THE CHURCH OF SCIENTOLOGY

CREED

We of the Church beliere:
That all men of whatever race, colour or creed were created with equal rights.
That all men have inalienable rights to their own religious practices and their performance.
That all men have inalienable rights to their own lives.
That all men have inalienable rights to their sanity.
That all men have inalicnable rights to their own defence.
That all men have inalienable rights to conceive, choose, assist
and support their own organizations, churches and governments.
That all men have inalienable rights to think freely, to talk freely, to write freely
their own opinions and to counter or urter or write upon the opinions of others.
That all men have inalienable rights to the creation of their own kind.
That the souls of men have the rights of men.
That the study of the mind and the healing of mentally caused ills should not
be alicnated from religion or condoned in non-religious fields.
And that no agency less than God has the power to suspend or
set aside these rights, overtly or covertly.

And we of the Church beliere:
That man is basically good.
That he is seeking to survive.
That his survival depends upon himself and upon his fellow's,
and his attainment of brotherhood with the L'niverse.

And we of the Church believe that the laws of God forbid Jan:
To destroy his own kind.
To destroy the sanity of another.
To destroy or enslave another's soul.
To destroy or reduce the survival of one's companions or one's group.

And ii'e of the Church believe:
That the spirit can be saved and
That the spirit alone may save or heal the body.

ME SINANON. QORC Charles E. De derich founded Synanon in 1958 with his $33 unemployment check. Articles of Incorporation were filed with the California Secretary of State on September 18, 1958 under the name Synanon Foundation, Inc. Synanon was organized and has been operated at all times since its incorporation in 1958 exclusively for pur po ses expressly within the meaning of Internal Revenue code section 501(c)(3) and is a non-profit, religious corporation, organized and existing under the laws of the State of California. Synanon was granted tax-exempt status in 1960. From 1960 to 1982, Synanon was recognized by the Internal Revenue Service as a tax-exempt organization. Our tax exemption for years 1977 and 1978 was revoked in May, 1982.

Although Synanon's religious and charitable activities are many, the most dramatic has been the effort to rehabilitate and reeducate over 15,000 people who have come to Synanon in trouble, seeking help. When the first drug addict came to Synanon, the assumption that "once an addict always an addict" was challenged and proven wrong. Today, Synanon's methods and philosophy are widely used in state and federal correctional system 8, in our country's educational institutions, by the informal network of organizations which currently distribute sur plus food and materials to the needy, and in thousands of rehabilitation organizations which are modeled on Synanon.

Synanon is one of the few modern American charitable or ganizations which has not relied on Government funding. Rather, Synanon has a fundamental religious belief that people, individually and collectively, should strive towards self-reliance. Synanon has developed businesses that teach job skills and make the organization largely self-supporting.

The Synanon Church al so teaches that we must act as our brother's keeper. Therefore, our religious community has kept its doors open and food supplies flowing to those in need, even without recognition from the I.R. s. of our tax-exempt status and while this matter is still pending in the courts. Although Synanon is best known for its work with addicts, other charitable and religious works include operation of schools, a vocational college, research into and dissemination of information about alienation, chemical dependence, delinquency, criminality and the care of senior citizens. In addition, Synanon has spawned a network of organizations that distribute food and other necessities of life to the needy.

Synanon, like many other new religions in America, faces tremendous per se cution from the U.S. Government, specifically the Internal Revenue Service and the Department of Justice. The facts are presented below. "The power to tax is the power to destroy Chief Justice Marshall 1819)

Over the past 25 years, the Internal Revenue Service has conducted four audits of Synanon's charitable and religious works. At the end of each of the first three audits, the auditing agent recommended "no change" in Synanon's tax-exempt status.

