1992: In its third series of responses to the IRS in support of its 1023 application for 501 (c)3 tax exemption, the Church of Scientology complained to the IRS that is was misunderstood, vilified, and not being treated fairly. In the paragraph below, the Church complains to the IRS that refund requests from its members are actually a spiritual cross-check that Dianetics and Scientology have not been properly applied:
Here we see Hubbardian logic at work: Scientology can do no wrong; only a misapplication of Dianetics and Scientology would cause a person to ask for a refund. This mindset is crucial in understanding the Church of Scientology and money.
By Scientology logic, then, a Scientologist asking for a refund or repayment indicates an “Out Tech” or “Out Ethics” situation.
In other words, the Church of Scientology believes that some terrible mistake has occurred, perhaps an auditor made a mistake, or something else caused a Scientologist to ask for a refund. Alternately, after talking to a person requesting a refund, the Church may elect to take the view that the person has overts or withholds or some hidden crime against the Church. From Scientology’s perspective, a refund or repayment request is a deadly serious matter. And to be blunt, the Church simply does not want to give refunds.
Given the Church of Scientology’s prejudicial view of people who ask for their money back, here is exactly what the Church of Scientology told the IRS in 1992 about its refund policy:
The Church made it sound so simple: The “unhappy few” would be given refunds or repayments and permanently expelled from the Church so that the “very happy” could continue on in Scientology without being enturbulated by the unhappy few.
In this essay we are concerned with repayments, i.e. the return of monies on account that have not been used. One would think these unused monies should be given back to the person who paid them; nevertheless the Church of Scientology makes every effort possible to keep these unused monies.
The Church has always solicited and encouraged its members to make advanced payments for future services. The Church pitches this as a way for its members to “open a flow” and make payments for its super-expensive services. These advanced payments are called “money on account.” However, the term “money on account” is so extraordinarily misleading as to be essentially meaningless. The moment any Scientologist puts “money on account” that money is treated as a donation and becomes Church property.
Let us create a hypothetical Scientologist named Linda who wants to do the L’s. The three L’s cost about $100,000. Linda, who is a chiropractor, works with her FSM and decides to “put $5000 on account” at Flag each month towards her L’s. After one year and eight months, Linda has $100,000 on account. She can now go to Flag and get her L’s.
But let us suppose that Linda has become disaffected during that one year and eight months. She no longer wants to be a Scientologist. She has read the internet; been ordered to disconnect from a few family members and friends who were declared SP’s; has lost income because she was ordered to not have SP’s as patients; and has been treated harshly in an Ethics cycle. Linda decides she no longer wants to be in the Church and asks for a repayment of her $100,000 money on account.
What happens next with Linda?
What the Church told the IRS: The Church told the IRS that it has an internal refund process in place. Among other things, the Church told the IRS about its CVB (Claims Verification Board) account:
The Church told the IRS that it handles refunds on an “abandoned or met” basis. The goal of the Church, therefore, is to get Scientologist to legally abandon, in writing, their repayment claim.
I can make this statement based upon the Church’s consistent track record of refusing to make repayments. This has been discussed and documented online for years by countless Scientologists. Some repayments do get made, but these often happen only after the person seeking a refund hires a lawyer.
Moreover, for the Church to say that the CVB must pass on the “validity” of a claim for a repayment is disturbing. What Sea Org members on the Claims Verification Board are going to breezily approve any repayment? Compounding this matter is Scientology’s byzantine finance policy in which the lion’s share of the money collected by the Orgs each week “moves uplines” immediately. This leaves the Orgs with very little money. According to the former Sea Org members I have interviewed, most Orgs simply do not have the cash reserves to make a big repayment — and in bad weeks some Orgs don’t even have enough money to pay Sea Org.
In order to get a repayment, then, Linda must complete the Claims Verification Board (CVB) routing form. This unnecessarily complicated form requires Linda to have personal meetings with various Church functionaries in order to get them to sign off on the routing form. The job of these Church functionaries is to get Linda to abandon, in writing, her request for a repayment.
