Government Probes Muslim Charities

Congressional scrutiny around the link between charities and terrorist organizations continues to grow. As first reported in the Washington Post on Jan. 14, Senate Finance Committee Chairman Charles Grassley (R-IA) and ranking member Sen. Max Baucus (D-MT) requested the Internal Revenue Service (IRS) to produce the confidential financial records and tax documents of several Muslim charities and Islamic philanthropic organizations. The Dec. 22, 2003 letter was sent in order to increase government oversight over groups that "finance terrorism and perpetuate violence."

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GAO Issues Report on Terrorist Financing

The General Accounting Office (GAO) has published a report by two Senators that reviews use of alternative financing mechanisms for terrorism and recommends changes to address challenges. The report, Terrorist Financing: U.S. Agencies Should More Systematically Assess the Use of Alternative Financing Mechanisms (GAO-04-163), has implications for nonprofits.

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OMB Watch Calls for Withdrawal of Anti-Terrorist Financing Guidelines for Nonprofits

The IRS is seeking comments on ideas that U.S. charities might employ to prevent diversion of charitable assets to terrorists. In seeking comments, the IRS references guidelines issued by the Treasury Department last November that were published without public comment.

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IRS Announcement 2003-29

BNA published the text of IRS Announcement on International Grant-Making and Activities by Domestic Section 501(c)(3) Organizations, below: International Grant-making and International Activities by Domestic 501(c)(3) Organizations: Request for Comments Regarding Possible Changes Announcement 2003-29

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Treasury Department Issues Anti-Terrorist Financing Voluntary Best Practices"

The Office of Foreign Assets Control of the U.S. Treasury Department has issued voluntary best practice guidelines for U.S. charities that cover governance, disclosure, transparency and financial practices for all charitable activities. In addition, special procedures for groups that distribute funds to foreign organizations are listed.

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Anti-Terrorism Bill Could Impact Nonprofits

The "USA PATRIOT Act" (PL 107-56) could pose big problems for nonprofits, especially those that advocate changes in US foreign policy or provide social services to individuals that become targets of government investigations.

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