Law Office Report 22, March 17, 1978

[Editor’s note: A second copy of this report appears here. That copy includes the immediate radio responses. It also includes handwritten annotations throughout which are not on this copy. On the other hand, this copy includes the supporting material referenced in the report.]

B-4-a (1)

[Handwritten notation above text: “To Carolyn Layton – duplicate copy”]

Law Office Report #22
March 17, 1978
Page 1
from June [Crym]


This report concerns the shipment of supplies to Tish [Leroy] which is coming via Ujara [Don Sly] in crates #107, 108 and 109, labeled Ben Barrett, Kathy Barrett and Ronnie Berryman/ and some separate items which are being shipped with this report because they need to be taken care of soon and the supplies being sent over will take a while to sort through.

1. 1977 income tax returns to be filed for people over there: Enclosed with this report are W-2’s which have arrived in the mail for people who are over there. These are the only ones which have come in; as more come in we will send them over. Attached also is a list of all W-2’s which have come in; Betty has assigned each person a number and if you have any messages or questions concerning these people, you can refer on the radio to this report and their individual #.

In crate #109 is the bulk of the 1976 income tax returns sent for reference; there may be some carryover in crate #108. These are all we could find in the files here. As more turn up, we will send them over. However, the state of the files is such that individual tax return files are stuck in everywhere, in no order, and it may take time to recover them. In the meantime, it appears that most people file short forms anyway so there should be no problem as long as you have a W-2. I will specify individual problems I know about later on in this report.

2. Sending over supplies to Tish: Because of the incredible bulk of material involved, this will take some time. We have removed the cabinets from the building to a place of more confidentiality; we need the keys for these cabinets so we can lock them. SEND THEM BACK: Betty tells me Tish took them with her when it was thought they would be shipped. Shipping costs are so large, and the records are the kind which should be carefully watched all the way there to ensure their arrival, that we are considering packing them in duffel bags and sending out from time to time. If we do this, we need to know if (1) you want the needs slips; (2) you want the boxes of canceled checks; (3) you want the 4 drawers worth of Apostolic receipts of money orders, filed for each member. We sent the equivalent of one file drawer of Apostolic over in the Ujara shipment, but we had to stuff those receipts in manila envelopes simply because of the weight.

We tried to send recap sheets mostly and a minimum of receipts; however, in going back I found many recaps that will need still to be sent, 1976 records. This is going to be a gradual thing, I’m afraid, mainly because of the restrictions on weight. The airline has cut back the weight limit to 77 lbs for the standard charge, a crate weighs 30 lbs alone, so we are going to do as many duffel bags as possible.

B-4-a (2)

Law Office Report #22
March 17, 1978
Page 2
from June

3. Individual tax problems:

a. Ben Bowers: Hopefully this will be resolved by the time it gets to you, but here’s what I’ve been trying to say on the radio: Ben and Christine Tally [Talley] were married, divorced in 1977. During the marriage, there was a trust fund set up consisting of her estate. Interest accrued on that trust fund, and every month or so statements would come in from the bank telling about the account, and interest accumulated. No one here seems to know whatever happened with that account, whether it was closed down or what, and if that happened in 1977. Ben is going to file the long form and itemizes his deductions, including interest on savings. Does this trust account still figure in the itemizations for 1977? How would we or he go about finding out the interest accumulated in 1977, if any? Where would we look on this end? I have the estate file for Christine, but the latest receipts from the bank are dated 12/76.

Ben also wants receipts from us for his rent, food, medical expenses and church donations. The donations are simple; I can do the standard donation letter I have been doing, based on 10% estimation. However, since our records were stolen in May, 1977, and that is just about the time he left, how are we to supply receipts for such itemizations without being inconsistent? Can we just make estimations and give the same reason as we do in the church donation letter?

b. Alfreda Sappho – wants to do long form and itemize deductions, and wants same as Ben, receipts from us re rent, food, church donations. The general problem is: what do we do with communal people who work and want to file long form to itemize deductions? I do not believe there are many, if any besides her and Ben, at least none have come to us yet. But Alfreda is becoming very difficult to deal with on this issue, and says she’ll go to H&R Block. I am going to tell her to see H&R Block and find out what they need for itemizations, then come back and tell us specifically. But I anticipate it will be much like Ben’s case, and would like some kind of guidance on how to deal with such cases.

c. We are returning to you the problems which we first listed on law office report #7, 12/22/77, plus some additions, as these people are all over there and should be dealt with over there. The additions are Leon Perry, a bill for $135 from IRS, which Harold originally asked Tish about and no response has been sent him from here; a notice to Walter Cartmell, which does not appear to be a charge but an information notice about a previous return he filed which requires some corrections; a charge to Annette Jones of $686 for incorrect 1975 return. The rest are those we already wrote you about: Robert & Vernetta Christian; Shirley Ann Edwards (Newell); Alvaray Satterwhite; Mary Shavers; Cleve & Helen Swinny; Al & Mary Tschetter. These may be easier to deal with after you have located their individual income tax files which are coming to you via Ujara.

