WASHINGTON, D.C. – A so-called “journalist” working for a publication called The Palestine Chronicle – part of an organization, the People Media Project, that enjoys tax-exempt status under section 501(c)(3) of the Internal Revenue Code in the United States – was holding Israeli hostages in his home in Gaza, including three of the four hostages recently rescued, according to Israeli Defense Forces. In a letter to Internal Revenue Service (IRS) Commissioner Daniel Werfel, Ways and Means Committee Chairman Jason Smith (MO-08) is demanding the IRS revoke the tax-exempt status of the People Media Group, given its potential links to the terrorist activities of Hamas.
“Terrorism and support for terrorism are not exempt purposes set forth in Section 501(c)(3) of the Internal Revenue Code (‘IRC’), and the American people will not tolerate providing generous tax benefits to organizations that support terrorism,” wrote Chairman Smith. “I write today to refer the People Media Project—an organization that is known publicly as The Palestine Chronicle—for revocation of its tax-exempt status.
“It was recently reported that a ‘journalist’ for The Palestine Chronicle, located in the Gaza strip, was not really a journalist at all. Rather, he was a terrorist, and he actively held Israeli civilians as hostages in his home. Despite being an active combatant and a likely member of Hamas—which is a U.S. designated terrorist organization—it appears that he may have been getting paid by the People Media Project using tax free dollars…
“The facts suggest that the People Media Project is not being operated exclusively for its charitable purpose, as required under section 501(c)(3) of the IRC and is instead circumventing its tax-exempt charitable purpose by supporting the terrorist organization, Hamas.”
Chairman Smith’s letter highlights the clear precedent for the IRS to consider revocation of the tax-exempt status of an organization supporting terrorism:
“In addition to the prohibitions of Section 501, the IRS also notes that violations of the law are an ‘antithesis of the public good’ and, as such, may be a bar to tax-exemption. Not only has the IRS found the mere conducting of illegal activities to be inconsistent with tax-exemption, but it has also stated that the ‘planning and sponsoring of such activities are also incompatible with charity and social welfare.’
“Additionally, terrorist organizations cannot maintain tax-exempt status. For example, the IRS previously revoked the tax-exempt status of organizations suspected of supporting terrorist organizations under the notion that providing material support to terrorist organizations is illegal. In these cases, the IRS revoked the organization’s tax-exempt status after public reporting suggested that the organization provided material support to a terrorist organization and because the nonprofit did not show that it directed its funding exclusively for charitable purposes as required under the IRC.”
Read the full letter here.
The Ways and Means Committee has been conducting a wide-ranging investigation into tax-exempt groups organized under Section 501of the Internal Revenue Code to determine whether such groups are abiding by their legal obligations and prohibitions under the code. This has included possible links between tax-exempt organizations and terrorist activities.