January 22, 2004 | Read Time: 3 minutes
As part of an expanding Congressional investigation into alleged ties between charities and terrorist groups, the Senate Finance Committee has asked the Internal Revenue Service to turn over confidential records, including donor names, of 24 Muslim charities and foundations.
Some Muslim leaders and charity lawyers said that the Finance Committee’s request could discourage legitimate donations to Muslim nonprofit groups and that it represents an unusually broad — and troublesome — use of Congressional power. But Marc Owens, former head of the IRS exempt-organizations division and now a lawyer in private practice in Washington, said he was surprised that the committee had not pursued financial records of Muslim charities sooner.
Congressional committees “are supposed to be watchdogs, but they haven’t been barking much,” he said. “The IRS needs to enforce the law, and if no one questions the IRS on what it is doing, it might not do as good a job as it can.”
Two Years of Probes
The Senate inquiry follows more than two years of investigations by the Federal Bureau of Investigation and the Treasury Department into the activities of Muslim charities that the Treasury Department has accused of having ties to Al Qaeda and other terrorist groups. Since the attacks of September 11, 2001, the Treasury Department has frozen more than $137-million in assets of 18 charitable organizations and shut down many of the largest Islamic charities with operations in the United States.
“Government officials, investigations by federal agencies and the Congress, and other reports have identified the crucial role that charities and foundations play in terror financing,” Charles E. Grassley, Republican of Iowa, who chairs the Finance Committee, and Max S. Baucus, Democrat of Montana, the committee’s ranking minority member, wrote to the IRS. They added: “We have a responsibility to carry out oversight to ensure charities, foundations, and other groups are abiding by the laws and regulations, to examine their source of funds, and to ensure government agencies, including the IRS, are policing them and enforcing the law efficiently and effectively.”
In recent months Senator Grassley has also demanded to see records of other charities alleged to have committed financial improprieties, including the American Red Cross and the Nature Conservancy.
Forms 990 Requested
The IRS probably will comply with the Finance Committee’s request to see the records of the Muslim charities because the committee has the legal authority to examine confidential financial records of nonprofit and for-profit organizations, according to Mr. Owens. IRS officials did not return phone calls to The Chronicle seeking comment on the Finance Committee’s request.
The committee’s letter includes a request for copies of Forms 990 informational tax returns filed by the 24 organizations, including names of donors. It also requested copies of Forms 1023, the charities’ applications for tax-exempt status, and any materials from examinations, audits, and other investigations, including of criminal matters.
The committee asked that the IRS turn over the material by February 20.
Charities are required to disclose on their Forms 990 the names of all donors who contribute $5,000 or more during a fiscal year. While most of the information in Forms 990 is available for public inspection, donor names are not.
‘A Publicity Stunt’
Muslim leaders and lawyers for Islamic charities expressed concern about the investigation, saying it could scare away Muslim donors from contributing to legitimate humanitarian causes.
“This to me is just a publicity stunt,” says Roger C. Simmons, a lawyer who represents the Global Relief Foundation, a charity whose assets were frozen more than two years ago. “What does the Finance Committee think it is going to find — something the FBI couldn’t find?”
Ibrahim Hooper, a spokesman for the Council on American-Islamic Relations, a Washington advocacy group, said he fears that the Senate investigation casts all American Muslims as terror suspects. “They want to send the message that if you’re Muslim and you are active at any level in the community, you are going to be a target,” he said.
A Senate aide who asked not to be identified said the Finance Committee did not intend to focus solely on Muslim charities and that at this stage the inquiry does not implicate any charity in wrongdoing.
