/

SCI E N T 0 LOG Y POL ICY D IRE C T I V E

13 JULY 1995RA Issue X Revised 1 June 1996

SMI INT SMI CONT OFFICES US OSA CONT OFFICES US US MISSION HOLDERS US MISSION EDs EXEC COUNCILS US MISSIONS TREASURY HATS US MISSIONS ORG DSAs US Tax Rudiments Policy 20RA

LEGAL RUDIMENTS CHECKLIST FOR US MISSIONS

(This fully updated checklist for missions is being issued to missions as part of the Tax Rudiments Policy series. The earlier version was issued as a SMI ED: However it is now being issued as an SPD becauseEDs expire after a year and these rudiments must be kept in permanently.) Ref: HCO PL 18 Feb 66

ATTACKS ON SCIENTOLOGY, (Continued)

The legal rudiments program has long been a successful means of ensuring that churches and missions of the Scientology religion keep in the legal basics necessary to ensure that they can stably expand. Included in this checklist are specific rudiments which are the items that each mission must keep in to maintain its tax exempt status. These are marked with an asterisk (*) on the checklist. Tax compliance rudiments include all of the specific forms a Mission must file with the IRS as well as the necessary actions to be in compliance with IRS regulations. Each Mission Holder is responsible for handling any rudiments currently out and thereafter keeping all points of the checklist 100% in. The Director of Special Affairs at your nearest org also has a respon.sibility to ensure that the missions in his area maintain full compliance with all legal and tax rudiments and will assist as needed. Having all legal rudiments in at all times will both protect your tax-exempt status and ensure that you can continue to expand the Scientology religion in your parish without any distractions.

DIRECTOR OF SPECIAL AFFAIRS SCIENTOLOGY MISSIONS INTERNATIONAL Approved by WATCHDOG COMMITTEE MEMBER FOR SMI Authorized by AVC INTERNATIONAL for CHURCH OF SCIENTOLOGY INTERNATIONAL CSI:AVCI:WDCSMI:FO:gg
@

199 CSI. All Rights Reserved. SCIENTOLOGY and HCO are trademarks and service marks owned by Religious Technology Center and are used with its permission. Printed in U.S.A.

SPD 13.7.9SRA X ATTACHMENT

US VERSION MISSION LEGAL RUDIMENTS CHECKLIST

W/E

(Mission name) The following checklist is to be used for the legal rudiments inspections in your mission and marked as to what is IN, OUT or N/A. From now on, this checklist is to be sent via your continental 8MI Office to the D8A 8MI Int at the end of every month, with a copy to your local Org DSA. Note: An asterisk (*) indicates a tax compliance rudiment. These are legal rudiments which specifically exist to safeguard the Church's tax exempt status. CORPORATE RUDIMENTS:
*1. The corporation is properly established with the required corporate papers registered. *2. Any and all filings required to maintain the corporation in good standing are up-to-date, filed on (date or dates) .

IN

OUT

N/A

*3. Corporate integrity is maintained by adhering to HCO PL 18 Feb 66 ATTACKS ON SCIENTOLOGY (Continued).
*4.

Board minutes are prepared, executed and in the

board book where necessary, including with respect to

all of the following activities by the corporation = a. b. c. d. e. All acquisition of major assets; Any acquisition or leasing of new premises; Opening of bank accounts; Entering into important contracts; Starting and ending litigation; Election of Directors & Officers; Borrowing, lending or granting of corporate funds or requests for grants; Other matters of importance to the corporation not covered above; Any large unusual expenditures.

f.
g. h. i.

*5. The Annual General Meeting(s) is held and minutes are filed in the board book. *6. The Mission Holder is duly appointed by Scientology Missions International and meets all requirements for this position as stated in the Bylaws. *7. The Directors of the corporation are qualified as stated in the Bylaws. *8. The Officers of the corporation are qualified as stated in the Bylaws.

9. The TM License Acknowledgement Certificate is prominently displayed in the public reception area. 10. The Articles of Incorporation Certificate is prominently displayed in the public reception area.

LICENSES, CONTRACTS & FORMS:

*11. The Trademark license is signed, including any addendums, and securely stored in val docs.

IN

OUT

N/A

Unpublished work: 1996 CSI.

All Rights Reserved.

"

SPD 13.7.95RA X ATTACHMENT

2 -

12. The Film license is signed and securely stored in val docs. 13. The "Contract Respecting Certain Religious Documents" (files license) is signed and securely stored in val docs.
14. The required payments of tithes to Scientology Missions International are up-to-date.

15. All staff have signed religious covenants, which are securely filed in HCO. 16. All public are being signed up on standard enrollment forms per the most recent issue and these forms are kept on file in HCO val doc files, per HCO PL 18 February 1966, ATTACKS ON SCIENTOLOGY {Continued} . 17. All staff have seen the film "Orientation".

