Posted on May 30, 2007

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IRS Poor at Spotting Charities With Possible Terrorist Links, Report Finds

According to a report released last week, the Internal Revenue Service does a poor job of identifying tax-exempt groups that may have links to terrorists, the Associated Press reports.

Issued by the office of the Treasury Inspector General for Tax Administration, the report criticizes IRS investigators for relying on paper documents and a limited terrorist watch list to pinpoint possible ties between charitable and other nonprofit groups and terrorists, and warns that charities with terrorist ties could go undetected by the IRS and not be reported to the federal authorities fighting terrorism. "The IRS clearly needs to use a more inclusive terrorist watch list and to computerize its tracking system as soon as possible," said Inspector General J. Russell George, whose office provides independent oversight of the tax agency.

Since October 2002, the IRS has been manually comparing names and organizations to a list maintained by the Treasury Department Office of Foreign Assets Control. While the OFAC list contains about 1,600 unique terrorist and organization names or aliases, the list maintained by the Terrorist Screening Center, an interagency operation run by the FBI, contains the names of more than 200,000 people suspected of terrorist activities. Following the recommendation of the inspector general, the IRS is developing a long-term strategy to automate the process of identifying potential terrorists and is testing software to check names on forms filed by charitable groups.

"Shutting down terrorist financing is one of the biggest challenges facing our country in the aftermath of the 9/11 attacks," said Senate Finance Committee chair Max Baucus (D-MT). "It's disturbing that the Treasury Department does not require the IRS to use the most basic tool for fighting terrorism financing: a comprehensive watch list."

Abrams, Jim. “Report: IRS Poor at Finding Terrorists.” Associated Press 5/25/07.

Primary Subject: Public Affairs
Location(s): National, Washington, DC

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