Originally published on Forbes.com Aug 2nd, 2013
The IRS has refused to grant church status to an unnamed organization that focuses on “open source spirituality. My request for confirmation has gone unanswered, but the evidence is fairly strong that the organization was founded by Scientology critic, Lawrence Wollersheim
Who Is Lawrence Wollersheim ?
Lawrence Wollersheim won a large damage claim against Scientology. The original suit was decided in 1986, but Scientology resisted. “Not one thin dime for Wollersheim” became a rallying cry for Scientologists. According to this Washington Post story by Richard Leiby, the judgment, which grew to over $8,000,000 was finally paid by Scientology in 2002:
Wollersheim, who ran a small photo business, joined Scientology in 1969 and later became a recruiter. He signed a “billion-year” contract to serve the church but says that he ended up being punished in a “thought reform gulag,” consigned to the hold of a ship docked off California for 18 hours a day. The ship was part of a mini-navy assembled by L. Ron Hubbard, the science fiction writer who created the church in the early 1950s.
Because of Scientology practices, “Wollersheim’s mental condition worsened to the point he actively contemplated suicide,” a California appeals court said in 1989. “The church’s conduct was manifestly outrageous.”
Wollersheim,who suffered from a bipolar disorder, was forbidden to seek medical help under Scientology policies, he says. He quit the church after spending $150,000 on Hubbard’s “mental health” regimes, and by 1980 had filed suit. In 1986, a jury awarded him $5 million in compensatory damages and $25 million to punish the church for what jurors called intentional and negligent “infliction of emotional distress.”
Despite having written a bit about Scientology’s tax issues, I don’t recall getting familiar with Wollersheim’s long struggle against Scientology, which includes a not for profit called FACT Net (Fight Against Coercive Tactics Network)
FACT Net educates the public about the negative & positive aspects of cults of all kinds and also educates about coercive psychological persuasion. It particularly focuses its education in the areas of religious cults and groups and negative & positive aspects of those groups.
FACTNet and Mr. Wollersheim have not been in the news much of late. My interest in them was piqued by PLR 201327018.
The Ruling
PLR 201327018 is a denial of 501(c)(3) status. The organization is not named. Since it is among other things dedicated to “open source spirituality”, I’m going to call it First Church Of The Open Source (FCOS). 501(c)(3) status is the gold standard of the possible 29 ways you can qualify for exempt status under 501(c), in part because it is one of the few that allow for tax deductible donations. Within 501(c)(3) there are several types, but the best, if you can qualify, is a church. Churches are exempt from filing Form 990 and the IRS is required to go through extra process to initiate a church audit. Although ministers are taxed on the compensation that churches pay them, amounts paid as housing allowances are excludible – the Code Section 107 parsonage exclusion. There is no dollar limit on parsonage exclusions.
As former pulp writer L. Ron Hubbard is reported to have said:
Writing for a penny a word is ridiculous. If a man really wants to make a million dollars, the best way would be to start his own religion.
FCOS did not call itself a church to the public, but there was a reason for that:
You do not refer to yourself as a “church,” which you state is primarily due to the negative connotations of the word “church” to those who are disillusioned with their traditional church experience and seek a new form of spirituality. Instead, you refer to yourself as a “spiritual community.”
It did look like the FCOS founder was setting up to take advantage of the parsonage exclusion:
On the same date, ***** voted as sole director to adopt a “Parsonage Resolution” that dedicated a portion of your ***** (explained below) to ***** as ***** residence. Although ***** does not remit any payment to you for this benefit, the value of the “parsonage,” $***** per month, is considered additional compensation to *****. You stated in the resolution that ***** needs to be physically present on the ***** to oversee ongoing ***** maintenance and upgrades.
Why IRS Ruled Against FCOS
The ruling went against FCOS in part because it was lacking several of the attributes of a church. There are 14 factors considered, although not all are required.
1) A distinct legal existence;
2) A recognized creed and form of worship;
3) A definite and distinct ecclesiastical government;
4) A formal code of doctrine and discipline;
5) A distinct religious history;
6) A membership not associated with any other church or denomination;
7) An organization of ordained ministers;
8) Ordained ministers selected after completing prescribed studies;
9) A literature of its own;
10) Established places of worship;
11) Regular congregations;
12) Regular religious services;
13) Sunday schools for religious instruction of the young;
14) Schools for the preparation of its ministers.
The IRS thinks that FCOS comes up short:
….although you meet several of the foregoing criteria, you fail to meet most of them, including the three most significant: a regular congregation, regular worship services, and a membership not associated with any other church or denomination.