18. All staff, once they have seen the film, have signed the printed attestation that they have seen the film and that they are aware of the fact that Scientology is a religion, that its teachings and claims are religious in nature and that their participation in Scientology services is done under ecclesiastical principles of the Scientology religion. The attestation is routed to Treasury and put into the person's Treasury file. 19. All public on lines in the mission have seen the film "Orientation".
20. All public, once they have seen the film, have signed the printed attestation that they have seen the film and that they are aware of the fact that Scientology is a religion, that its teachings and claims are religious in nature and that their participation in Scientology services is done under ecclesiastical principles of the Scientology religion. The attestation is routed to Treasury and put into the person's Treasury file.

21. All staff have read SPD 13 March 1996 I, RETURN OF DONATIONS and SPD 13 March 1996 II, STATEMENTS BY STAFF MEMBERS. 22. Copies of SPD 13 March 1996 I, RETURN OF DONATIONS and SPD 13 March 1996 II, STATEMENTS BY STAFF MEMBERS are suitably framed and posted in the registration area. 23. Extra copies of SPD 13 March 1996 If RETURN OF DONATIONS and SPD 13 March 1996 II, STATEMENTS BY STAFF MEMBERS are available in the registration area for any public who wish to see them.
24. Any contract proposed has Legal Officer approval and approval of the board before signing, per HCO PL 3 Feb 66, LEGAL, TAX, ACCOUNTANT AND SOLICITOR, MAIL AND LEGAL OFFICER and HCO PL 28 Jan 65, HOW TO MAINTAIN CREDIT STANDING AND SOLVENCY.

TRADEMARKS & COPYRIGHTS: 25. All promo is quaIled (not stopped) to ensure standard trademark usage is in and outnesses are corrected with cramming, per HCO PL 15 Nov 1958 I, THE SUBSTANCE AND FIRST DUTY OF HCO. 26. All promo is quaIled (not stopped) to ensure standard copyright usage is in and outnesses are corrected with cramming, per HCO PL 15 Nov 1958 I, THE SUBSTANCE AND FIRST DUTY OF HCO.

IN

OUT

N/A

SPD 13.7.95RA X ATTACHMENT LOCAL LAWS & REGULATIONS: 27.

- 3 -

IN

OUT

N/A

The building complies with local fire regulations.

28. The building complies with local health and safety regulations.

29. The building is in a location that is properly zoned for its activities. HCO:
30. All motor vehicles used by the mission are registered, covered with license/tax and insurance, and meet all other requirements to be legally driven in accordance with the law.

IN

OUT

N/A

31. Any legal mail or particle or person is routed to the Legal Officer, or whoever holds this post from above, first and not accepted by anyone else in the mission, per HCO PL 3 Feb 66, LEGAL, TAX, ACCOUNTANT AND SOLICITOR, MAIL AND LEGAL OFFICER. TREASURY: *32. Bank signatories on mission accounts are qualified to be signatories and authorized by the board with a board minute done and on file. *33. The bank mandates require that each check be signed by two signatories and this is never violated. *34. All disbursements are made only after approval of a standard financial planning submission as described in HCO PL 26 Nov 65R FINANCIAL PLANNING, with an approved FP ED issued and followed. *35. All income is banked before being spent and only disbursed in accordance with approved financial planning. *36. Any payment of parsonage allowance fully conforms to SPD 13 July 95 IV, PARSONAGE ALLOWANCE IN MISSIONS. *37. Pay and staff benefits fully conform to SPD 13 July 95 II, PAY & BENEFITS TO MISSION STAFF. *38. The mission only pays expenses of staff, the mission holder or other individuals that pertain to accomplishing the religious purposes of the mission and only with an approved PO. *39. Any personal usage of mission vehicles conforms to SPD 9 April 1994 IX, TAXABLE INCOME ON PERSONAL USE OF ORG CARS. *40. Annual parishioner donation statements are done timely as per SPD 10 Nov 94, ANNUAL PARISHIONER DONATION STATEMENT. *41. Treasury records as described in HCO PL 23 Jan 66, ACCOUNTING POLICIES OF SCIENTOLOGY COMPANIES and other policies in Volume 3 are kept, specifically including invoices of all sums received, checks and vouchers for all disbursements, weekly invoice packets, reconciled copies of all bank statements and checks taped onto original stubs (counterfoils) or filed in numerical order (once computerized forms are in use) . *42. Receipts are obtained for all mission expenses proving that they were properly spent on the item for which they were disbursed and these are duly filed in Treasury. IN

OUT

N/A

SPD 13.7.95RA X ATTACHMENT

- 4

*43. All financial transactions are recorded in the finance computer. (Once the COMPUTERIZED FINANCE SYSTEM FOR MISSIONS has been installed.) 44. The mission is adequately covered by insurance that will protect the mission and the value of its MEST. This minimally includes: a) b) c) d) e) theft fire and water damage injury to persons on the property (liability) other forms of property damage pertinent to the local area such as hurricane or earthquake insurance in areas prone to such. other necessary forms of insurance such as for transport of funds where this is cost-effective.

