Mosul (Reuters) -- After they seized Mosul two years ago and destroyed the priceless Mesopotamian artifacts in its museum, Islamic State militants found a practical use for the building -- they turned it into a tax office.

The outside world learned of the museum's initial fate from a video Islamic State released months later showing its fighters smashing Assyrian, Akkadian, Babylonian, Persian and Roman artifacts, many of them two millennia old or older.

They wanted to destroy any history that did not agree with their extreme version of Sunni Islam.

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Iraqi troops took the museum back last month from the militants, who left its once-famous collection in a sorry state.

Remains of an Assyrian winged bull statue, some carved stone coffins, mosaics and two black blocks with Islamic calligraphy are just about all that's left. Smaller pieces from other items litter the floor.

Government forces are still battling the militants just a few hundred meters (yards) away in the Old City, their last stronghold in Iraq, so the rubble-strewn museum is still out of reach for archaeologists to assess the damage.

Apart from soldiers stationed to guard it, a stray cat nibbling at discarded army rations seems to be the building's only inhabitant. Machine gun fire and mortar rounds rang out from a distance as journalists made their way through the museum.

In a basement room under the main exhibition halls, there was a pile of envelopes used to issue orders to pay Islamic tax, one of main sources of funding for the militants.

"The Islamic State ... seeks to levy your duties which were forced by God on the rich people's money," read a message on the envelope stamped with the group's black-and-white flag.

The "Diwan Zakat", or Islamic tax department, then left a space for names and file numbers to identify the payments.

Next to the tax receipts were green leaflets with Koran quotes, from the same department based in "Nineveh Province", whose capital is Mosul.

SENSE OF ORDER

The video released in 2015 to show militants wielding sledgehammers to smash museum statues they regarded as idolatrous sparked a global outcry.

They also ransacked the ancient palace in the Assyrian city of Nimrud south of Mosul. The group released another video showing its fighters using bulldozers and electric drills to tear down murals and statues there.

In Palmyra in neighbouring Syria, Islamic State dynamited two temples and the city's imposing triumphal arch before it was driven out of the former tourist magnet.

Built in 1952, Mosul museum housed more than 2,000 artifacts but officials have given conflicting accounts of how many were there when the militants overran the city. Some looting had already taken place after the U.S.-led invasion of Iraq in 2003.

"The destruction is a catastrophe," said Nabil Noureldin, a former lecturer at Mosul University who fled after Islamic State came and now lives in Turkey. "These are priceless items."

The full extent of the destruction would only become clear when experts can verify the remains against copies of the original items stored at Baghdad's museum, he added.

The militants searched the building methodically for valuables, even breaking up the ground floor in their search for vaults with artifacts inside that they could sell, according to Federal Police officers.

Apart from taxes, oil sales, antiquities smuggling and ransom from kidnappings were also sources of income for Islamic State.

In July 2015, U.S. authorities handed Iraq a hoard of antiquities it said it had seized from Islamic State in Syria.

Excavations under an ancient mosque elsewhere in Mosul, recently discovered after the militants retreated, showed that they had preserved its artifacts for possible smuggling abroad.

In the museum, the militants left behind many trivial items that should have been just as repugnant to their strict Islamist ideology as the priceless statues they destroyed.

There were cards describing main museum artifacts in English and Arabic, postcards from the souvenir shop showing a princess's skull and dusty books about Iraq's contribution to Arab history.

There was also a pamphlet for an "international festival" on April 14, 1994, a time when the late strongman Saddam Hussein still in power and Iraq was cut off from the world under U.N. embargo.

Editing by Tom Heneghan.