Les Etats-Unis et la scientologie - IRS - Department of the Treasury - VII. TREATMENT OF PARISHIONERS' CONTRIBUTIONS

Department of the Treasury - Internal Revenue Service
Closing Agreement On Final Determination Covering Specific Matters

VII. TREATMENT OF PARISHIONERS' CONTRIBUTIONS

A. The Service acknowledges its obligation to interpret and apply the "gift or contribution" requirement of Code section 170(c) equally and consistently to the fundraising practices of all religious organizations that receive fixed donations from parishioners in connection with participation in worship and similar religious rituals or services.

B. Until the earlier of (i) December 31, 1999, (ii) the issuance or adoption by the Service of audit policies or practices in theexamination of tax returns utilizing uniform and consistent principles for determining the deductibility of fixed donations to all churches, or (iii) until legislation is enacted which affects the deductibility of such fixed donations, the Service agrees not to contest the deductibility of Church of Scientology fixed donations in connection with qualified religious services. The phrase "qualified religious services" means those appearing on the "Scientology Classification, Gradation and Awareness Chart." If the taxpayer produces an accurate receipt or other documentation from the donee Church of Scientology substantiating (1) the amount of the taxpayer's fixed donation and (2) the qualified religious services with respect to which the donation was made, then, for as long as this paragraph B. of this section VII. applies, as set forth in paragraph F., the full amount of the fixed donation for these services shall be treated as a charitable contribution under Code section 170 and shall not be challenged on that basis. Nothing in the preceding sentence affects other requirements, including substantiation, as provided by law. In the absence of such documentation, the Service also may independently determine the amount of and the extent to which the taxpayer's fixed donations were made in connection with qualified religious services. Individual taxpayers' contributions to churches of Scientology not in connection with religious services or any substantial return benefit remain fully deductible if other requirements under the law are met. Payments to churches of Scientology for books or other religious articles are not deductible except to the extend that a dual payment exists.

C. To apply paragraph B. for taxable years before 1993, and in consideration of the other provisions of this agreement, the Service will settle all outstanding controversies with individual Church of Scientology parishioners involving the deductibility of their fixed donations under Code section 170 on a no-change basis (subject to substantiation of payment for qualified religious services and compliance with other requirements of the Code). Any future deficiency controversies with individual taxpayers involving the deductibility of Church of Scientology fixed donations for taxable years beginning before 1993 also will be resolved on a no-change basis on the section 170 issue subject to substantiation of payment for qualified religious services and compliance with other requirements of the Code. This process will be implemented as follows :
1. The Office of Chief Counsel, Internal Revenue Service will enter into stipulated decision documents with the taxpayers listed on Exhibit VII-I (or authorized representatives) to carry out this paragraph in the cases pending before the United States Tax Court. Upon notice and request of the CTCC, the office of Chief Counsel will enter into a similar stipulated decision document in any future case that becomes docketed in the Tax Court with respect to a taxable year beginning before 1993. The stipulated decision documents will reflect an allowance of charitable contribution deductions for Church of Scientology fixed donations in the full amount of the payments substantiated as being paid for qualified religious services as provided in paragraph B. above. The stipulated decision documents also will identify as overpayments any credible or refundable amounts paid by the taxpayers for the years at issue, provided that the Tax Court has jurisdiction to determine the existence and amount of such overpayment. 2. The Service will issue administrative refunds for the full amount of the tax that is attributable to the fixed donations to churches of Scientology for qualified religious services, plus interest, to the taxpayers in the following cases : Powell v. United States, No. CV 90-8271 (S.D. Fla.) Nieves v. United States, No. CV 90-4211 (S.D. N.Y.) Following the issuance of the administrative refund, the taxpayers will dismiss with prejudice their respective cases.
3. In the case of a refund claim for a taxable year beginning before 1993 that is not barred by the statute of limitations and is not the subject of a docketed deficiency cases before the Tax Court or a refund cases before a District Court or the Court of Federal Claims at the time of the execution of this Agreement, the taxpayers shall be entitled to an allowance of 80 percent of his or her fixed donations in connection with qualified religious services, as provided in paragraph B. and the claim shall be treated accordingly. The Office of Chief Counsel shall request the Untied States Department of Justice to enter into a stipulation with taxpayer's counsel (or taxpayer) in any future case seeking a refund of income taxes for taxable years beginning before 1993 based on the Service's disallowance of charitable contribution deductions for Church of Scientology fixed donations for which the statute of limitations has nor expired, in accordance with the preceding sentence. See, however, the CTCC's obligation not to promote such claims as provided in paragraph G. 4. For any refund controversy described in subparagraph 3., above, provisions of paragraph B. shall remain open until the Service mails a notice of final disallowance of such refund claim.
5. If the Service is in compliance with the provisions of subparagraphs 1-3, above, and the taxpayer refuses the Service's offer to provide a stipulation or settlement in resolution of the fixed donation issue of the taxpayer/parishioner to the Church of Scientology as provided herein, then, notwithstanding any other provision of his section VII., the Service shall not be bound by this paragraph as to that taxpayer (and that year for which there is no agreement) and shall not thereafter be bound to the 80/20 dual payment percentage as to that taxpayer for that tax year. Nothing in this paragraph prevents the Service, at its election, from stipulating or settling on any other basis (or proceeding in any manner) with any taxpayer if the taxpayer declines to settle in accordance with this section VII. 6. This paragraph C. shall apply to all pending and future administrative cases in examination, appeals, or collection for taxable years beginning before 1993. 7. All overpayments resulting from the stipulations or judgments provided in subparagraphs 1. through 3., above, shall be promptly credited or refunded under applicable provisions of the Code (including section 6611) and regulations.

