Posts Tagged ‘tax-exempt’

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Canadian auditors: Game over for Islamic charity

September 29, 2013

It’s final.  ISNA’s tax-exempt status has been revoked by the Canada Revenue Agency after an efficient and pointed audit that revealed ISNA sent nearly $300,000 to a terrorist organization in Kashmir.  Language from auditors and tax professionals is normally guarded, nuanced, and measured.  Read with that understanding of their profession in mind, the public announcement by CRA of their findings is scathing.  An excerpt follows.  Thanks to the reliable Gisele for sending this in:

…Our analysis of the information obtained during the course of the audit has led the CRA to believe that the Organization had entered into a funding arrangement with the Kashmiri Canadian Council/Kashmiri Relief Fund of Canada (KCC/KRFC), non-qualified donees under the Act, with the ultimate goal of sending the raised funds to a Pakistan-based non-governmental organization named the Relief Organization for Kashmiri Muslims (ROKM) without maintaining direction and control. Under the arrangement, KCC/KRFC raised funds for “relief work” in Kashmir, and the Organization supplied official donation receipts to the donors and disbursed over $281,696 to ROKM, either directly, or via KCC/KRFC.

Our research indicates that ROKM is the charitable arm of Jamaat-e-Islami, a political organization that actively contests the legitimacy of India’s governance over the state of Jammu and Kashmir, including reportedly through the activities of its armed wing Hizbul Mujahideen. Hizbul Mujahideen is listed as a terrorist entity by the Council of the European Union and is declared a banned terrorist organization by the Government of India, Ministry of Home Affairs, under the Unlawful Activities (Prevention) Act of 1967.

Given the commonalities in directorship between ROKM and Jamaat-e-Islami, concerns exist that the Organization’s resources may have been used to support the political efforts of Jamaat-e-Islami and/or its armed wing, Hizbul Mujahideen.”

The Government of Canada has made it clear that it will not tolerate the abuse of the registration system for charities to provide any means of support to terrorism. Canada’s public policy recognizes that the tax advantages of charitable registration should not be extended to organizations whose resources may have been made available, knowingly or unknowingly, to a terrorist entity, whether such financing is direct or indirect through organizations that claim to have nominally “charitable,” social, or cultural aims…

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Front group finance: recommended reading

May 23, 2013
  • Are tea party groups subjected to greater scrutiny than Islamic charities? A nonprofit consultant says yes (h/t creeping)… more>>
  • How Saudi charitable fronts pump millions of dollars via hawala into Kashmir to transform it into a valley of Wahhabism… more>>
  • Islamic charities have exploited America to fund Chechen jihadists since 9/11… more>>
  • No longer confined to the blogosphere, the Associated Press reports on the legal battle between a Christian publisher and a terror-linked Muslim syndicate… more>>
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Canada’s taxman cracks whip on Muslim Youth

March 14, 2012

And the Canada Revenue Agency deserves a standing ovation for it.

Prior to 9/11, the World Assembly of Muslim Youth (WAMY) and its close North American affiliate known as the Benevolence International Foundation (BIF) made up one of the three charitable front groups that Osama Bin Laden depended on the most for Al Qaeda’s funding (the other two being the Muslim World League and the Qatar Charitable Society).

Now the Canada Revenue Agency has stripped WAMY’s Canadian branch of its tax-exempt status for its failure to prove that it is distinct from its parent organization (WAMY in Saudi Arabia) or to maintain an actual charitable purpose.

In 2011, the Canada Revenue Agency also revoked the tax-exempt status of the Islamic, bogus front charities known as the World Islamic Call Society (an entity sponsored by Muamar Qaddafi) and IRFAN (a Hamas-tied charity).

Unfortunately, the decision does not close WAMY or prevent it from raising funds, but only prevents contributions to WAMY from being claimed as tax-deductible expenses.

H/t to GMBDR, which points to this story from the National Post as further evidence of WAMY’s financial difficulties over the last couple years.

Canadian Muslim youth group tied to al-Qaeda stripped of charitable status

Mar 6, 2012 – 8:47 PM ET | Last Updated: Mar 7, 2012 8:58 AM ET

A Canadian Muslim youth organization has been stripped of its charitable status after a Canada Revenue Agency investigation linked it to a Saudi-based group that allegedly financed Islamist terror campaigns.

An audit of the World Assembly of Muslim Youth revealed the charity had developed ties to a number of organizations that allegedly helped fund al-Qaeda operations around the world and failed to comply with a number of standards required for charities to maintain their status.

In a warning letter to the Toronto-area organization last summer, CRA director-general Cathy Hawara said “our analysis of the Organization’s operations has led the CRA to believe…[it] was established to support the goals and operations of its parent organization, located in Saudi Arabia, which has been alleged to support terrorism.”

WAMY, known in Canada for running Islamic camps and pilgrimages for youth, was stripped of its status on Feb. 11. It failed to keep proper books and records, maintain a specific charitable purpose and distinguish itself from parent organization WAMY (Saudi Arabia), which had been alleged to support terrorist activity, the CRA audit said.

