Dear Lawyer: Scientology has been in the news a lot lately. What’s the deal? Just because they call themselves a religion doesn’t grant them an exemption from paying tax, does it? What are the requirements to be granted tax exempt status and what can we do to shut down this so-called brainwashing cult masked as a religion?
The first amendment to the US Constitution prohibits the government from interfering with the free exercise of religion. The federal government cannot enact laws that interfere with the free exercise of religion. The Supreme Court, (who interprets the Constitution), ruled that, as long as an individual has a genuine belief in a religion, it qualifies for first amendment protection.There are many, (some say as many as 30,000) practicing Scientologists. The church boasts membership in the millions all over the world. Many former Scientologists argue these brained washed religious zealots have a genuine belief in Scientology as a religion. Thus, this element is met. The next threshold question is whether, or not the church qualifies for 501(c) (3) status with the IRS, making the church tax exempt.501(c)(3) is the IRS code section granting tax exempt status as a religion. The U.S. uses tax law and tax policy to enact social policy. One example is the Schedule A tax benefit for mortgage interest. The tax code wants to encourage home ownership. As per the IRC 501(3)(c), to be tax exempt, the organization must be operated exclusively for exempt purposes and none of its earnings may go to any individual.The aim of the tax-exempt status is give organizations who give back to society a tax break. The majority of churches aid the poor and operate for exempt purposes. Critics of Scientology argue the Church does no outreach to aid society and their earnings go straight to their leader (now deceased) L. Ron Hubbard, and his successor David Miscavige. Critics claim the church has accumulated over 5 billion in assets for which they have paid zero in federal income tax.As a CPA, with an extensive tax knowledge, I feel all churches should be taxed. However, until there are changes in the tax code, the tax-exempt status stands for all religions that meet the exempt status. Arguably Scientology does not meet the requirements for tax exemption, but until somebody challenges Scientology’s tax-exempt status, or the tax-exemption of all religious organizations, then these organizations will continue to operate utilizing the benefits of American society without contributing to the great dream that is the United States of America. What can you do? If you feel strongly enough about the abuses of Scientology; exercise your 1st amendment right and protest. Most cults die out once their leader dies. L. Ron Hubbard never envisioned the internet. People cannot stay brainwashed if truthful information is available. Arguably the church is in a death spiral and it cannot recover anyway. However, with 5 billion in the bank, Scientology will likely be around a long time.
Brent Kendell, JD, CPA