Scientology’s Flag Land Base lost money in 2020? We beg to differ.

Six years ago we wrote about government data that researcher RM Seibert uncovered showing without a doubt that Scientology was abusing “R-1” religious visas in order to bring indentured servants to its “Sea Org” operations.

Enticing people to come from places like Russia, Italy, Mexico, and Hungary, Scientology was bringing them into the country under the special visa, which is supposed to be reserved for people coming to do “religious” work. Instead, these people were doing menial labor at Scientology’s bases, with their passports confiscated and no way to leave the organization.

On September 8, New York magazine took Seibert’s data and really ran with it, producing a lengthy story that included interviews with several former Scientology workers who talked about coming to this country under deceptive terms by the church.

It’s a well-researched and well-written piece. But one statement in it really made us do a double-take. The article said that in 2021, Scientology had joined complaints of other organizations that the pandemic had resulted in a government slowdown of new visa approvals:

“There is good reason to suspect that this slowdown has strained the operations and finances of the church. Financial documents recently made public show that its main Florida base lost money in 2020.”

Say what? The Flag Land Base lost money?

You have to understand something about Scientology’s structure to understand why this statement hit us as so stunning, and, frankly, unlikely.

The way Scientology is set up, Scientologists from around the world, no matter where they are, must ultimately travel to Clearwater, Florida to its spiritual mecca, the “Flag Land Base,” in order to move to the higher levels of the “Bridge to Total Freedom.”

As a result, “Flag,” as it’s known, is the real financial engine of Scientology. People like Mat Pesch, who worked in finance at the base, have said that Flag was regularly taking in one or two million dollars a week, and that Flag took in more money in a year than the rest of the worldwide Scientology organizations combined.

It is hard to imagine that Flag, even in Scientology’s leaner years, was actually losing money.

So what was New York magazine talking about? The statement in the article had a link that led to the year 2020 IRS 990-T filing for the Church of Scientology Flag Service Organization.

FSO is the Scientology entity that runs the Flag Land Base. It is a tax exempt organization, one of many Scientology subsidiaries that was granted that status by the IRS in 1993. As a result, FSO is not required to file an annual tax return with the US government.

However, even tax exempt organizations like churches are required to file what’s called a “990-T” form for what is known as “unrelated business income.” And since 2006, a change in the law required those organizations to make their 990-T forms available for public view.

So, in other words, churches can still keep their finances secret, but if they receive business income for things unrelated to their exempt activity, they have to report it.

So, for example, if a church rented out its parking lot for a concert or something, and was paid for it, they would have to report it on a 990-T. And for the most part, if you were investigating the finances of that church, what it took in for renting out its parking lot would probably not be all that relevant.

And that’s also the case with Scientology. We first started talking about 990-T forms filed by Scientology organizations back in 2014 when we realized that there was something else about 990-T forms that we did find very relevant.

You see, when a church submits a 990-T and lists how much “unrelated” income it received, it also has to fill in a little box that is called “book value.” In other words, while the church is telling you how much it took in to rent out that parking lot, it also has to estimate how much the church itself is worth.

We found this very, very interesting in regards to Scientology entities. And so did Alex Gibney. He used the information we had found in Scientology’s 990-T forms for his 2015 HBO documentary “Going Clear,” pointing out that Scientology, even with its small membership, is worth several billion dollars.

OK, so getting back to the FSO and that statement by New York. The magazine had linked to FSO’s most recent 990-T, which showed a loss of $1,914 in taxable income.

But remember, that’s “unrelated business income,” and so what it tells us is that Flag lost a small amount of money in 2020 of “unrelated” income, which really isn’t as important as its main work of fleecing Scientologists coming to get their upper levels. In previous years, FSO had been reporting unrelated yearly income of about $200,000, which is chickenfeed for an organization taking in $50 to $100 million a year from upper-level Scientologists.

FSO is under no obligation to reveal what happened to its main income in 2020, when the pandemic forced it to shut down, at least for some time. (Our sources indicated that church leader David Miscavige did keep the place open using an elaborate quarantine and disinfection regimen.) While it’s possible that the pandemic had a significant effect on that main income, we just can’t tell from the 990-T form, which doesn’t reflect it.

And in fact, that 2020 form actually shows that FSO’s book value has ballooned, not shrunk. For the first time since 2008, (the earliest 990-T form for FSO we’ve seen) the organization has gone above a book value of $300 million.

Yes, the 990-T form for 2020, while showing that FSO did lose $1,914 in unrelated, taxable income, also revealed that FSO is now worth an overall $316,439,546.

The Flag Land Base, at least through 2020, was not losing value.

Since then? We expect the pandemic has hurt Scientology in a big way, and we’ll be very interested to see what it’s done to the book value of FSO. The organization’s 2021 report ought to be due in another month or so.

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