Scientology Doc ‘Going Clear’ Raises New Questions About Church’s Tax-Exempt Status

Going Clear Book Cover

Documentarian Alex Gibney’s new HBO exposé Going Clear: Scientology and the Prison of Belief has raised new questions about the church’s classification as a nonprofit organization and its resultant tax-exempt status.

The film, which made its premiere at Sundance in January, alleges that the church gained nonprofit status in 1993 using less-than-scrupulous methods.

Scientology founder L. Ron Hubbard was notorious for his tussles with the IRS. For years, he struggled unsuccessfully to get the Church of Scientology recognized as a nonprofit religious organization, and ultimately fled the country to avoided paying taxes on his burgeoning empire.

Going Clear alleges that in the early 1990’s, Hubbard’s successor, David Miscavige, ordered church members to file thousands of individual lawsuits against the IRS seeking tax-exempt status. The agency was inundated with the suits, and, in a deal that the Church denies ever happened, the IRS allegedly agreed to grant Scientology nonprofit tax-exempt status in exchange for the complete withdrawal of all of the litigation.

The IRS designation was a massive victory for the now-billion dollar Scientology enterprise. The film details the church’s money-collecting prowess; individual church members pay thousands of dollars to “level up” in the organization, and the Church uses its nonprofit status to pay laborers in its vaunted Sea Org unit just $0.40 per hour. According to a 2011 tax filing, just two of the organizations’s dozens of corporate entities are worth at least $1.2 billion.

With the film’s HBO debut Sunday night, some are calling for the IRS to review its 1993 decision. Actress Mia Farrow tweeted her support for renewed scrutiny on Monday:

Farrow linked to a petition on calling for the IRS to “stop this before it’s too late.” The petition, created last week, has so far received more than 3,500 signatures.

“Scientology received tax exempt status in 1993 through the use of numerous frivolous lawsuits and blackmail against government officials,” the petition’s author wrote. “Please tell the IRS to retract COS tax exempt status. They are estimated to have made billions of dollars since the illegal 1993 agreement.”

According to the Nonprofit Risk Management Center, hundreds of nonprofit 501(c)(3) organizations lose their tax-exempt status every year for a number of reasons that could apply to the Church. One of the factors that could play into renewed action by the IRS is that a nonprofit organization must prove “operation in accord with stated exempt purpose(s).” With its designation, the Church must prove that it “operates exclusively for religious purposes and that Scientology, as a bona fide religion, is beneficial to society as a whole.”

There have been calls for a review of the IRS’s designation before; in 2011, the St. Petersburg Times (now the Tampa Bay Times) published a series of articles detailing alleged abuses within the Church from some of its former top officials. The paper ultimately published an editorial calling for the IRS to at least review, if not reverse, its 1993 decision.

Going Clear: Scientology and the Prison of Belief is available now on HBO Go and HBO On Demand.


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