The fourth audit which began in March, 1979, clearly. demonstrates the intent of the Internal Revenue Service to use its power to tax as power to destroy. The following facts were

all admitted by Les Brandin, the agent assigned to the audit of Synanon, during deposition under oath on May 5, 1983:

(1) In November, 1979, Agent Brandin submitted
a Request for Technical Advice to the National
Office of the I.R.S. His conclusions were based
on an 8-month audit of Synanon. He concluded
that none of the net earnings of Syna non were
inur ed to the benefit of any private individual
and that Synanon was organized for exempt
purposes.

(2) In January, 1980, the Request for Technical
Advice was withdrawn by Agent Brandin's District
Office, Brandin was told by Mr. Beck, Chief of
Technical Review of the San Francisco District
Office of the I.R.S., that the reason for
withdrawal was that people in the National
Office would have to rule in favor of Synanon.
(3) On January 10, 1980, the I.R.S. District
Office issued a memorandum requesting further
examination of eight issues concerning Synanon.
Agent Brandin had already examined seven of the
eight issues and had sufficient information
regarding these issues. The remaining eighth
issue was irrelevant to the audit since it
concerned events outside the time period of his
examination.

(4) Agent Brandin and his Group Manager, Les
Stepner, met with Synanon representatives and
obtained additional information concerning all
of the items and issues in the January 10,
1980 memorandum. As always, Synanon provided
all information and documents requested by the
I.R. S. agents.
(5) Both Agents Brandin and Stepner determined
that the issues in the January 10, 1980
memorandum had no adverse impact on Synanon's
tax-exempt status.

(6) At the end of his audit in March, 1980,
after many, many trips to Synanon's facilities
and a review of Synanon's records, Agent
Brandin prepared his Revenue Agent Report. His
report stated his conclusion that Synanon was
tax-exempt under 1.R. C. section 501(c)(3) and
that Synanon should retain its tax-exempt
status.

(7) Brandin's Revenue Agent Report stated that
there was no private inur era ent in Synanon, that
Synanon's research, scientific and literary
activities were within the scope of LRefe
section 501(c)(3), that Synanon did not
participate in legislative activities or
political campaign activities, and that the
presence of a community of diverse people
contributed to the charitable purposes of
Synanon, Agent Brandin submitted _*ng_change"
recommendation in Synanon's tax-exempt status.
(8) Agent Brandin was immediately replaced as
the I. R. S. agent for Synanon's audit because he
had reached a result favorable to Synanon in
his Revenue Agent Report.

On June 25, 1980, Bob Chui replaced Les Brandin as the
agent in charge of Synanon's audit. Representatives of
Synanon were informed that Agent Chui would be redeveloping
Synanon's case, and that Mr. Brandin had been reassigned due
to other priorities. Agent Chui visited Synanon's religious
communities only a few times between July 22 and November 10,
1980.

On November 7, 1980, the Internal Revenue Service made a
second request for Technical Advice to the National Office.
In June. 1981, Synanon's representatives went to the National
Office in Washington, D.c. to clarify our position with
respect to the second Technical Advice memor andum. In full
cooperation with the Internal Revenue Service, Synanon
provided more information in August and September of 1981.

On May 19, 1982, over three years after the fourth audit
of Synanon had begun, the Internal Revenue Service mailed its
final adver se ruling letter and revoked Synanon's
tax-exemption.

SynAnon. Pursues.Its Legal Remedies

Synanon filed a lawsuit for declaratory action, pursuant to section 7428 of federal Rules of civil Procedure, against the Internal Revenue Service on August 16, 1982 to preserve our constitutional rights of freedom of religion.

This lawsuit was filed because the Internal Revenue Service refused to treat Synanon as a religion and a church, and be cause of our belief that the Internal Revenue Service has selectively enforced the law to discriminate against Synanon and thus has endangered the continuation of Synanon's important religious and charitable works.

Syna non has been denied the opportunity to fairly litigate this lawsuit on its merits. From the date of filing our complaint to the present, Synanon has been denied discovery of facts essential to meet the burden of proving these charges against the Internal Revenue Service. For example, Synanon has not been permitted to take the depositions of any employees of the Internal Revenue Service, with the exception of one day's de position of Agent Brandin. Furthermore, the Department of Justice has subpoenaed and secreted away documents which Synanon has not been permitted to review. The Department of Justice has commingled civil and criminal investigations of Synanon -- an impermissible tactic -- in order to gain an unfair advantage over Synanon and to prevent Synanon from litigating its action against the I.R.S.