The insurance is in force and the mission is in compliance with all points in the policy necessary to ensure that it will be covered in the event of a loss. *45. The mission is covered by worker's compensation insurance and is in compliance with all necessary regulations pertaining thereto, including posting of required notices and standard handling of claims administration when the need arises. *46. Mission audits are up-to-date, per HCO PL 27 Jan 1960 ACCOUNTS POLICIES; HCO PL 23 Jan 1966 ACCOUNTING POLICIES OF SCIENTOLOGY COMPANIES and the Audit Series. *47. Mission balance sheets are up-to-date, per HCO PL 27 Jan 1960 ACCOUNTS POLICIES; HCO prJ 23 Jan 1966 ACCOUNTING POLICIES OF SCIENTOLOGY COMPANIES and the Audit Series. 48. Mission rent or mortgage payments are up-to-date or agreement gotten on payments and no threat to the mission. 49. Equipment lease payments are up-to-date or agreement gotten on payments and no threat to the mission. STAFF: 50. There are no violations of HCO PL 23 November 1959 EMPLOYMENT OF CRIMINALS FORBIDDEN. *51. All mission staff working for the organization after 6 November 1986 have filled out an 1-9 form (Immigration & Naturalization Service form) showing that they are eligible for employment and these forms are kept on file by HCO. *52. All foreign staff have a visa or work permit which authorizes them to work for the mission. 53. All minors on staff are working in full conformance with all laws pertaining to the employment of minors, including meeting the necessary requirements for public education. IN OUT N/A

TECHNICAL:
54. Every person starting the Purification Rundown has signed the most recent release form. 55. Every person starting the Purification Rundown has obtained medical approval from an informed and reliable medical practitioner who has checked blood pressure, kidneys and has checked for anemia and has filled out the most recent medical authorization form.

IN

OUT

N/A

.,'

.J;

SPD 13.7.95RA X ATTACHMENT

5 -

56. Every person starting the Purification Rundown has obtained the necessary recommendations regarding vitamins and minerals used on the rundown. 57. Claims for refunds and repayments are standardly handled on mission lines per policy. (To count this rudiment in, claims must not be Type C and must be handled within 6 weeks of receipt.) 58. There are no illegal PCs on auditing lines, per HCO PL 6 December 1976RB, ILLEGAL PCS, ACCEPTANCE OF - HIGH CRIME PL. 59. The Dianetics registration signs are prominently displayed in the mission (HCO PL 12 June 1969 DIANETIC REGISTRATION) .
60. PC folders and ethics files are labelled as confidential and protected by the Priest/Penitent Privilege, per SPD 118R, LABELLING OF TECHNICAL AND ETHICS FILES.
TAX COMPLIANCE RUDIMENTS

IN

OUT

N/A

*61. There are no violations of SPD 13 July 95 VI, SELF-DEALING. *62. All required tax filings are up-to-date, with no backlog of undone filings existing, and backed up by defensible records which match what is reported to the government on the tax filing. *63. All required tax payments are up-to-date and there is no backlog. *64. The corporation and its agents refrain from participation or intervention in any political campaign on behalf of or in opposition to any candidate for political office. (Note: candidate's forums or voter education activities which do not show favoritism to any particular candidate are okay.) *65. W4 forms have been obtained from all newly hired staff and are updated whenever required. (Consult IRS Circular E, Employer's Tax Guide, if there are any questions. ) *66. Payroll is computed standardly each week with state and federal withholding taken out weekly. (See IRS Circular E and appropriate publication of your state tax agency.) *67. Sales tax is properly computed & collected on all transactions where this is required. *68. Invoicing of sales tax is properly done so that the purchase price and sales tax collected are both clearly shown. *69. Money is set aside weekly to pay taxes in accordance with local law (sales tax, VAT, etc.) and is held onto until due to be paid and is then paid over to the appropriate tax agency. It is never used for anything else. *70. The 941 (federal payroll tax quarterly return) is filed quarterly within 30 days after the end of the calendar quarter and it is ensured the exact amounts as indicated on the 941 are paid. *71. The state payroll tax report is filed when due.

*72. W2s (the IRS form which states how much each employee earned for the year) are made out and distributed to all employees by January 31st of the following year.

SPD 13.7.95RA X ATTACHMENT

- 6 -

*73. W2s are filed by the church corporation with the IRS with W3 (the overall cover report form) by February 28th of each year. *74. W2s are filed with the state in accordance with the laws of your state. *75. In accordance with the Tax Compliance Manual, no FSM commissions are paid to any US individual or mission without having that individual's or mission's social security number or tax ID number on file. *76. W9s have been obtained and are on file for any other required individuals as described in the Tax Compliance Manual to whom the mission made payments and to whom the mission is required to give a Form 1099. *77. 1099s are given out to all required non-employees and FSMs by 31 January of the following year if they were paid $600 or more by the mission in the year before. *78. Copies of 1099s are filed with the IRS with cover form 1096 by February 28th of each year. LEGALLY REQUIRED DATES FOR YOUR MISSION: IN OUT N/A

List out all legally required rudiments for your mission including filing dates for taxes, renewal dates for insurance, permits, etc., for the year and mark them as IN, OUT or N/A. Use more space as needed. 79. 80. 81. 82.

SCIENTOLOGY, HCO, PURIFICATION RUNDOWN and DIANETICS are trademarks and service marks owned by Religious Technology Center and are used with its permission. Printed in U.S.A.