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For-profit halal board claims tax-exempt status

January 24, 2012

Wahhabi-backed U.S. halal certifier pays top officers 6-figure salaries, gets $5 million in business income, claims public charity status

If a food manufacturer wants to call its products halal, and obtain a label that attests to its halal compliance, that manufacturer must submit an application for review by a halal certification organization.

In the U.S., halal certifiers are not government entities and, unlike organic food certifiers, are not accredited by the government.  The halal boards are privately run.

One of the largest halal groups is the Islamic Food and Nutrition Council of America (IFANCA), a Chicago-based multi-million dollar enterprise.  But as Family Security Matters has noted, “There are very few transparent news reports of the expansion” of the halal industry in North America.  The time has come for fuller scrutiny.

First, IFANCA proclaims on its own website that it is recognized and endorsed by the Saudi-based, Wahhabi hegemon Muslim World League.  The MWL has funded Al Qaeda, Hamas, and other terrorist organizations throughout the world in an effort over several decades to export and ingrain Wahhabism across the planet.  But this doesn’t seem to bother IFANCA.

Second, IFANCA claimed tax-exempt status in its 2010 tax return even though the vast majority of its reported revenues comes from “inspection fees.”  These are fees that IFANCA charges to food producers for the “privilege” of sporting IFANCA’s halal food logo.  Such fees sound a lot more like ordinary business income that should be taxable rather than charitable or “public” contributions which would qualify the entity for tax-exempt status.  IFANCA’s Form 990 showed $5,519,829 in inspection fee revenue.  Its only other reported revenues were $14,466 in gifts.

To qualify for tax-exempt status, a charity needs to get over one-third of its income from donations or grants and no more than one-third of its income from business activity.  With 100 percent of its income from apparent business activity, IFANCA falls far short of federal standards for a nonprofit charity.  (IFANCA’s six-figure salaries to its president and vice-president documented in its tax returns may also raise a few eyebrows.)

IFANCA casts itself as an educational entity of sorts, promoting “knowledge” and “community development” with respect to halal foods.  But it does not base its claim for public charity status on its educational or religious mission, but rather by describing the inspection fees as public contributions.

IFANCA’s tax approach makes it relatively unique among food certification groups such as organic, vegan, and kosher certifying entities.  Several U.S. organic food certifiers are tax exempt on the bases of Section 501(c)(5) of the Internal Revenue Code because they have an agricultural mission—not on the basis of any professed public charity mission under 501(c)3.

The Vegan Awareness Foundation, which is a major certifying entity for vegan foods, maintains tax-exempt status on the basis that it receives a substantial portion of its revenues from donations or grants—not from site inspections.

Many kosher certifying entities are set up as regular businesses and pay taxes.

The IFANCA case illustrates a flawed federal system that accepts 99 percent of all claims for tax-exempt status.  The IRS can start making amends by revoking IFACNA’s tax-exempt status.

Moreover, due to its tax-dodging behavior and World Muslim League affiliation, consumers should avoid buying any IFACNA-certified foods, and grocers should refrain from stocking their shelves with such products.

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Funding jihad is not a tax-exempt activity

October 26, 2011

IRS Form 990, question 76:  does your charity engage in any other activities?  One Islamic charity’s answer:  does funding jihad count?

The First Circuit has reinstated the convictions of the three jihadists who ran the Massachusetts-based Care International, who argued that the IRS’s tax form for nonprofits, Form 990, is too vague.  Money Jihad has looked at a lot of 990s.  Overall, the wording on the tax form is pretty direct.  There may be some legal grounds to question whether the IRS is specific enough on certain concepts, but excluding the publication of your jihadist magazine from your list of activities raises a red flag (or the green flag of Islam or the black flag of jihad as the case may be).

Peter J. Reilly makes some great points in this piece from Forbes last month:

I both love and hate Form 990.  I hate it because it is a real pain to prepare and review.  I have to deal with it both for clients and also in my capacity as a volunteer.  One of the downsides of being a CPA is that when you want to help a not for profit, they usually rope you into being the treasurer or chairing the finance committee. I love 990’s for the information they provide about not-for-profits.  Most not for profits, except churches, are required to file them and they are public records… Whenever I write about a case that in any way involves a not-for-profit, I will look at its 990 and I find it often adds an interesting dimension as in this  donated to .  Useful as 990’s are, I would not have thought there was a role for them in the War on Terror.  Silly me.  The First Circuit’s decision in  has set me straight.

The case was an appeal of criminal convictions of Emadeddin Muntasser, Muhamed Mubayyid, and Samir Al-Mon.  The government was also appealing the District Court’s overturning of the jury verdict on some of the counts.  The case is largely about Form 990 with a particular emphasis on Question 76.  Question 76 asked if the organization has engaged in any activities not previously reported to the IRS.  Like supporting jihad for example.  That is not generally thought to be a valid exempt purpose.

