigation.

Following the October 13 surprise agreement, IRS officials were tight-lipped about the details. IRS Public Affairs Officer Frank Keith would only confirm to Privacy Times that the secret agreement would affect FOIA litigation, but refused to specify in what manner.

However, Scientology spokesman Marty Rathbun said the organization was dropping some 45 FOIA lawsuits pending against the IRS. At one point, he added, Scientology groups had 115 cases going against the IRS. The main areas of impact will be the Northern (San Francisco) and Central (Los Angeles) Federal Court Districts in California, and the U.S. Court of Appeals for the Ninth Circuit.

Rathbun said the withdrawal of the FOIA lawsuits was not a quid pro quo for the granting of the tax exemption. "The purpose of the FOIA lawsuits was to get to the bottom of discriminatory conduct by the IRS," he claimed. "Now that the discriminatory conduct has ended, there is no need to go on with the FOIA suits. We see this as part of a total disengagement with the IRS."

Since its inception in the 1950s, the Church of Scientology has aroused controversy. Scientology Founder L. Ron Hubbard issued a directive that the courts be used to attack "enemies" until they "sue for peace." Critics and some former members contend the sprawling empire is a profit-making enterprise that masquerades as a religion. In fact, the U.S. Court of Claims had ruled against a tax exempt bid by the Church of Spiritual Technology, a leading Scientology affiliate.

Scientologists did not always rely on the FOIA when seeking government documents. In the late 1970s, eleven Scientologists, including Hubbard's wife Mary Sue, served time for infiltrating the IRS and other agencies and stealing confidential records.

Jon Atack, English author of the book, A Piece of Blue Sky (Lyle Stuart-Carol Publishing, New York, 1990), and a leading Scientology critic, assailed the agreement. "The IRS has betrayed the American people," he said, adding, "Americans should be horrified" that a group whose members were convicted of stealing federal files "could force the IRS to back down."

The IRS settlement does not end all of the organization's tax disputes. In Pinellas County, Florida, where Scientology organizations have major property holdings, Country Property Appraiser Jim Smith said he plans to proceed with litigation in state court to determine if the organization is exempt. "To us, the IRS is just another government agency. We have to determine independently whether Scientology is operating as a for-profit organization," Smith said. An estimated $7.5 million is at stake.

Last updated 14 June 1997
by Chris Owen (chriso@lutefisk.demon.co.uk)