D. To apply paragraph B. for taxable years after 1992, the Service shall prepare and transmit instructions to all appropriate IRS functions and Offices at the National, Regional and District level and to IRS Service Center explaining their obligations to carry out paragraph B. of this section VII. In particular, those instructions shall direct the various Service functions not to disallow any portion of deductions for Church of Scientology fixed donations in connection with qualified religious services on the ground that the payments are not charitable contributions, until the earliest of (i) December 31, 1999, (ii) the issuance by Service of the audit policies or practices described in paragraph B. (ii) or (iii) until legislation is enacted which affects the deductibility of such fixed donations. Nothing in the paragraph prevents the Service, at its election, from stipulating or settling on any other basis (or preceding in any manner) with any taxpayer of the taxpayer declines to settle in accordance with this section VII.

E. The Service also agrees to withdraw, obsolete or supersede, Rev. Rul. 78-189 no later than April 1, 1994, irrespective of whether the audit policies or practices described in paragraph B. (ii) ar issued.

F. Additionnal penalty
1. Except as provided in subparagraph 2., below, the Service shall apply paragraph B. to all pending and future administrative cases in examination, appeals, or collection for taxable years beginning after 1992 through taxable years ending before January 1, 2000.
2. If the Service implements the audit policies or practices described in paragraph B. (ii) for a taxable year ending before January 1, 2000, then the service shall allow individual taxpayers charitable contribution deductions for no less than 80 percent of their Church of Scientology fixed donations in connection with qualified religious services, as defined in paragraph B., to the extend substantiated as provided in paragraph B., for taxable years ending before January 1, 2000. 3. If, prior to January 1, 2000, the Service has not issued or adopted audit policies or practices described in paragraph B. (ii), the parties agree to meet to discuss further agreements or actions that nay be undertaken to implement paragraph A. in the spirit of this entire Agreement.

G. While recognizing that all individual Scientologists not barred by law or agreement are entitled to file claims for refund to recover amounts covered by this settlement and that the CTCC may inform Church parishioners of the provisions of section VII of this Agreement, the CTCC agrees not to promote or encourage individual Scientologists to file claims for refund of taxes for the taxable year 1993.