The defendants’ twenty-four day jury trial focused on the circumstances motivating Muntasser’s formation of Care in 1993; the defendants’ failure to disclose some of Care’s activities, such as the publication of certain newsletters from 1993 to 1997; and Care’s support for, and promotion of, Islamic jihad and fighters known as “mujahideen.”  The government’s central theory at trial was that Muntasser had established Care in order to fraudulently obtain a tax exemption, so that contributions being used to finance mujahideen overseas could be deducted from individual tax returns as charitable donations.

Care was the successor to the Boston branch of  an organization called Al-Kifah –

Among its activities, Al-Kifah’s Boston branch published a pro-jihad newsletter entitled “Al-Hussam,” which translates from Arabic as “The Sword”; it sold books and audiotapes extolling the cause of jihad; and it promoted sermons and lectures by like-minded Muslim leaders. It also solicited substantial charitable donations through the publication of an annual Zakat Calculation Guide. 4 Although the organization advertised itself as a tax-exempt charity, it had never been granted charitable status by the IRS.

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IRS revokes CAIR’s tax-exempt status

June 28, 2011

The IRS has revoked the tax-exempt status of the Council on American-Islamic Relations.  CAIR hasn’t filed a single 990, a fairly simple tax form required for most nonprofit organizations to submit, in over three years!  (See our related coverage here from last year.)  This is in line with a pattern of slipshod accounting, misappropriation, unknown overheads, missing money, mysterious spending, and unacceptable financial controls by Islamic entities throughout the world.

The Investigative Project on Terrorism hints that CAIR did not file the required paperwork because it would reveal their reliance on foreign funding sources.  That is plausible because, if you were the attorney for CAIR, you too would probably make the decision that it’s better to lose your tax-exempt status than it would be to be prosecuted in federal court for violating FARA, the Foreign Agents Registration Act.  (CAIR’s FARA problem is documented here, which was exacerbated by CAIR’s servile request to Libyan looney-toon Muamar Qaddafi.)  Violations of FARA carry up to a five year prison sentence.

But as a co-conspirator with the Holy Land Foundation in its scheme to fund Hamas, CAIR could be concealing far worse truths than its Gulf revenue stream.  Missing 990s not only means that we don’t know CAIR’s funding sources, but we don’t know much about their expenditures either.  CAIR’s historic involvement in terror finance schemes is chilling.

From the Politico (which notes that CAIR lied to their own reporter for this story) on June 23:

CAIR loses nonprofit status

The Council on American-Islamic Relations has lost its nonprofit status, according to the Internal Revenue Service.

The civil rights group, long accused of ties to radical Islam, is on a list of 275,000 organizations who have not filed the requisite paperwork with the IRS to maintain nonprofit status. Tax law requires annual disclosure of assets, expenditures and salaries for 501(c) nonprofits. Both CAIR and sister organization CAIR Foundation have lost their status.

A CAIR attorney initially told POLITICO that its appearance on the IRS list referred to a defunct arm of the nonprofit, and that CAIR and CAIR foundation were unaffected — a claim that a review of the IRS documents did not support. CAIR then told POLITICO the IRS was to blame, citing a number of other errors that have occurred on the IRS list. However, CAIR could not produce their IRS disclosure forms for 2007 through 2010 — which are required to be open for public inspection.

“We are looking into all of these issues and are working with the IRS to clear things up,” CAIR spokesman Ibrahim Hooper told POLITICO. “CAIR was clearly not targeted or singled in any way by the IRS.”

CAIR was named an unindicted co-conspirator in a landmark terrorism financing trial in Texas. Some Islamic charities facing federal investigations have been advised by attorneys not to file IRS paperwork for legal reasons, but there is no evidence that CAIR is currently the target of a federal probe.

Incidentally, the move helps IRS catch up with its Canadian counterpart, Canada Revenue Agency, which has so far been more agressive on revoking the tax-exempt status of nefarious Islamic charities.

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Tax preference for Cordoba Initiative, tax penalty for pro-Israel group

August 29, 2010

While the developers of the Ground Zero Mosque may finagle tax-exempt financing (see Creeping Sharia), a pro-Israel organization is being denied tax-exempt status by the IRS according to a new lawsuit.  Check out the coverage on TaxProf Blog:  Lawsuit: IRS Using Bob Jones University to Deny Tax-Exempt Status to Pro-Israel Charity.

Oh, an in addition to tax-free financing, it’s worth noting that a lot of mosque projects involve interest-free financing from the North American Islamic Trust.  From NAIT’s website:

NAIT has advanced millions of dollars in interest-free loans to centers to complete their infrastructure projects. Relationship with NAIT (e.g. the case of Tulsa, Oklahoma) can help in inducing the signing of construction contracts in the face of limited immediate availability of construction funds. Affiliation with NAIT helps in obtaining and renewing property tax exemption, and in dealings with the IRS.

NAIT is the waqf (Islamic endowment) component of the Islamic Society of North America.  Remember that ISNA, NAIT, and CAIR were all unindicted co-conspirators of the Holy Land Foundation, the American Islamic charity convicted of funding Hamas.