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The Church of Scientology is exempt from Federal Income Tax as are all churches under IRS Code Section 501(c)(3). After extensive audits, the IRS acknowledged in 1993 that Scientology qualified for this status.
Qualification of a Section 501(c)(3) Organization
There are two key requirements for an organization to be exempt from federal income tax under section 501(c)(3). A 501(c)(3) organization must be organized and operated exclusively for one or more exempt purposes.
Organized. An organization must be organized as a corporation (including a limited liability company), trust, or unincorporated association. The organizing document (articles of incorporation if you are a corporation, articles of organization if you are a limited liability company, articles of association or constitution if you are an association, or trust agreement or declaration of trust if you are a trust) must limit the organization's purpose(s) and permanently dedicate its assets to exempt purposes.
Operated. An organization must be operated to further one or more of the exempt purposes stated in its organizing document. Certain other activities are prohibited or restricted, including, but not limited to, the following activities. A 501(c)(3) organization must:
a. Absolutely refrain from participating in the political campaigns of candidates for local, state, or federal office.
b. Absolutely ensure that its assets and earnings do not unjustly enrich board members, officers, key management employees, or other insiders.
c. Not further non-exempt purposes (such as purposes that benefit private interests) more than insubstantially.
d. Not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose(s).
e. Not engage in activities that are illegal or violate fundamental public policy.
f. Restrict its legislative activities.
On the other hand, Scientologists pay taxes just like everyone else. Just like everyone else donations to a charitable organization qualifies as tax deductible up to a certain amount.
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