IRS Closing Agreement with Scientology: Proving Narconon is part of the "Church"

[ethercat]

BigBeard is fond of citing the 1993 IRS Closing Agreement to show that Narconon's Tax Exempt status derives from the agreement that CoS made when they received their exemption.  I don't think that gets enough attention - not that I think people dismiss it or don't read it, but I think it sometimes gets lost in a sea of information.  So I thought having a sticky thread with a link to the closing agreement (which is FAR too long to just post here outright) would be helpful for people who want to look into this further.  BigBeard, feel free to add any more information to this sticky.

It is an extremely complex document, with a convoluted history. 

On October 1, 1993, the agreement went into effect.   On October 8, 1993, David Miscavige held a "victory rally" and declared that "the war is over" to scientologists who attended.¹  The IRS formally announced the agreement on October 15, 1003.  November 10, 1993 a consumer tax organization called Tax Analysts submitted a FOIA request for it, which was denied on February 7, 1994, and Tax Analysts filed suit.  In 1996, they won the suit, although the agreement was apparently never turned over to them.  It was leaked to the Wall Street Journal on December 30, 1997.  They did a front page story and published the leaked agreement on their website.

Department of the Treasury
Internal Revenue Service
CLOSING AGREEMENT ON FINAL DETERMINATION COVERING SPECIFIC MATTERS

Under section 7121 of the Internal Revenue Code, the parties named herein and the Commissioner of Internal Revenue make the following closing agreement:

WHEREAS, the Church of Scientology and its constituent entities (the "Church") and the Internal Revenue Service (the "Service") have a long history of controversy spanning over 30 years;

WHEREAS, the Church has pending with the Service applications on Form 1023 requesting that the Service recognize certain constituent entities within the Church as exempt from income taxation pursuant to section 501(a) of the Internal Revenue Service Code, as exclusively charitable organizations described in section 501 (c) (3) of the Code;

WHEREAS, the controversy between the parties includes litigation (hereinafter "the section 170 litigation") in which the deductibility under Code section 170 of parishioners' payments to the Church in connection with their participation in religious services of the Scientology faith is at issue;

WHEREAS, the Church signatories and individual Scientologists have initiated, supported and/or otherwise participated in litigation under the Freedom of Information Act (FOIA) to compel the Service to disclose information withheld by the Service in response to FOIA requests about its treatment of Scientologists and Churches of Scientology (hereinafter "FOIA litigation");

WHEREAS, in October of 1991, the key officials of the Church, David Miscavige and Mark Rathbun, approached the Service seeking to negotiate the resolution of the above-described matters, and met with the then Commissioner;

WHEREAS, at this meeting, the Commissioner indicated his desire to resolve all outstanding issues between the Church and the Service and appointed the Assistant Commissioner to negotiate and conclude a settlement with the Church on behalf of the Service;

WHEREAS, the Church and the Service intend this closing agreement to be final and conclusive with respect to all matters but, while also final and conclusive, that its provisions relating to the continuing duties and obligations of both parties during the transition period shall generally be effective until December 31, 1999;

NOW IT IS HEREBY DETERMINED AND AGREED, for purposes the Internal Revenue laws of the United States, and in consideration of the provisions contained herein that:

C. An entity is a "Scientology-related entity" if that entity is described in one or more of the paragraphs set forth below:
...
4. The social benefit and other public benefit entities discussed at pages 1-28 through 1-42 of the June submission along with all subsidiaries, subordinate chapters, subordinate organizations, or sublicensees thereof (e.g., organizations that are permitted to use particular names, copyrights, service marks, and/or technologies) are Scientology-related entities. Thus, for example, Citizens Commission on Human Rights, National Commission on Law Enforcement and Social Justice, Scientology Defense Fund Trust, Association for the Better Living and Education, Applied Scholastics Incorporated, Narconon International, The Way to Happiness Foundation, and the Foundation for Religious Freedom are Scientology-related entities. Pages 1-28 through 1-42 are attached as Exhibit VIII-2 to this Agreement.
 ...
    8. Any entity that owns, (including, but not limited to, those entities listed below in this subparagraph C.8.), (sub) licenses to others to use, and/or has rights to (sub) license others to use what has been described in the Qualified Written Material as the Scriptures (the written and spoken words of L. Ron Hubbard on Scientology and Dianetics) or any technology, copyright, trademark or service mark held by RTC, CSI, CST, any publications organization (described in paragraph C.3 above), the Estate of L. Ron Hubbard or Author's Family Trust B, is a Scientology-related entity.

