It has been reported that the Trump administration is considering signing an executive order to classify certain non-profit organizations as being associated with terrorism. If such organizations are identified, their tax-exempt status will be immediately revoked, and they could be paralyzed as a result.
The American Wall Street Journal reported this information on November 6, citing sources.
Sources familiar with the matter said that Trump administration officials have been busy working on this executive order for several months. They said that the specific content of the order is still being discussed, and it may not be finalized, or Trump may not sign it.
It is revealed that this administrative order will utilize a tax law provision that has not been actually tested. This will intensify the government’s scrutiny of tax-exempt organizations. It is also possible that it will be applied to some of Trump’s opponents and political rivals. Labeling these organizations as “terrorist” could have much faster consequences than the IRS’ usual procedures for reviewing and punishing violations by tax-exempt organizations.
It is still unclear how many groups this administrative order can apply to, and which groups it can apply to.
Trump signed an executive order last year requiring the IRS to ensure that no tax-exempt organizations engage in domestic terrorism or political violence, and to encourage the transfer of leads to the Justice Department. Officials have publicly emphasized these actions, but rarely mentioned how tax law provisions would be utilized.
"We are investigating how taxpayer relief qualifications are being abused, which charitable institutions have become fundraising channels for foreign influence activities, and how the people entrusted with managing these organizations inadvertently promote violence. Finance Minister Bernsten said in July that 'the evidence indicates where we should go, and we will not hesitate.' "
According to a memo obtained by a person directly involved in the matter and The Wall Street Journal, Trump administration officials have recently sought expertise from the IRS to assess how this executive order will be implemented. Another person familiar with the discussions said that government officials have been examining the bank records and other documents of non-profit organizations in order to draft the executive order and determine which organizations should be considered engaged in or supporting terrorism.
Some insiders said that officials are studying Section 501(p)(2)(C) of the tax law. This section gives the president the power to declare certain organizations "supporting or engaged in terrorist activities" under an executive order. If such an determination is made, these organizations’ tax-exempt status will be automatically revoked, their financial resources will be damaged, and donations from their supporters will be cut off.
Since the second term of the Trump administration, various departments of the U.S. government have been looking for ways to investigate and punish some non-profit organizations. Trump has instructed Bessen to use the Treasury Department's Counterterrorism and Financial Intelligence Office to examine the financial flows of these organizations and try to trace illegal funding chains.
According to one participant, at a cross-departmental meeting at the end of last year, Stephen Miller, the White House deputy chief of staff (now chief of staff), asked government officials why more effort was not made to investigate non-profit organizations that he believed were connected to 'terrorist organizations', such as Antifa ('Anti-Fascist Movement'). In September last year, Trump declared Antifa a 'domestic terrorist organization' through an executive order.
