Treasury Suspends “Sham Charity’s” Tax Exempt Status for Supporting Terrorism
On Tuesday, Treasury’s Office of Foreign Assets Control said that the Samidoun Palestinian Prisoner Solidarity Network is a “sham charity” that provides material support to the Popular Front for the Liberation of Palestine, a designated Foreign Terrorist Organization. Canada made a simultaneous designation under its own laws. The U.S. designation was made under the authority of Executive Order 13224, as amended by Executive Order 13886. Samidoun is fiscally sponsored by the Alliance for Global Justice. Here is part of Treasury’s announcement:
Today, in a joint action with Canada, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated the Samidoun Palestinian Prisoner Solidarity Network, or “Samidoun,” a sham charity that serves as an international fundraiser for the Popular Front for the Liberation of Palestine (PFLP) terrorist organization. The PFLP, which was designated as a Foreign Terrorist Organization and a Specially Designated Global Terrorist by the U.S. Department of State in October 1997 and October 2001, respectively, uses Samidoun to maintain fundraising operations in both Europe and North America. Also designated today is Khaled Barakat, a member of the PFLP’s leadership. Together, Samidoun and Barakat play critical roles in external fundraising for the PFLP. Today’s action is being taken pursuant to the counterterrorism authority Executive Order (E.O.) 13224, as amended.
“Organizations like Samidoun masquerade as charitable actors that claim to provide humanitarian support to those in need, yet in reality divert funds for much-needed assistance to support terrorist groups,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “The United States, together with Canada and our like-minded partners, will continue to disrupt those who seek to finance the PFLP, Hamas, and other terrorist organizations.”
In coordination with Canada, OFAC is targeting a sham fundraiser whose efforts have supported terrorism. When terrorists and terrorist organization abuse the non-profit sector, legitimate organizations have more difficulty securing financial services. This impacts their ability to provide support for basic human needs like food, medicine, and shelter in Gaza and the West Bank. By publicly identifying sham charities, this action reduces the overall risk of the NPO sector and preserves access by legitimate humanitarian organizations to financial services.
Tuesday’s action provides an opportunity to compare present law with a recent bill regarding suspending tax exemption for terrorist supporting organizations. Critics say the bill gives Treasury the power to revoke tax exemption whenever it feels like it and with little regard for due process or constitutional rights. But Tuesday’s action was taken under current law and according to the Service, results in immediate and automatic suspension of tax exemption. No notice or opportunity to respond or anything.
The period of suspension [under IRC 501(p)] typically begins with the publication of the terrorist designation/identification by the appropriate federal agency (typically Treasury’s Office of Foreign Assets Control or the State Department) and not when the IRS subsequently publishes an announcement of the suspension. The IRS announcement helps publicize the suspension.
So Samidoun’s tax exemption is suspended effective on Tuesday. By contrast, Samidoun would be entitled to pre-suspension notice, access to “some” evidence (how much is anybody’s guess but its more than under current law), an opportunity to submit its own evidence, and an internal administrative appeal under the bill. That is way more process than current law provides. Current law provides nothing. In fact, all that Samidoun can do under current law is file an action in the DC Circuit to challenge the designation.
darryll k. jones