H. Individual taxpayers making fixed donations to churches of Scientology shall be considered to be third-party beneficiaries of this section VII. and shall be entitled to enforce its terms in any administrative or judicial proceeding. Such individual taxpayers shall not be charged with the receipt of taxable income by virtue of any of the provisions of this agreement.

I. The CTCC shall use its best efforts to have Scientology parishioners agree to the stipulations and settlements as provided in this section VII.

J. If the Service either holds a meeting regarding the deductibility of fixed donations to religious organizations and invites religious organizations to participate or solicits comments from religious organizations on the subject, the Service shall invite the Church of Scientology to participate or to supply comments on the same the other religious organizations.


VIII. DEFINITIONS

For purposes of this Agreement:

A. "Code"

means the Internal Revenue Code of 1986 and the regulations thereunder, as amended from time to time.

B. "Entity"

includes any corporation, limited liability company, trust, association, committee, partnership, or unincorporated organization, as well as any "person" (other than an individual), as defined in Treas. Reg. sec. 301.7701-1 through -4.

C. An entity is a "Scientology-related entity"

if that entity isdescribed in one or more of the paragraphs set forth below:
1. An entity is a Scientology-related entity if it is a signatory to this Agreement or is identified in section III., paragraphs B. or C. or section IV., paragraph D.2. of this Agreement or Exhibits III-1 through III-35 of this Agreement.
2. An entity is a Scientology-related entity if it delivers religious services to parishioners in a manner prescribed by the works of L. Ron Hubbard and as authorized (directly or indirectly) by Religious Technology Center, Church of Scientology International or other entity described in another paragraph as a Scientology-related entity. Thus, for example, all Class V churches, Continental organizations, CSFSSO, CSFSO, CSWUS, Saint Hill or other advanced organizations and missions are Scientology-related entities.
3. The publications organizations discussed at page 1-21 through 1-27 of the letter to John Burke, Monique Yingling dated June 29, 1992, (the "June Submission") and part of the Qualified Written Material are Scientology-related entities. Thus, for example, Bridge Publications, Inc., and New Era Publications International ApS, as well as their related subsidiaries or affiliates, are Scientology-related entities. Pages 1-21 through 1-27 are attached as Exhibit VIII-1 to this Agreement.
4. The social benefit and other public benefit entities discussed at pages 1-28 through 1-42 of the June submission along with all subsidiaries, subordinate chapters, subordinate organizations, or sublicensees thereof (e.g., organizations that are permitted to use particular names, copyrights, service marks, and/or technologies) are Scientology-related entities. Thus, for example, Citizens Commission on Human Rights, National Commission on Law Enforcement and Social Justice, Scientology Defense Fund Trust, Association for the Better Living and Education, Applied Scholastics Incorporated, Narconon International, The Way to Happiness Foundation, and the Founda Religious Freedom are Scientology-related entities. Pages 1-28 through 1-42 are attached as Exhibit VIII-2 to this Agreement.
5. Any entities subject to the ecclesiastical direction or general guidance of Church of Scientology International or Religious Technology Center, directly or indirectly, including but not limited to any trusts, that hold assets (including but not limited to intellectual property and mortgages) for any other Scientology-related entity or for the advancement or protection of the Scientology religion whether or not those entities were discussed at pages 1-43 through 1-56 of the June submission are Scientology-related entities. This definition does not include the trust or estate of any parishioner who has made an intervivos or testamentary transfer of assets to the Church. This definition does not include financial institutions that are not owned (directly or indirectly) in whole or in part by any entity that otherwise meets the definition of Scientology-related entity under another subparagraph of this paragraph VIII. C. This definition does not include (i) any fiduciary that is not a Scientology-related entity or a Scientology-related individual (ii) the employee of any such fiduciary, (iii) any escrow agent holding assets of a Scientology-related entity under and escrow arrangement of a strictly temporary nature, (iv) any trustee under a deed of trust upon real property to secure the debt of a Scientology-related entity (v) any person acting under the power of attorney to Scientology-related entity, provided that any such fiduciary described in (i) through (v) above, and is nor otherwise a Scientology-related entity under paragraph of this section VIII, paragraph C. Pages 1-43 through 1-56 are attached as Exhibit VIII-3 to this Agreement.
6. Any entity directly or indirectly involved in, or related to, the ownership and /or operation of the M.V. Freewinds including those listed at pages 1-57 through 1-59 of the June submission are Scientology-related entities. Thus, for example, the Foundation Church of Scientology Flag Ship Service Organization, Flag Ship Trust, Transcorp Services S.A., San Donato Properties Corporation and MCL Services N.V. are Scientology-related entities. Pages 1-57 thorough 1-59 are attached as Exhibit VIII-4 to this Agreement. 7. Any membership entity primarily composed of Scientologists, whether or not listed on pages 1-60 through 1-62 of the June submission, including but not limited to the International Association of Scientologists, Danish Association of Scientologists, and European Association for Scientology, along with any entities performing the operations of (or holding the assents of ) such organizations (including Foundation of International Membership Services Administration N.V., Membership Services administration (UK) Ltd and U.S. IAS Members' Trust), are Scientology-related entities. Pages 1-60 through 1-62 are attached as Exhibit VIII-5 to this Agreement. 