One strategy the Church uses is to convince Linda, and others asking for repayments, to donate for expensive sec checking or other auditing procedures to “handle” their upsets with the Church. These cycles can easily eat up $25,000 – $50,000 or more of “money on account.”
Scientology is quick and eager to grab money from people. However,when it comes to refunds the Church becomes an obnoxious, bureaucratic, sandbagging, fine print deadbeat. Some people who want refunds have to get an attorney after the Church denies their refund request. The Church of Scientology was simply not designed to give refunds with any shred of dignity or grace.
What happens if Linda, our Scientologist seeking a repayment, gets declared a Suppressive Person?
What happens is that it gets much worse for her.
Once a Scientologist has been declared an SP, they are not allowed to step foot onto Church premises to complete the CVB routing form. Hence, the ultimate Catch-22: You must physically go into a Scientology Org to complete your CVB form as a condition of the Church even considering your request to get your “money on account” repaid to you.
However, if you are an SP then you are not allowed to physically step foot onto Church property to complete your CVB routing form.
The Church has been making this dishonest Catch-22 quite clear in written responses to Scientologists asking for repayments; this as we saw in a recent letter from HCO Flag that was posted online:
This Catch-22 that a declared SP cannot take the required steps to get their money back is, according to L. Ron Hubbard’s own words, “out exchange” and “ripoff.” Mr. Hubbard himself defined a criminal as a person who wants something for nothing:
“First consider a group which takes in money but does not deliver anything in exchange. This is called rip-off. It is the ‘exchange’ condition of robbers, tax men, governments and other criminal elements.” – L. Ron Hubbard, HCO PL 10 Sep 82 – Exchange, Org Income and Staff Pay.
Hence, in refusing to make repayments of unused monies to declared SP’s, the Church of Scientology is in the “’exchange’ condition of robbers, tax men, governments and other criminal elements.”
The Church itself has become a suppressive group whose purpose is to ripoff, or steal, monies it has not earned. The Church of Scientology has displayed its hostility, contempt, and naked greed in the boilerplate language it routinely uses in letters it sends to parishioners denying repayment requests:
This is what the Church is saying in 2015: We don’t have a duty or obligation to return any contribution. There is no law in America requiring us to do so.
This is what the Church told the IRS in 1992:
In addition to violating its own doctrine of exchange, the Church of Scientology is lying; it told the IRS about that its refund policy was “exceedingly fair” when it is quite clear to see that the Church’s refund policy is dishonest, misleading, cumbersome, and perhaps even illegal.
In the leaked Final Draft Closing Agreement between the IRS and the Church of Scientology, the IRS stated that the Church’s tax exemption could be reopened in the event of fraud, malfeasance, or misrepresentation of material fact:
Certainly this is one area where former Scientologists and critics can address with the IRS and members of the US Congress. If you are seeking a repayment from the Church for “monies on account” and are being ignored or denied – and it seems to be standard Church practice to impede, refuse, and generally delay in hopes people will abandon their repayment requests – then complain to the IRS in writing. The complaint process was covered here at the Scientology Money Project. The IRS wants to hear it:
Finally, one important fact to know: David Miscavige’s attorney Monique Yingling is a Church of Spiritual Technology (CST) Special Director. As a CST Special Director, Yingling’s “prime directive” as a tax attorney is to ensure that the Church of Scientology International (CSI) does not act in any way whatsoever to risk its tax exemption.
Arguably the chief architect of Scientology’s tax exemption, Yingling wrote, or caused to be written, most of the 1023 application to the IRS in support of the Church’s bid for tax exemption. Yingling knows there is a contradiction between what the Church represented to the IRS in 1992 and what it is now practicing.
Therefore, Scientologists seeking repayments would do well to write to Monique Yingling in her capacity as a CST Special Director to express your concerns that CSI is risking its tax exemption by refusing repayments. David Miscavige should be copied as well as he licenses Scientology’s technology to CSI. The addresses:
Church of Spiritual Technology
Attn: Special Director Monique Yingling
419 Larchmont, No. 162
Los Angeles, CA 90004
Religious Technology Center International
Attn: COB RTC David Miscavige
1710 Ivar Avenue Suite 1100
Los Angeles, CA 90028