For 34 years, thousands of Scientologists traveled to Clearwater and stayed in hotels owned by their church, enjoying a free ride from the 5 percent tourist tax that other visitors pay at Pinellas' commercial hotels.
But that quietly changed earlier this year.
Pressed by the staff of Pinellas Tax Collector Diane Nelson, the Church of Scientology agreed to start collecting the tourist tax a few months ago and pay it monthly to Nelson's office, the St. Petersburg Times has learned.
It's a surprising reversal that will generate significant new revenue for Pinellas' tourist promotion efforts.
But the change raises questions about another tax that Pinellas hotel guests pay - the 7 percent sales tax. Does the church now collect that tax from its guests too?
The Florida Department of Revenue, which separately administers the sales tax, wouldn't say, citing state laws that make confidential almost all information about sales taxpayers.
The church, meanwhile, suggested it doesn't collect sales tax on hotel stays.
Asked about the tax, church spokesman Peter Mansell sent the Times a one-sentence statement: "The Church is generally exempt from sales tax."
Nelson and her staff would be surprised, they said, to learn the state didn't go after sales tax once the church agreed to pay the smaller tourist tax. They say the tourist tax and sales tax go hand-in-glove.
In general that's true, state officials said.
"I think it's probably a safe assumption to say the majority of the time, if you are obligated for one (tax) you'd have to also be obligated for the other if you're engaged in the activity of renting (hotel rooms)," said Marshall Stranburg, General Counsel for the Department of Revenue.
Gary Gray, a program administrator for the department, said the church is a registered taxpayer but he could not disclose whether it collects sales tax on its hotel rooms.
Nelson's chief tax auditor, Erin Sullivan, said she called the Department of Revenue in 2008 and was told the church wasn't registered to collect taxes on hotel stays.
If still true, the state may have missed out on years of revenue.
Scientologists who visit Clearwater often stay days at a time, sometimes weeks or months, while taking services at the church's sprawling downtown campus. The city has been Scientology's international spiritual headquarters since 1976.
Most of the visitors stay in one of the church's five downtown hotels, with a total inventory of 600 to 700 rooms. High on luxury, they charge nightly rates as high, if not higher, than the Tampa Bay area's leading hotels. Collecting an extra 12 percent - seven cents on the dollar of sales tax, plus a five-cent tourist tax - adds up quickly.
At the Fort Harrison and Oak Cove hotels, room rates start at $150 for a standard room with king bed, according to a recently published church rate sheet. Parlor suites go for $230 to $450.
Cabanas facing the Fort Harrison's pool and courtyard range from $250 to $600. The presidential suite is $1,500 a night. Over at Oak Cove, penthouse suites are $800.
If the church were to book parishioners into 300 of its rooms on a given night, with room rates averaging, say, $200, the nightly sales tax collections would total $4,200. Projected over a full year, the state would get $1.5-million in sales taxes alone.
Add the tourist tax, and the total grows by $1.1-million.
Sales tax revenues are sent to the state Department of Revenue, which returns to Pinellas the money generated by the seventh cent of sales tax. That funds the Penny for Pinellas program, which pays for major improvements to roads, parks, drainage systems and government buildings.
The tourist tax, which Pinellas imposed in 1978, originally was collected by the state but since 1990 has been collected locally. Sometimes called a bed tax, it pays to promote and develop the county's hotels and attractions.
Scientology is not new to paying local taxes. The church has paid property taxes on a portion of its Clearwater holdings since 1994, when it ended a long dispute with county officials who sought to tax the church from the time it started purchasing property in Clearwater.
The church took the county to court annually for more than a dozen years, arguing it deserved tax-exempt status.
Momentum tilted in the church's favor in early 1990s, when Scientology aggressively sought and won tax-exempt status from the IRS. That 1993 decision prompted the Pinellas property appraiser's office to exempt from property taxes those church properties used for religious purposes - course rooms, counseling areas, offices, staff housing.
But the office put on the tax rolls the nonreligious portions of those properties - hotel rooms, restaurants, guest workout facilities, swimming pools.
Today, the property appraiser's office exempts $58.5-million in church real estate but taxes church holdings valued at $31.9-million. Despite its many exemptions, the church is the third-largest payer of property taxes in downtown Clearwater with a 2010 tax bill that totals about $700,000.
Still, no one in the tax collector's office approached the church about paying taxes on hotel stays until recently, officials confirmed.