    9. Any other entity licensed to use, or otherwise granted permission to use or employ, any copyright, service mark, or trademark that has been, is now (or shall in the future) be held or owned, directly or indirectly, by Religious Technology Center, Church of Scientology International, the Estate of L. Ron Hubbard, Author's Family Trust B or Church of Spiritual Technology, is a Scientology-related entity.

    10. Any taxable or for-profit entity of which one or more Scientology-related entities and/or any of the trustees, directors and/or officers of any entity defined as a Scientology-related entity under this section VIII. paragraph C, separately or together, owned or had a beneficial interest of more than twenty-five percent is a Scientology-related entity. In addition, any non-profit entity of which one or more Scientology-related entities and/or any of the trustees, directors and/or offices of any entity defined as a Scientology-related entity under this section VIII. paragraph C, separately or together, control the voting power of, or have a beneficial interest of, more than twenty-five percent, is a Scientology, related entity. For purposes of this definition, any Individual or At-Large member of the CTCC shall be considered an officer of a Scientology-related entity.
...
    14. The term Scientology-related entity is not limited to those entities that are in existence as of the date of this Agreement but also includes those described in paragraph C. created after this Agreement is signed.

D. "Scientology-related Individual" means an individual rendering services to or on behalf of a Scientology-related entity as a staff member, agent officer, trustee, or attorney in fact of that Scientology-related entity. The term "Scientology-related individual" includes, without limiting the generality of the foregoing, Individual CTCC members, At-Large CTCC members and individuals serving on the CTCC as representatives of Corporate CTCC members. The term "Scientology-related individual" applies only to the extent that such individual is acting in his capacity as staff member or other service-provider to or on behalf of the Scientology-related entity.
...
J. "CTCC" means the Church Tax Compliance Committee.

New York Times, 1997:
Scientology's Puzzling Journey From Tax Rebel to Tax Exempt

¹ I was invited by my now disconnected X-friend to attend the satellite presentation of the "war is over" event at the Atlanta Org, and I accepted.  I had already surmised that scientology was creepy from X-friend's behavioral and viewpoint changes when he became involved with it, but it was at this event that I became certain that scientology was something very, very evil.  It had nothing to do with the tax-exemption, but with the way it was presented - I knew then that scientologists viewed themselves as better, or more important, than anyone or anything - that they viewed themselves as gods.

[CoolHand]

Narconon was given its own group exemption 20 years before the church's settlement agreement.  I used to have to send out copies of that letter from the IRS that was from 1973 or so all the time for information packets to media, etc.  Unless I'm missing something and the 1993 settlement trumps the original exemption for Narconon - the two aren't necessarily related in the IRS system, despite the inclusion as a related entity.

[BigBeard]

Some individual narCONon's filed their own 1023's and had gained tax exempt status prior to the 1993 Closing Agreement. I believe any Group Exemption Letter prior to 1993 was squashed by the Hernandize Supreme Court rulling that (way over simplified) declared $cientology, and it's related entities, a business.

Then came all those individual lawsuits against the IRS that caused it to cave in, and ignore the Supreme Court in the process, and grant the 1993 Agreement. Which led to the current Group Exemption Letter giving NN Int Group Exemption Number (GEN) 2595, used by those NN's claiming to be part of NN Int on their Form 990's. These are the NN's that show up in IRS Select Check search as 'NN Int', with a DBA of whatever name they are using, and a "Ruling Date" of 1993.

Those NN's that went out and got tax exempt status prior to the 1993 Agreement, and never claimed to be part of NN Int, show up under their own name. And their 990's reflect a GEN of '0000', meaning they are not part of a group exemption, and have a "Ruling Date" before 1993.

[Mary_McConnell]

Yes, the original Narconon in Los Angeles was formed and granted tax exempt status in, I believe, in 1977. Many of the facilities operate under that original group exemption. Many but not all. The wonderful thing about the IRS for 1023 is that it lists all the Scientology front groups and acknowledges them as being a part of the church structure.

One can read all of them here:
http://www.xenu-directory.net/documents/corporate/irs/

List of Scientology entities for which the 990 filings were included in the analyses on this site ( Through 2008)
http://www.xenu-directory.net/documents/corporate/990s-index.html

[DeathHamster]

I've done a closing agreement page with some annotations and links to law pages.
1993 Scientology - IRS draft closing agreement