Inside Scientology - Janet Reitman [89]
But Scientology faced one last formidable adversary: the Internal Revenue Service. Scientology's conflict with the IRS originated in 1967, when the agency, which had previously granted tax exemption to Scientology, revoked its tax-exempt status after finding that Scientology, and Hubbard in particular, seemed to be profiting from the operation. The Church of Scientology appealed this decision and refused to pay taxes—a stance it would maintain for the next twenty-six years.
This reaction prompted the IRS to embark on a deeper examination of Scientology as a "dissident group." Between 1969 and 1975, the Church of Scientology and its activities were monitored by three different agencies within the IRS. Scientology, in turn, monitored the IRS as part of Operation Snow White.
Even after Operation Snow White was uncovered, Scientology's war with the IRS only intensified. In September 1984, the U.S. Tax Court denied the church's appeal of the IRS's original 1967 ruling, concluding, as others had done before, that Scientology "made a business out of selling religion." The judge went into great detail about Scientology's many acts of obstruction, noting how Hubbard had once ordered his staff to mix up some two million pages of tax-related documents to make it difficult for IRS agents to sort through them. The court noted that "criminal manipulation of the IRS to maintain its tax exemption (and the exemption of affiliated churches) was a crucial and purposeful element of [Scientology's] financial planning."
Meanwhile, the IRS's criminal investigation into Hubbard's finances had moved on to examine the activities of the RTC and Author Services, as well as their key officials. For several years, Miscavige would later maintain, he and several other officials were the target of investigation by the IRS's Criminal Investigations Division. The IRS didn't comment on the investigation, and the case was dropped with Hubbard's death in 1986. But Miscavige never forgot. To Scientology's new leader, as to its Founder, the IRS represented far more than a powerful government agency determined to "suck the blood from the whole country," as Miscavige once put it; it was the vanguard of a global campaign, launched by psychiatrists, to crush the church.
"A tax-exempt organization is not subject to the myriad complexities of the Internal Revenue Code which can be used to harass and destroy organizations the IRS does not like," Miscavige told his flock. "But most importantly, because all bona-fide religions and churches in the United States do have tax exemption ... if the IRS refused to grant such to Scientology that fact alone could be used to [discredit] the church internationally." Without tax exemption, he argued, Scientology would never be seen as a religion. Nothing, in Miscavige's mind, could damage Scientology more.
In 1988, Marty Rathbun received his next assignment from Miscavige: launch a campaign to win tax exemption from the IRS. The plan, according to Rathbun, was to follow L. Ron Hubbard's edicts in the most strategic way possible in order to overwhelm the agency and wear it down. To prosecute this war, Rathbun would rely upon the Office of Special Affairs, which he had helped establish five years earlier. Since then, OSA had carried out numerous assignments, ranging from litigating against Scientology enemies to far stealthier black operations, just as the Guardian's Office had always done.
Staffed by some of Miscavige's closest associates, OSA also employed numerous former Guardian's Office officials who, having survived the purges of the early 1980s, had been offered a second chance. "The measuring stick in the Church of Scientology has never been whether you were participating in illegal activities#x2014;it's whether you were caught," Jesse Prince, who took part in several intelligence operations in his