8. Any entity that owns, (including, but not limited to, those entities listed below in this subparagraph C.8.), (sub) licenses to others to use, and/or has rights to (sub) license others to use what has been described in the Qualified Written Material as the Scriptures (the written and spoken words of L. Ron Hubbard on Scientology and Dianetics) or any technology, copyright, trademark or service mark held by RTC, CSI, CST, any publications organization (described in paragraph C.3 above), the Estate of L. Ron Hubbard or Author's Family Trust B, is a Scientology-related entity. 9. Any other entity licensed to use, or otherwise granted permission to use or employ, any copyright, service mark, or trademark that has been, is now (or shall in the future) be held or owned, directly or indirectly, by Religious Technology Center, Church of Scientology International, the Estate of L. Ron Hubbard, Author's Family Trust B or Church of Spiritual Technology, is a Scientology-related entity. 10. Any taxable or for-profit entity of which one or more Scientology-related entities and/or any of the trustees, directors and/or officers of any entity defined as a Scientology-related entity under this section VIII. paragraph C, separately or together, owned or had a beneficial interest of more than twenty-five percent is a Scientology-related entity. In addition, any non-profit entity of which one or more Scientology-related entities and/or any of the trustees, directors and/or offices of any entity defined as a Scientology-related entity under this section VIII. paragraph C, separately or together, control the voting power of, or have a beneficial interest of, more than twenty-five percent, is a Scientology, related entity. For purposes of this definition, any Individual or At-Large member of the CTCC shall be considered an officer of a Scientology-related entity. 11. For purposes of subparagraphs 4, 8, or 9, the term Scientology-related entity includes only those entities that are under the ecclesiastical direction or general guidance of CSI, directly or indirectly, and that are not owned in whole or in part by any entity that otherwise meets the definition of Scientology-related entity under another subparagraph of this section VIII. paragraph C.. Thus, by the way of example, the term Scientology-related entity generally does not include (I) sublicensees of the World Institute of Scientology Enterprises (hereinafter "WISE"), (ii) any entity that would not otherwise be described above, except that it has been licensed to publish or disseminate solely the fictional works of L. Ron Hubbard, and (iii) licenses of Applied Scholastics, Inc. that are not included as subordinate entities under its group exemption, as provided in section III., paragraph 3.c and listed on Exhibit III-28 (or will be subordinate entities in the future) .
12. a. In general. The term Scientology-related entity generally includes an entity whether formed under the laws of the United States or of a country other than the United States, except to the extent other provisions of this Agreement expressly include only U.S. entities or expressly exclude non-U.S. entities. b. Exception. i. With respect to certain provisions of this Agreement, the term Scientology-related entity does not include an Excluded Foreign Scientology-related Entity. A Scientology-related entity is an Excluded Foreign Scientology-related Entity if it is formed under the laws of, and substantially all of its operations are in, a country other than the United States and it (a) is described in section VIII, paragraph C.2 and is a Mission or Class V church; (b) is described in Section VIII, paragraph C.4; (c) is described in Section VIII, paragraph C.5, provided that it is not an entity that has as its primary function the holding of assets for the Church of Scientology; or (d) is described in Section VIII, paragraph C.9 but has neither annual gross receipts not gross assets in excess of $15 million. ii. To the extent a Scientology-related entity is otherwise specifically included in a provision (notwithstanding the fact that is an Excluded Foreign Scientology-related Entity), it is a Scientology-related entity for the specified purposes of the affected provision. Specifically, but not by the way of limitation, an Excluded Foreign Scientology-related entity with respect to the following provisions of this Agreement: Section II.: paragraphs B.5., B.7 through B.9, C.1. through C.6, E.1., E.4.b. and F. Section III.: Paragraph B.10 Section IV.: paragraphs A.3.d., B.1.a., B.1.f.ii. B.2.a., B.3., B.4., C.1., C.3., C.4., C.5., C.6., C.7.a.,C.7.b., C.10.,E.1., E.2.,E.3., and F.2. Section V.: all Section VI.: paragraph B. iii. An Excluded Foreign Scientology-related Entity is excluded from the definition of Scientology-related entity with respect to the following provisions of this Agreement : Section IV.: paragraphs A.3. (other than A.3.d.), D.1., D.2., D.3. Section VI: paragraph A, C (unless paragraph C.10. of section IV applies) and G. Section IX: paragraph A. iv. With respect to other provisions of this agreement concerning procedural matters (such as reporting term limitations) that relate to the specific provisions referred to in Section VIII, paragraph C. 12.b.ii., Scientology-related entity also includes Excluded Foreign Scientology-related entity. c. Limitation. paragraph 12.b. shall not apply to exclude from treatment as a Scientology-related entity any entity that otherwise meets the definition of Scientology-related entity under a subparagraph of this section VIII. paragraph C. other than subparagraphs 2.,4.,5., or 9. 13. If an entity is treated as a Scientology-related entity by reason of paragraph C.1. of this section VIII., then such entity shall be treated as a Scientology-related entity notwithstanding that one or more of the other subparagraphs of paragraph C. of this section VIII might otherwise apply to exclude such entity from being treated as a Scientology-related entity. 14. The term Scientology-related entity is not limited to those entities that are in existence as of the date of this Agreement but also includes those described in paragraph C. created after thisAgreement is signed.

