By Shelley Smith
Historically in the United States, applying criminal tax laws to lethal organizations is not new and many had been brought down by United States Treasury agents. Today those same resources are being applied by American law enforcement against Al Qaeda and other international terrorist groups. Understanding terrorist financing enforcement through counter terrorism enforcement is fighting political violence through legal proceedings and the rule of law. Yet there is a pending question of, why aren’t we taxing terrorism?
Since 1994, the United States has officially recognized the crime of terrorist financing through the enactment of, 18 U.S.C. § 2339A. Terrorist financing can involve dirty money and focuses in on the illegal source of funds that are connected to any illegal activity, such as charities as fronts for terrorist organizations, illegal drug trafficking and others. The current worldwide strategy against such activities is aimed at disrupting the ability of state sponsors of terrorism and sub-national terrorist organizations, yet the U.S. tax laws are structured in such a way to where illegal activities by terrorist organizations and groups can circumvent around the laws and continue their illegal activities.
In 2005, Jeffrey Breinholt, Senior Fellow and Director of National Security Law and the Deputy Chief of the Justice Department’s Counterterrorism Section, brought to our attention a largely overlooked aspect of U.S. federal criminal law enforcement, the criminal tax law. His original study was published August 1, 2005, “Taxing Terrorism, From Al Capone to Al Qaida: Fighting Violence through Financial Regulation“, has since been published into a book titled the same in 2007.
The efficacy of criminal tax prosecutions needs to go beyond cases of tax fraud and other tax crimes and also focus on the larger issue of how criminal tax tools fit into federal criminal law towards the illegal proceeds of crime that qualifies as income. There still remains the need for reformation in the structured wordings in several of the IRS forms such as the informational form 1099.
However, there has been a change in tax liability in the 2007 Form 1040 -ES, but no where in the U.S. Treasury Department’s” Comprehensive Strategy for Reducing the Tax Gap“, September 26, 2006, or in the “A Summary of the Dynamic Analysis of the Tax Reform Options“, prepared by the President’s Advisory Panel on Federal Tax Reform, May 25, 2006, was it mentioned about tightening controls on illegal assets, including the protection of charitable sectors from the risk of terrorist exploitation.
About the Author
Shelley Smith is an expert in analysis and research on a variety of topics and issues that include national and international security, homeland security, terrorism and counterterrorism, law enforcement, and criminal justice systems. Smith is currently pursuing an Master’s in Intelligence Studies Capstone with a concentration in Middle Eastern Studies at AMU.