Britannica Sources used in this answer

Why did the Internal Revenue Service challenge the tax-exempt status of Scientology churches?

Created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.

Father of Scientology — Scientology L. Ron Hubbard's seminal – and controversial – work was *Dianetics: The Modern Science of Mental Health*, written in 1950.

The Internal Revenue Service (IRS) challenged the tax-exempt status of Church of Scientology organizations primarily because it viewed the group as a commercial enterprise rather than a religious institution.1

Starting in 1958, the IRS began revoking the tax-exempt status of individual Scientology churches for several reasons, most notably their practice of selling counseling courses. The IRS formally withdrew the organization's tax-exempt status in 1967, a decision that was subsequently upheld by numerous courts.21

This dispute lasted for 25 years, during which the church engaged in extensive legal battles and intelligence operations against the IRS. The conflict concluded in 1993, when the church reached a settlement with the IRS, agreeing to pay $12.5 million and accepting significant federal oversight in exchange for regaining its tax-exempt status.12