D. "Scientology-related Individual"

means an individual rendering services to or on behalf of a Scientology-related entity as a staff member, agent officer, trustee, or attorney in fact of that Scientology-related entity. The term "Scientology-related individual" includes, without limiting the generality of the foregoing, Individual CTCC members, At-Large CTCC members and individuals serving on the CTCC as representatives of Corporate CTCC members. The term "Scientology-related individual" applies only to the extent that such individual is acting in his capacity as staff member or other service-provider to or on behalf of the Scientology-related entity.

E. "Qualified Written Material"

means any information designated as "Qualified Written Material" pursuant to paragraph 4 of the agreement between Church of Scientology International and the Service, executed on behalf of the CSI on May 5, 1992. This material was obtained as part of the discussions in which the Service requested information relating to the organizational structure and operations of the Church mostly by written requests dated May 4, 1992 and October 16, 1992, to which the Church responded in June and November of 1992, respectively, and in various other written responses.

F. "Service"

means the Internal Revenue Service, including but not limited to the Office of Chief Counsel. References to officers or employees (present or former) of the Service shall include, but not limited to, officers or employees (present or former) of the Officer of Chief Counsel.

G. "Taxable year"

means calendar year.

H. "Transition period"

means taxable years 1993, 1994, 1995, 1996, 1997, 1998 and 1999.

I. "Agreement"

means this closing agreement.

J. "CTCC"

means the Church Tax Compliance Committee.

K. "Church Signatories"

means the following entities: Church of Scientology International, Religious Technology Center, Church of Spiritual Technology, Church of Scientology Religious Trust, Building Management Services, Church of Scientology Flag Service Organization, Inc. and the Church of Scientology Western United States.

