Scientology Agreement With IRS Comes to Light

Newly disclosed details of a 1993 settlement in which the Internal Revenue Service granted tax-exempt status to the Church of Scientology show that the church paid the federal government $12.5-million.

The payment extinguished all liability for estate, income, and payroll taxes that the church may have incurred during decades of contentious battles with the service before 1993. The church agreed to drop thousands of lawsuits it had filed against the I.R.S. and its officials. It also agreed to set up a committee of church officials to monitor compliance with tax laws and with the agreement itself, details of which leaked out last month despite a strict confidentiality clause. The agency has said it condemns any unauthorized disclosure of taxpayer information.

The service, which for years had contended that the Church of Scientology operated as a for-profit business to enrich its principal officials, granted tax-exempt status to 114 Scientology-related entities, including the mother church, the Church of Scientology International. It also agreed to stop auditing a dozen major church organizations and to drop its attempts to obtain certain church records.

The agreement permits the I.R.S. to impose penalties of up to $50-million if church funds are spent repeatedly for non-charitable purposes.