Auditing Scientology: Reexamining the Church's 501(c)(3) Tax Exemption Eligibility

54 Tex. Tech L. Rev. 345 (2022).

35 Pages Posted: 17 Feb 2021 Last revised: 28 Aug 2022

Date Written: February 1, 2021


The Church of Scientology is one of the most discussed religions of the modern era, and its beliefs and practices have been shrouded in controversy since its emergence in the 1950’s. Shortly thereafter, the Internal Revenue Service recognized Scientology as a valid religious organization, thus granting certain governmental protections and benefits afforded to religious organizations in this country, including tax exemption. After a decades-long battle between the Church and the IRS, the IRS eventually granted a blanket tax exemption to all Scientology organizations under Section 501(c)(3) of the Internal Revenue Code.

However, the Church’s current practices and activities raise significant concerns that warrant a reexamination of its tax exemption eligibility. The Church engages in activities that are substantially commercial by requiring payment from Scientologists to practice the religion and improve their spiritual standing. Additionally, the Church violates the fundamental national public policy that freedom of speech should not be suppressed simply because two parties disagree, a foundation of our nation that is trounced by Scientology’s Fair Game policy. Further, the Church facilitates private inurement of top executives and influential celebrity members by expending excessive funds for their personal benefit.

For these reasons, the IRS should reevaluate the tax exemption status of each individual Scientology organization, or risk undermining judicial decisions and creating the dangerous precedent that persistent attacks on governmental agencies will in turn lead to leniency and submission. Should the IRS investigate and determine that all Scientology organizations comply with the requirements of Section 501(c)(3), then retention of their tax exemption status would be completely warranted; however, to permit such activities to continue without question would undoubtedly defeat the principles behind tax exemption and raise legitimate concerns regarding the fairness of IRS decisions.

Keywords: tax, nonprofit, religion, Scientology

Suggested Citation

Holley, Taylor, Auditing Scientology: Reexamining the Church's 501(c)(3) Tax Exemption Eligibility (February 1, 2021). 54 Tex. Tech L. Rev. 345 (2022)., Available at SSRN: or

Taylor Holley (Contact Author)

Underwood Law Firm, P.C.

United States

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