L. "Settlement Agreement"

means an agreement entered into between the Church Signatories and the Service on even date herewith relating to the disposition of certain other matters between the parties attached hereto as Exhibit IV-5.

M. "Annual Report"

means the report complied and submitted during the transition period by the CTCC as required under section IV of this Agreement.

N. Disqualified Person

In General. The term "disqualified person" means with respect to a Scientology-related entity, any of the following persons:
1. an Individual CTCC member (within the meaning of section IV. paragraph A.2.c. of this Agreement); 2.A member of the family (as defined in paragraph 9) of an Individual CTCC member; 3. a corporation not recognized as exempt under Code section 501 (c) (3) of which any person described in section VIII. paragraph N.1. or N.2. owns more than 35 percent of the total combined voting stock or stock value; 4. a limited liability company not recognized as exempt under Code section 501 (c) (3) in which any person described in section VIII. paragraph N.1. or N.2. owns more than 35 percent of the membership interests;
5. a partnership not recognized as exempt under Code section 501 (c) (3) in which any person described in section VIII. paragraph 1. or 2. owns more than 35 percent of the profits interests or capital interests; or 6. an estate or a trust not recognized as exempt under Code section 501 (c) (3) in which any person described in section VIII. paragraph N.1. or N.2. holds more than 35 percent of the beneficial interest. 7. Stockholdings; Membership Interests. For purposes of paragraphs 3. and 4., there shall be taken into account indirect stockholdings and membership interests which would be taken into account under section 267 (c) and 318 (a) (4), except that, for purposes of this paragraph, Code section 267 (c) (4) shall be treated as providing that the members of the family of an individual are the members within the meaning of section VIII. paragraph N.9. 8. Partnerships, Trusts, Estates. For the purposes of paragraphs 4. and 5. the ownership of profits interest, capital interest or beneficial interest shall be determined in accordance with the rules for constructive ownership of stock provided in Code section 267 (c) (other than paragraph (3) thereof), except that Code section 267 (c) (4) shall be treated as providing that the members of the family of an individual are the members within the meaning of paragraph 9. 9. Members of Family. For purposes of this definition, the family of any individual shall include on the individual's parents, children, spouse, siblings and the spouses of the individual's siblings. 10. Time of determination. A person is a disqualified person, if, at any time during the transition period that a person is described in this definition.
O. Willful

There term "willful" means a knowing, voluntary, intentional violation of a known legal duty.

P. Sanction Period

The term "sanction period" means, with respect
to any act of self-dealing under section VI. paragraph B or noncharitable expenditure under section VI. paragraph C, the period beginning on the date on which the act of self-dealing or noncharitable expenditure occurs and ending on the earliest of :
1. the date on which the penalty imposed by section VI. paragraph B.a.1. or C.a.1 is paid; 2. the date on which correction of the act of self-dealing or noncharitable expenditure is completed; or 3. 180 days after the final judicial decision sustaining the Service's final determination with respect to a penalty imposed by section VI. paragraph B.1. or C.1. hereof under section VI. paragraph H.1..

Q. First-Tier Penalty

For purposes of this paragraph P., the term "first tier penalty" means any penalty imposed by section VI. paragraph B.1. or C.1.

R. Second-Tier Penalty

For purposes of this paragraph P., the term "first tier penalty" means any penalty imposed by section VI. paragraph B.1. or C.2.

S. Correction

The terms "correction" and "correct" mean :
1. for any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the Scientology-related entity in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards; 2. for any noncharitable expenditure (A) recovering part of all of the expenditure to the extent recovery is possible, and where full recovery is not possible such additional corrective action as is prescribed by the Service or (B) in the case of a failure to comply with paragraph D making or correcting the report in question, and 3. for any failure to report under paragraph IV.D., the filing with the Service of an annual Report or corrected Annual Report 9 (or relevant part thereof), meeting the requirements of this Agreement.
T. Correction Period

The term, "correction period" means, with respect to any event that is subject to penalty under the Agreement, the period beginning on the date on which such events occurs and ending 180 days after the date of the mailing under section VI. paragraph H.1.b. of a final notice of determination with respect to the second tier penalty imposed on such event, extended by any other period the Service determines is reasonable and necessary to bring about correction of the event.