The most interesting defense that FCOS put up was this:
Because we were born as a global spiritual movement of the post-postmodern era, we are one of the first spiritual organizations to be delivering almost all of our services primarily on and from the Internet. Our physical spiritual centers and locations play a significantly lesser role.
I think they have a point there. The IRS definition of church reminds me a lot of the thing my father used to do with his fingers illustrating the church, the steeple and looking inside and seeing all the people.
I think we should be open to the idea of virtual churches. Perhaps even better would be getting the IRS out of the church defining business, but that would take major tax reform.
There were also concerns about inurement to the founder.
What Is The Wollersheim Connection ?
Dammit Jim, I’m a tax blogger, not an investigative reporter. Nonetheless, I think the connection looks pretty solid. If you google “open source spirituality: or “we are one of the first spiritual organizations to be delivering almost all of our services primarily on and from the Internet” you end up at the Universe Spirit website.
Poking around the site a bit will bring you to Lawrence’s Blog.
The donation section of the website tells you that:
(Integrative Spirituality is legal name of the organization that birthed Universe Spirit and Evolution Spirituality. (Integrative Spirituality and Universe Spirit are DBAs (doing business as names,) and Part of Factnet, a 501c3 IRS recognized non-profit organization.)
Factnet, you will recall is Mr. Wollersheim’s organization.
Also from the ruling we have:
You were established by ***** with the damages ***** won from ***** lawsuit against *****. ***** donated substantially all of your assets, $*****, through a limited liability company of which ***** was a minority owner and of which *****, a corporation of which ***** was the sole shareholder, was the majority owner.
My inquiry to Universe Spirit has gone unanswered and the rest of my meager investigative skills have been exhausted looking for further confirmation. If FCOS, as I have dubbed it, is not one of the Factnet/Wollersheim brood, I’m hoping that the real post-postmodern open source spirituality organization that got turned down by the IRS will stand up and be counted.
Another Scientology Critic Heard From
Scott Pilutik is an attorney who has written on Scientology for The Village Voice. He agrees that the ruling very likely relates to Mr. Wollersheim and bases his comment to me on that assumption:
Wollersheim’s contentious and litigious history with Scientology would seem to call out for a comparison between his rejected 501(c)(3) and Scientology, since he has evidently failed where Scientology succeeded.Looking at the language the IRS singled out, there is something vaguely reminiscent of Scientology–“developing a spiritual path” to “assist individuals” by “collecting and systemizing the best of what mankind already knows” reminds me of how Hubbard touted Scientology as the sum total of all mankind’s knowledge, conveniently amassed by mankind’s faithful servant, Hubbard himself. Etymologically speaking, Scientology is knowledge about knowledge.That said, Wollersheim’s website seems more focused on ecological issues, and is somewhat vague about the tools (his term, but a metaphor which Scientology also frequently employs) by which adherents can achieve spiritual goals.The IRS appears to have based its denial on Wollersheim by contending that his church is basically not much more than a website. They were thorough enough to also deny him based on the religion’s content, which, as I pointed out, seems more socially oriented than per se religious. Wollersheim should take a few more cues from Scientology and add some aliens and spaceships if he wants to ever become a bona fide religion. Charging members tens of thousands of dollars to advance through a byzantine maze of spiritual advancement wouldn’t hurt either.
On Open Source Spirituality
If you would like to get a taste of something that seems a lot like open source spirituality, but has regular buildings where you can go for services every Sunday (except maybe in the summer), you might want to check out Unitarian Universalism.
Unitarian Universalism (UU) draws from many sources:
- Direct experience of that transcending mystery and wonder, affirmed in all cultures, which moves us to a renewal of the spirit and an openness to the forces which create and uphold life;
- Words and deeds of prophetic women and men which challenge us to confront powers and structures of evil with justice, compassion, and the transforming power of love;
- Wisdom from the world’s religions which inspires us in our ethical and spiritual life;
- Jewish and Christian teachings which call us to respond to God’s love by loving our neighbors as ourselves;
- Humanist teachings which counsel us to heed the guidance of reason and the results of science, and warn us against idolatries of the mind and spirit;
- Spiritual teachings of earth-centered traditions which celebrate the sacred circle of life and instruct us to live in harmony with the rhythms of nature.
At least in New England, most of the churches seem to have steeples. They are thin on the ground in some parts of the country and accordingly offer an online spiritual community called Church of the Larger Fellowship.
You can follow me on twitter @peterreillycpa.