B-4-a (3)

Law Office Report #22
March 17, 1978
Page 3
from June

4. Discussions with Marshall Bentzman re audit of PT: He is presently researching issue of right of feds to search records of churches; Martha is writing this up in more detail, my general impression is that the feds have the burden of proof and must justify their reasons for examining church records; that they can only examine in order to determine that the church is indeed a church and functioning as such; and the magic key is the suspicion that the church may be practicing in unrelated business income. This is not new to us, but I agree with his approach in saying that we would defend all the way; we should not acquiesce but instead demand that they prove their intentions first. This is all for the purpose of dragging the thing on. Tonight I xeroxed pieces of the IRS Code, which may have already been reviewed by Ed and Sarah; also attached is a copy of the Scientology case which found that the summons issued by the IRS to examine records was insufficient; that the Scientologists case raised sufficient doubt about the IRS’s intent and harassment. IRS Code section 7605 deals with restrictions on examination of church records by IRS; USA v. Church of Scientology case is attached. As Bentzman explained, looking at the Code this way is only piecemeal and to get a real picture of the whole thing requires a lot of background research. You can tell Ed and Sarah that I tried to “sheparadize” [shepardize] the Scientology case but could find nothing; that does not mean that there was nothing, there may well have been recent decisions but we were in a rush at Eric’s and I didn’t have time to get into it. We should ask Bentzman; he did hint that he will be writing up some opinion letters on this whole area of unrelated business income which will include the Scientology case. [Editor’s note: Scientology case at B-4-a (5)]

5. Audit of the Ranch: attached is a copy of the letter received by the ranch. Bonnie [Beck] tells us they have been given an extension till June ’78 to produce information and records. She is now combing through all the old records we have been able to find and will be preparing recap sheets, etc. and compare to those already in existence. One of the problems that has come up was that Harold’s and Tish’s figures didn’t jive for the 1977 income and disbursements; also, Bonnie can’t understand why Tish’s figures of income seem to be based on more patients than there were in actuality. [Editor’s note: Attachment at B-4-a (6) – (7)]

6. David Smith: The reason he gave us which he will not elaborate on on the radio which he says will keep him here 18 months is that he never filed his income taxes for 1972 through the present. However, we don’t really believe that is the real reason, as he was looking for excuses after we (me and Sandy [Bradshaw]) explained that people can file their taxes in Guyana, there’s no problem with that. He obviously wanted an out to remain here. He said that Tim Stoen had advised him in the past not to file his taxes because of his receipt over the years of increments on the property and estate to which he is an heir in Colorado along with 5 other relatives. After we put aside the tax reason, he said he wanted to get a job. We asked why he didn’t want to see his children; he said they weren’t his children, he’d given to the temple, and anyway at least 2 of them he doubted were his anyway. Looking in the tax files, I came across the application he apparently filed for extension of time to file IRS return in 1976, in his letter to

B-4-a (4)

Law Office Report #22
March 17, 1978
Page 4
from June

his sister asking her for income amounts he received in 1972 through 1976 on the property. Also enclosed is W-2 for 1976. [Editor’s note: Attachment at B-4-a (8) – (10)]

I don’t know what will be the outcome of this situation; the night after he spoke on the radio, he testified, but said nothing specific, just said Jim was the doctor of all doctors, and that was it. My impression was that he was making a public display of “loyalty” so the people would think he was okay, but I would suspect this guy from the get go, of possibly being involved with Stoen in some way.

7. See Law Office Report #13, item #11 re Edwards house – would you please return via mail the Authorization I sent over to be signed by the Edwards. We have a potential buyer of the lot, and this thing is tied up with the insurance investigation. We need permission of the owners and the mortgage holders before the property can be demolished and sold. Attached is another Authorization in case the first one got misplaced. [Editor’s note: Attachment at B-4-a (11)]

******pleasant 73’s*****

sorry, there’s more:

8. Letter from Kay Henderson re donations – see attached. This has already been discussed on the radio with Mildred. This is for your information and additional instructions, should there be any. [Editor’s note: Attachment at B-4-a, (12) – (14)]

9. 1978 Church Exemption, due by March 31 for Mendocino County PT building – please have Ed review this and advise how to fill it out; is there any difference now that no church services are being held there? ALSO: in January, we sent over, not in a law office report but in reports sent over by Martha, the 1978 Church Exemption form for San Francisco County. The touchy thing about this one is that it asks specific questions re how many people living in the building. When we sent it over, we figured most people would be out of here and the building would be pretty vacant; but that is not the case and as apostolic apartments are closing down, people are moving into the church more. A rough count would say maybe 30 are living here now. How do we fill this out? This is also due March 31. [Editor’s note: Attachment at B-4-a, (15) – (22)]

B-4-a (5) [10 pages] headed with notation “Re item 4, Law Office Report #22”

B-4-a, (6) – (7) [4 pages] headed with notation “Item 5, Law Office Report #22”

B-4-a, (8) – (10) headed with notation “Item #6, Law Office Report #22”

B-4-a (11) authorization referred to in Item #7

B-4-a, (12) – (14) headed with notation “Item #8”

B-4-a, (15) – (22) headed with notation “Item #9”