U. Church

The term "Church" when used in a descriptive sense refers to all Scientology-related entities. When used in connection with specific obligations under this Agreement, however, the term "Church" shall generally mean the CTCC.

V. Commissioner

The term "Commissioner" means the Commissioner of the Internal Revenue Service.

W. Assistant Commissioner

The term "Assistant Commissioner" means the Assistant Commissioner of the Internal Revenue Service for Employee Plans and Exempt organizations (or the successor to his or function in any reorganization of the Service).

X. Knowing

An individual shall be considered to have participated in a transaction "knowing" that it is either an act of self-dealing under section VI., paragraph B. or a noncharitable expenditure under section VI., paragraph C. only if
1. He has actual knowledge of sufficient facts so that, based solely upon such facts, such transaction would be an act of self-dealing or a noncharitable expenditure, and 2. He is aware that such an act under these circumstances may violate the relevant provisions of this Agreement, and 3. He negligently fails to make reasonable attempts to ascertain whether the transaction is an act of self-dealing or a noncharitable expenditure, or he is in fact aware that it is such an act.
The term knowing does not mean "having reason to know," but evidence that a person had reason to know of a particular fact or of a provision of this Agreement can be circumstantial proof of actual knowledge.

Y. Reasonable cause

The term "reasonable cause" means the exercise of responsibility by a CTCC member on behalf of the CTCC and Scientology-related entities with ordinary business care and prudence.


IX. OTHER MATTERS

A. Representations

The Church signatories represent that all are duly organized, validly existing and in good standing under the laws of the jurisdiction in which they are organized and that all have the power and authority to execute and deliver this Agreement, to perform their duties and obligations and to exercise their rights under this Agreement, to cause Scientology-related entities to comply with the terms of this Agreement, and further represent that the execution of this Agreement by the officers or trustees has duly and properly authorized by each Church signatory and that upon execution, this Agreement constitutes a valid and legally binding obligation of each Church signatory.

B. Notices
1. All notices and reports hereunder shall be in writing and sent by certified mail, return receipt requested. 2. Notice to the Service shall be sent as follows : Assistant Commissioner Employee Plans and Exempt Organizations Internal Revenue Service Room 3408E 1111 Constitution Avenue, N.W. Washington, D.C. 20224 In the event of a reorganization of functions within the Service in which the office of Assistant Commissioner (Employee Plans and Exempt Organizations) is eliminated, notices hereunder to the Service shallbe sent to the Service official succeeding to the functions now served by the Assistant Commissioner (Employee Plans and Exempt Organization), as determined by the Service and sent to the CTCC in accordance with paragraph B. 4. hereof. 3. Notice to the CTCC shall be sent as follows : Church Tax Compliance Committee c/o Church of Scientology International 6331 Hollywood Blvd.Suite 1200 Los Angeles, California 90028-6329 4. Either party may change the address designated for future noticeshereunder by notice in the manner provided in paragraph B. 1. to the other party to the existing address of record as provided in paragraph B. 2. or B. 3.

C. Rules of Construction
1. This Agreement has been prepared by the combined efforts of the parties and their respective attorneys. 2. The parties may by written agreement extend the time for performance of any obligation under this Agreement, except and only to the extent that another provision of this Agreement precludes such an extension of time. 3. Unless otherwise expressly provided herein, no remedy conferred on or reserved to a party to this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing pursuant to the Code, at law or in equity. No delay or omission to exercise any right or power accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In the event any provision of this Agreement should be breached by any party, and thereafter duly waived by the other party so empowered to act, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. 4. The words "hereof," "herein," "hereunder," "hereto" and other words of similar import refer to this Agreement in its entirety. 5. The words "agree" and "agreements" contained herein are intended to include and mean "covenant" and "covenants." 6. References to section headings and other subdivisions of this Agreement are for convenience only and shall not define or limit the provisions hereof. 7. All references made in (i) the neuter, masculine or feminine gender shall be deemed to have been made in all such genders, and (ii) in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular number as well.
D. Entire Agreement