Sullivan, who heads up Nelson's tax enforcement unit, began to investigate whether the church qualified to collect the tourist tax in 2008. She said former Times reporter Jonathan Abel called to ask for public records of any hotel taxes the church might collect on its Clearwater properties. Sullivan told him the church wasn't applying the tourist tax.
But the question got her thinking.
No one from the tax collector's office ever approached the church about paying the tourist tax. Sullivan thought: Why not?
The church's Fort Harrison and Oak Cove hotels stand shoulder to shoulder with the county office complex. To get to downtown lunch spots, county workers walk right past the church's hotels, where guests often can be seen arriving in church vans, unloading luggage.
Sullivan's first step was to call the Department of Revenue in Tallahassee. Was the Church of Scientology registered to collect taxes on "transient rentals" - the bureaucratic term for rentals of six months or less in hotels, motels, condos and apartments?
No, she was told.
The state had issued the church a "consumer certificate of exemption," allowing it to avoid taxes when purchasing goods and services for its exempted practices, such as church operations. But that had nothing to do with the renting of hotel rooms.
Sullivan asked if the Department of Revenue wanted to help pursue the church. The agency declined.
"They felt (a church hotel stay) was not subject to the taxes - what they were doing was not a taxable transaction," Sullivan said.
"They didn't want to participate with us in this venture, so we were on our own."
Asked by the Times about the appearance that the local tax collector was more aggressive than the state in pursuing this new slice of revenue, Department of Revenue officials declined to comment. Stranburg, the department's general counsel, said answering the question would lead into areas that might violate taxpayer confidentiality.
After Sullivan's initial inquiries, her staff contacted the church, which referred them to a Clearwater law firm that for years has represented the church on local matters.
Sullivan's team called on their lawyer, Assistant County Attorney Sarah Richardson, who was guarded in a recent interview, also citing taxpayer confidentiality laws.
"I think we can say this much," she said. "The church immediately referred Erin's office to their attorney who just about immediately gave up some information that helped us with a dialogue."
Talks were off and on for months. Then Ed Armstrong, a partner in the firm, took over for the church, Richardson said. "Finally got it on track. Ed and I just started talking."
Earlier this year, the two sides agreed the church would register to collect tourist taxes, Richardson said.
Nelson confirmed the church has made monthly payments to her office, just like regular commercial hotels. Her office made the Department of Revenue aware of the change through an information-sharing program that aims to ensure both agencies are collecting all the taxes they should be.
Nelson said she also plans to follow up with the state about whether the church is paying the 7 percent sales tax, "to ensure all the laws are complied with and Pinellas is getting all the taxes they're due." Her office would do that with any taxpayer, she said.
Asked about its agreement to start collecting tourist taxes, the church responded with a one-paragraph letter from spokesman Mansell, who said, "there is no express exemption from the tourist development tax for religious and charitable organizations."
He added that the church's impact on the local economy was well-documented, regardless of whether it pays the tourist tax.
Neither Richardson nor Nelson would discuss whether the church made a payment for past due tourist taxes, as it did in 1994 for back property taxes.
"Can't go there," Richardson said.
Aware the church could emerge as a big player among Pinellas hotels collecting room taxes, Nelson said she chose to make no announcement about the successful negotiation because that is not her style.
"I just haven't found anything good about going out there and bragging about how much collection I can get out of somebody."
Nelson, who became tax collector in 2000, said she can't explain why her office didn't approach the church prior to Sullivan acting.
"Why we didn't do it earlier, I don't know other than - someone brought something to our attention."
Her predecessor, Fred Petty, said the county made no overtures to the church during those years either.
"I can't give you a good reason as to why, other than I didn't know of any good reason to go after them," said Petty, who served two terms as tax collector, mostly in the 1990s, after working in leadership positions in the office for 24 years.
It was Petty who pushed to have the county take over collection of the tourist tax from the Department of Revenue in 1990. The department "was collecting it as a part of the sales tax," Petty said. "It was around $4-million and I got it up to $8- or $10-million." He said he went after condo owners who weren't paying taxes on rentals.
Clearwater Mayor Frank Hibbard lauded Nelson's office for pursing the matter.
"It will make a lot of my citizens happy because they have always believed that the church ought to be paying more in taxes. And a lot of their buildings look, feel like hotels.
"So, it quacks, walks, it probably is a duck," Hibbard said. "And that's how I think a lot of people feel about several of their buildings. They serve as hotels."