Originally published on Forbes.com Aug 21st, 2013
A recent IRS ruling (PLR 201332013) has denied exempt status to an unnamed group dedicated to teaching people about “true meaning of Islam focusing on the Shi’a school of thought, religious tolerance, and peaceful means of conflict resolution” . The lesson of the ruling is that in establishing exempt status, the burden is on the organization requesting it. The ruling indicates that exempt status was not denied because the IRS did not like the answers it was getting, but rather because it was not getting much in the way of answers at all. It makes you wonder if some of the Tea Party folks who think they have been subject to harassment have just been putting up with the regular drill that happens when the IRS cannot figure out what is really going on.
What The Group Was About
I’m going to refer to the organization in this ruling as the Group, rather than trying to come up with a clever name. According to the ruling its mission is:
Islamic Religious teachings to include Holly Quran, Create understanding and sympathy for all religions, help the needy all over the world, Teach principles taught by the Holly Prophet Mohammed (PBAU) and his progeny utilizing Satellite technology to broadcast internationally.”
The Group indicated that it would educate people through television programs, seminars, publications and other similar forums about the true meaning of Islam focusing on the Shi’a school of thought. The Group provided a breakdown of what it would be discussing:
— Social: *****% of time and resources; to include debates on social, economical, and cultural challenges. It will include discussions on the rights of women and children, and documentaries on the professional and personal lives of successful Muslims in the West.
— Religious: *****% of time and resources; to focus on the prophet of Islam’s biography, truth about the event of Ashura, teaching of Islam through the Jaffari school of thought, teaching, reading, and meaning of Qur’an, among other topics.
— Cultural: *****% of time and resources; to present the culture of Islam, Islamic jurisprudence, introduction and understanding of Shi’a culture, rise and fall of Islamic empires, and other related topics.
— Scientific: *****% of time and resources; to introduce discoveries Muslims made throughout history, current scientific discoveries as seen through Qur’an and Islamic perspectives, and other related topics.
— Kids/Youth Content: *****% of time and resources; aimed at teaching children and youth religious tolerance and peaceful conflict resolution. Programs will teach children the true meaning of Islam, reciting the Qur’an, and challenges pertaining to the growth of Muslim adolescent and youth in the West. These programs will also focus on the analysis of child abuse and its solutions, and other related programs.
— Entertainment: you failed to include this category in your allocation of time and resources; this would include short education films on moral issues, historical Islamic movies, game shows, and other related programs.
Picky Picky IRS Wants Some Details
After that things started getting a little vague.
In Letter3 we asked you to provide a list of names and qualifications of the people that will contribute content to your religious and education programming and the people that will appear as experts on your programs. In Letter4 you provided a list of seven individuals. You stated that most have studied many years in Islamic seminary in different Islamic countries and have also obtained secular degrees from different universities. You failed to provide individual qualifications for each person named.
Then there were the seminars or maybe not:
In Letter1 we asked you to describe what you had accomplished in furtherance of your seminar activities. We also asked you to describe the content of your seminars or planned seminars. You responded in Letter2 that you had not conducted any seminars. In Letter3 we requested a schedule of each seminar you had conducted since the date of Letter2. We asked you to include the names, dates, subject matter, and location of each. You responded in Letter4 that you had not conducted any seminars since you were formed and have no plans to do so for at least the next two years.
And the publishing:
We asked you in Letter1 to describe what you had accomplished to date in furtherance of your publishing activities. We also asked you to describe the content and distribution of your publications. You responded in Letter2 that you had not published anything to date nor had you set a date for publication. In Letter3, we asked you to provide copies of any published material or a description of planned publications since the date of Letter2. You responded in Letter4 that you had still not published anything and have no plans to do so in the near future.
Finally there was the broadcasting:
You stated that you would spend *****% of your time and resources on broadcasting activities. Yet when we asked you for information about your broadcasts, including information regarding their subject matter, you provided only cursory information — no more than a few words. We asked for the dates and locations of the broadcasts, but you provided none.
They couldn’t describe what they had done, but they must have been doing something, because they were spending money:
Though you were unable to describe your broadcasting activities with any precision and have not conducted any seminars, publishing, or research as you proposed to do in your application, you nevertheless incurred expenses of $x2 for Partial Year, a substantial portion of which you allocated to satellite services, editing services, airline tickets, and travel. Owing to your seeming dearth of activities over the same period (for example, it appears that your website has not been updated since before Partial Year), it is uncertain whether such expenses were incurred in furtherance of your exempt purposes.
There were also concerns that the tight management team of “Founder” and “Cofounder”, who are related, and one other director.
While you have added an unrelated individual as your third director, it is questionable whether a person who works in the field of automobile insurance will have a significant voice in the affairs of a satellite television network.
More Targeting ?
Taking the facts in the ruling at face value, you can understand why the Group was turned down. On the other hand, the Group did seem to receive quite a bit of scrutiny. Was this more targeting ? Perhaps.
Z Street, a pro-Israel group, is suing the IRS over its loss of exempt status. They are talking about a BOLO similar to the Tea Party one concerning “disputed territories in the Middle East”. The IRS may be particularly jumpy about purported Islamic charities since the fall-out from the case of Muhamed Mubayyid and Care International, Inc, which turned out to have some purposes not usually thought to be exempt – like funding jihad.
I’m hoping that one of my diligent readers will do a better job than I did on penetrating the redaction of the PLR and identifying the Group. Then we can have a good argument about whether or not they deserved to be targeted.
You can follow me on twitter @peterreillycpa.