This Agreement constitutes the entire agreement between the Service and the Church and supersedes all prior agreements and understanding, both written and oral, between the Service and the Individual CTCC members, Corporate CTCC members, At-large CTCC members, Church Signatories, Scientology-related entities and Scientology-related individuals with respect to the subject matter hereof. However, nothing contained herein shall affect the Settlement Agreement, executed on even date herewith.

E. Survival of Agreement

All covenants, agreements, representations, and warranties made herein and in all reports (including any Annual Report under section IV.), certificates, tax returns prepared and delivered pursuant hereto shall continue in full force and effect so long as any of the provisions of this Agreement remain unperformed.

F. Costs of Compliance with Agreement

The Church Signatories, Individual CTCC members, Corporate CTCC members, and At-large CTCC members shall, solely at their own cost, perform and discharge all of the obligations and duties and exercise all rights under this Agreement, For example, no set off is available against any penalty asserted under section VI. paragraph C. 1. by reason of such costs. The Service shall at its own cost perform and discharge all of the obligations and duties and exercise all rights under this Agreement.

G. Counterparts

This Agreement shall be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

H. Finality

This Agreement is final and conclusive except:
1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of material fact; 2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including any stated exception for Code section 7122) notwithstanding any other law or rule of law; and 3. If it related to a tax period ending after the date of this Agreement, it is subject to any law, enacted after the Agreement date, that applied to that tax period.

X. DATE OF THE AGREEMENT

The date of this Agreement is October 1, 1993.

Dated: October 1, 1993
[Signature]
DAVID MISCAVIGE, Individual Member of CTCC

Dated: October 1, 1993
[Signature]
NORMAN F. STARKEY, Individual Member of CTCC

Dated: October 1, 1993
[Signature]
MARK RATHBUN, Individual Member of CTCC

Dated: October 1, 1993
[Signature]
HEBER JENTZSCH, Individual Member of CTCC

Dated: October 1, 1993
[Signature] (POA)
MARC YAGER,
Chairman, WatchDog Committee,At-Large Member of CTCC

Dated : October 1, 1993
[Signature] (POA)
JONATHAN EPSTEIN, International Finance Director, At-Large Member of CTCC

Dated: October 1, 1993
[Signature] (POA) NIGEL OAKES, Chief Accountant International,At-Large Member of CTCC

Dated: October 1, 1993
RELIGIOUS TECHNOLOGY CENTER
By: [Signature] Mark Rathbun
Title: President

Dated: October 1, 1993 CHURCH OF SCIENTOLOGY INTERNATIONAL
By: [Signature]Heber Jentzsch
Title: President

Dated: October 1, 1993
CHURCH OF SPIRITUAL TECHNOLOGY
By: [Signature]
Title: POA

Dated: October 1, 1993
CHURCH OF SCIENTOLOGY FLAG SERVICE ORGANIZATION, INC.
By: [Signature]
Title : POA

Dated: October 1, 1993
CHURCH OF SCIENTOLOGY WESTERN UNITED STATES
By: [Signature]
Title: POA

Dated: October 1, 1993
BUILDING MANAGEMENT SERVICES
By: [Signature]
Title: POA

Dated: October 1, 1993
CHURCH OF SCIENTOLOGY RELIGIOUS TRUST
By: [Signature]
Title: POA

Dated: October 1, 1993
COMMISSIONER OF INTERNAL REVENUE SERVICE
By: [Signature] John E. Burke, Assistant Commissioner, Employee Plans and Exempt Organizations

Dated: October 1, 1993
COMMISSIONER OF INTERNAL REVENUE SERVICE
By: [Signature] James J. McGovern, Associate Chief Counsel, Employee Benefits and Exempt Organizations