Negotiations With IRS
In 1991 Miscavige, together with Marty Rathbun, visited IRS headquarters to arrange a meeting with Commissioner Fred T. Goldberg, Jr.. For more than two decades, the IRS had refused to recognize Scientology as a nonprofit charitable organization, a status granted to most established religious organizations. Prior to this meeting, Scientology had filed more than fifty lawsuits against the IRS and, according to the New York Times, "Scientology's lawyers hired private investigators to dig into the private lives of I.R.S. officials and to conduct surveillance operations to uncover potential vulnerabilities... taken documents from an I.R.S. conference and sent them to church officials and created a phony news bureau in Washington to gather information on church critics. The church also financed an organization of I.R.S. whistle-blowers that attacked the agency publicly." At the meeting with Commissioner Goldberg, Miscavige offered to cease Scientology's suits against the I.R.S. in exchange for tax exemptions. This led to a two-year negotiating process, in which IRS tax analysts were ordered to ignore the substantive issues because the issues had been resolved prior to review. Ultimately, the church was granted recognition as a nonprofit religious or charitable organization in the U.S., which creates a tax exemption for the Church of Scientology International and its organizations, and tax deductions for those who contribute to their programs. Senior Scientology officials and the I.R.S later issued a statement that the ruling was based on a two-year inquiry and voluminous documents that showed the church was qualified for the exemptions.
To announce the settlement with the IRS, Miscavige gathered a reported 10,000 members of Scientology in the Los Angeles Sports Arena, where he delivered a two-and-a-half-hour address and proclaimed, "The war is over!". The crowd gave Miscavige an ovation that lasted more than ten minutes.
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