In March, 1983, the Government filed its first Motion to
Di sm 188 the action and a Motion for Summary Judgment. Synanon
responded with its own Cro88-Motion for Summary Judgment,
requesting that the issues be decided in Synanon's favor.
Included in Synanon's papers were over 350 affidavits from
current and former residents of Synanon, experts on religion
and others acquainted with Synanon's charitable and religious
works. These affidavits answered each of the allegations
made by the Government against Synanon. The Court never ruled
on the Government's motions or Synanon's Cross-Motion for
Summary Judgment.

At the end of 1983, the Government filed its second Motion for Summary Judgment and Motion to Di sm 188 the action. The Government alleged that Synanon had engaged in a corporate policy of violence seven years ago and had systematically destroyed documents. Synanon denied the truth of these allegations and has never had the opportunity to litigate

fully these issues before the federal court. On February 9, 1984, Judge Richey granted the Government's Motion to Di em 1889 thus, Synanon's complaint against the Internal Revenue Service was di smissed. Synanon has appealed this decision.

The $55 Million Tax_Bill The legislative intent of section 7428 of the Federal Rules of Civil Procedure was to enable a charitable and/or religious organization to bring a denial or revocation of I.R. S. recognition of tax-exempt status to the courts prior to · being forced to pay its taxes. Synanon's action for declaratory relief against the I.R.S. has not been decided on the merits. Therefore, all appeals should be exhausted before the injunctive-like authority of section 7428 is dissolved.

On Monday, February 13, 1984, four days after Judge Richey's decision and even before Synanon had an opportunity to prepare and file the Notice of Appeal, the Internal Revenue Service delivered to The Synanon Church a series of tax bills totalling $55 million for years 1977-1983. In March, 1983 Judge Richey had issued an opinion that his court lacked jurisdiction to grant declaratory relief under 26 USC section 7428 for years after fiscal 1978 because there was no final adver se determination for those years. The I.R.S. had revoked Synanon's exemption for years 1977 and 1978 only. There was no determination for years 1979-1983. Despite this, the $55 million tax bill was for years 1979-1983.

To meet this demand, The Synanon Church would have had to turn over its entire gross revenues for the next twelve years without incurring a single expense. Synanon's revenues in the year ending August 31, 1981 were approximately $4.9 million. For the year 1982, the total was $4.6 million, and, in 1983, it was $4 million. These figures total $13.5 million for the past three years and are the gross revenues of Synanon. They do not include any expenses of any kind or payments for any obligations. The haste with which the Internal Revenue Service prepared these tax bills became immediately evident when accountants reviewed the bills and found a $10 million computational error in the assessment of interest. Ten million dollars may not be much to the Internal Revenue Service, but it is a tremendous amount to the people of Synanon!

In June, 1984, the 1.R.S. presented Synanon with a revised tax bill totalling $3.9 million. This bill is $51.1 million less than the original bill! "Computational errors" of such overwhelming magnitude demonstrate the malice of the I.R.S. toward Synanon.

On February 13, 1984, upon serving the tax bill, the I.R.S. impounded Synanon's bank accounts, seizing Synanon's available cash. In addition, the I. R. S. placed liens on Syna non's properties in California. These actions were widely publicized, had a negative effect on Synanon's ability to do business and created tremendous fear and insecurity among Synanon's residents.

within one week, representatives of Synanon met with I. R. S. agents at Synanon's community in Badger, California to discuss the effects of the seizure of Synanon's funds, the liens on our property and the $55 million tax bill. The I.R.S. agents subsequently agreed to return the cash to Synanon and to not collect taxes until Synanon's appeals had been exhausted.

Two weeks later, the I.R.S. presented Synanon with a bill for