N A T I O N A L

(ALSO LOCAL FOR: D.C., LOS ANGELES, SEATTLE)

ATTN: ASSIGNMENT DESK

Public Research Foundation (PRF) has recently disclosed that
Scientology organizations are being governed in accordance with a
closely-guarded "Tax Compliance Manual" (PRF PRESS RELEASE, "THE 'TAX
COMPLIANCE MANUAL'--FIRST IN A SERIES").

     The manual was created in 1993, the same year that the Closing
Agreement was secretly signed by IRS and church officials. The Tax
Compliance Manual is published by sanction of the Church of Spiritual
Technology (CST)--the senior corporation which owns all the copyrights.

     The manual reveals that IRS has been a knowing party to the
establishment of "Tax Compliance Sections" to govern every Scientology
church and mission, bringing about an unprecedented closure between
church and state.

     The Tax Compliance Manual says:

"FORMATION OF THE TAX COMPLIANCE SECTION

"The Tax Compliance Section has been formed in the
Corporate and Legal Rudiments Branch of Office of Special
Affairs International. It is staffed with veteran OSA INT
crew who are extremely knowledgeable and experienced in tax
and finance matters. There will also be a Tax Compliance
Officer in each Continental OSA Office. A primary function
of the Tax Compliance Section is to ensure that all churches
and missions comply with all requirements of tax exemption."

      Office of Special Affairs International (OSA Int) is merely
a part of Church of Scientology International (CSI). And CSI (as
represented by its President, Heber Jentzsch) is a signatory to
the Closing Agreement, subject to the mandates of that agreement.

     The Closing Agreement verifies that IRS is a party in
informed consent to the creation and operation of these "Tax
Compliance Sections" inside the church. The Closing Agreement
requires annual reports be submitted to IRS, and part of the
requirements include:

"6. Reporting of any ecclesiastical modification or the
restructuring of any entity. The Annual Report shall
include any changes...to the ecclesiastical management
structure of the Church..."

and

"9. Reporting of any amendment of any directive concerning
the treatment of funds. The Annual Report shall disclose
the issuance, modification, amendment, or rescission of any
written material relating to or involving the handling of
funds by Church personnel."

     The "Tax Compliance Manual" treats extensively of the
handling of funds by Church personnel, and constitutes a
definitive modification and restructuring of CSI to include the
organizational "Tax Compliance Sections" within OSA
International.

     If IRS had not been informed of the Tax Compliance Manual
and of the addition of the Tax Compliance Sections inside
churches of Scientology, then the Church Tax Compliance Committee
signatories would have been in violation of terms of the Closing
Agreement, and therefore liable to extreme penalties outlined in
the agreement.

     But the Tax Compliance Manual also says:

"The Tax Compliance Section is concerned with the
activities of church organizations throughout the world--
not just those located in the United States. Recognition of
tax exemption by the IRS opens the door for similar
recognition of local orgs and missions by tax authorities in
many other countries."

     Having already established that "There will also be a Tax
Compliance Officer in each Continental OSA Office," this means
that these extensions of IRS, there specifically and only to
enforce compliance to IRS codes, are now situated on foreign
soil, but camouflaged by their existence inside the churches.

     The IRS's new power over the church's activities is perhaps
best summed up in one chilling sentence from the Tax Compliance
Manual:

"Any question as to whether a post qualifies as a
ministerial capacity should be referred to the Tax
Compliance Officer, Office of Special Affairs
International."

     In the next part of our series, PRF will explore the
relationships and power of the church's corporate officials.