Az-Zakat
The third pillar of Islam - right after the shahada (testimony of faith) and salat (prayer) - is called zakat. The root meaning of this word in the language means to cleanse or purify, to grow, blessing and to praise or speak highly of. The Prophet (sas) said:
"Buniya al-islamu 'alaa khamsin: shahadatu an laa ilaha illa Allah wa anna Muhammadan rasoolu Allahi wa iqaami as-salaati wa eetaa'i az-zakati wa hijji al-baiti wa saumu Ramadhani"
"Islam was built on five pillars: the testimony that there is no deity but Allah and that Muhammad is His messenger, establishing the prayer, paying the zakat, pilgrimage to the House and fasting Ramadhan." Muslim & Bukhari
The meaning of zakat in the shari'a is: An assigned portion of the property of a Muslim to which Allah has assigned ownership to the recipients of zakat. It is also used to refer to the actual act of paying that portion to the authorities.
Because it is the third pillar of Islam, whoever leaves it or refuses to turn it over to those in authority among the Muslims out of not acknowledging it obligatoriness is an apostate and is to be fought by the Muslim nation. Allah has mentioned it together with prayer in very many places in the Qur'an. Allah said:
{Wa aqeemoo as-salaata wa aatoo az-zakaata wa rka'oo ma'a ar-raaki'een}
{And establish the prayer, pay the zakat and bow along with those who bow.} Al-Baqarah:43
The Prophet (sas) said:
"Umirtu an uqaatila an-naasa hattaa yash-hadoo an laa ilaha illa Allahu wa anna Muhammadan rasoola Allahi wa yuqeemoo as-salaata wa yu'toona az-zakata fa idhaa fa'aloo dhalika, 'asamoo miniy dimaa'ahum wa amwaalahum illa bi haqqi al-islam wa hisaabuhum 'alaa Allahi."
"I have been ordered to fight the people until they bear witness that there is no deity but Allah and that Muhammad is His messenger and they establish the prayer and they pay the zakat. So, if they do that, there blood and their property is protected from me, except for the right of Islam, and their account is up to Allah." Muslim & Bukhari
Zakat is a purification (by far the most common use of the word in the Qur'an and the language) in that it purifies the remainder of the property of the Muslim upon whom zakat is due. If a Muslim has any amount of zakat due and fails to pay it, his property becomes kanz. Allah and His Messenger (sas) have warned of the most serious punishments for anyone who keeps kanz. Some have believed that kanz means large amounts of wealth. This is not true. Many of the Companions were very wealthy. Also, the Prophet (sas) said:
"Ma uddiya zakatuhu fa laisa bi kanz."
"Whatever (wealth) has had its zakat paid is NOT kanz."
Zakat is the REQUIRED spending upon every Muslim. Allah encourages us to spend our wealth in good causes at all times and above and beyond the zakat. However, zakat is the minimum requirement and a Muslim can be at peace that their property is not a kanz which will be a cause for their punishment in the hereafter as long as they have paid the zakat on it. Allah said:
{Yaa ayyuhaa alladhina aamanoo anfiqoo mimma razaqnaakum min qabli an ya'tiya yaumun laa bai'un fihi wa laa khullatun wa laa shafaa'atun wa al-kaafiroona hum adh-dhaalimoon.}
{O you who believe spend from that which we have provided for you before a day comes on which there is no exchanging nor any friendship nor any intercession. And the disbelievers they are the oppressors.} Al-Baqarah:254
Beware of kanz! And remember that it has nothing to do with quantity. A Muslim who has billions of dolars but who has paid its zakat is in no danger from that money. Another Muslim who has a few hundred or a few thousand dollars but who has neglected to pay its zakat is the one who is in possession of kanz. Allah said about this:
{...Wa alladhina yaknizoona adh-dhahaba wa al-fidh-dhata wa laa yunfiqoonahaa fiy sabeeli Allahi fa bash-shirhum bi 'adhaabin aleemin.(34) Yauma yuhmaa 'alihaa fiy nari jahannama fa tukwaa bihaa jibaahuhum wa junoobuhum wa dhuhooruhum. Hadhaa maa kanaztum li anfusikum fa dhooqoo maa kuntum taknizoon.}
{...And those who hoard gold and silver and do not spend it in the path of Allah, warn them of a painful punishment. (34) On the day when it is heated in the fire of jahannam and then with are burned their faces and their sides and their backs. This is what you have hoarded for yourselves, so taste that which you used to hoard.} At-Tauba:34-35
Zakat is a system and not an individual act of charity. True, when the Muslim Ummah decays to such an extent that no one is collecting zakat from the Muslims or, if they are collecting it they are not distributing it properly, then the obligation remains and each individual Muslim must make the best out of this corrupt situation by finding a place to turn over their zakat. This is not, however, the sunnah of zakat.
The Prophet (sas) collected the zakat of the Muslims in a particular month of the year. One opinion says that it was in Muharram (the first month of the Islamic calendar) while others believed it was in Ramadhan. In one narration found the the Musannaf of as-Sa'aani, it is reported that the Prophet (sas) saw the hilal (of Muharram) on the journey back from the Hajj and said: "This is the month of your zakat." The narrator continues that at that point, he (sas) ordered for the collectors to be sent out.
In a hassan hadith found in Abi Daud, the Prophet (sas) explained the nisaab (how much is taken from various quantities) of camels and then said:
فِي كُلِّ سَائِمَةِ إِبِلٍ فِي أَرْبَعِينَ بِنْتُ لَبُونٍ وَلَا يُفَرَّقُ إِبِلٌ عَنْ حِسَابِهَا مَنْ أَعْطَاهَا مُؤْتَجِرًا بِهَا فَلَهُ أَجْرُهَا وَمَنْ مَنَعَهَا فَإِنَّا آخِذُوهَا وَشَطْرَ مَالِهِ عَزْمَةً مِنْ عَزَمَاتِ رَبِّنَا عَزَّ وَجَلَّ لَيْسَ لِآلِ مُحَمَّدٍ مِنْهَا شَيْءٌ
"For every forty grazing camels (the Zakat is) one nursing female; the one who gives it seeking reward from Allah will get his reward. As for the one who hides it (or otherwise withholds it), verily we will take it from him and half of his camels (or "half his property") - a strict order from among the orders of your Lord!" (Narrated by Al-Baihaqy and Abu Daud with a strong chain of narrators).
So, zakat in its proper implementation as it was implemented by the Prophet (sas) and his companions is a centrally administered system or "tax". It differs from all other taxes made by man in that the one who pays it expects reward from Allah Most High and deflects from himself a painful punishment. It is also different from man made taxes and at the same time from other sources of public property in Islamic law in that it can only be used in certain ways. Allah mentioned eight "recipients" or categories over which zakat must be distributed:
{Innama as-sadaqaatu lil fuqaraa'i wa al-masaakeena wa al-'aamileena 'alihaa wa al-mu'allafati quloobuhum wa fiy ar-riqaabi wa al-ghaarimeena wa fiy sabeeli Allahi wa ibn as-sabeeli fareedhatan min Allahi wa Allahu 'aleemun hakeemun.}
{The charitable funds are only for the destitute, the poor, those who administer it, those whose hearts are to be drawn near, for freeing slaves, for those in debt, in the path of Allah and the traveller. An obligation from Allah and Allah is Knowing, Wise.} Al-Baqarah:60
During the time of the first Khalifa, Abu Bakr, many of the Arab tribes rebelled against paying zakat and claimed that making prayer was enough for them even if they didn't pay the zakat. Some of them refused saying that they themselves would deliver it where it belongs. They were supported by those who left Islam altogether and followed their leaders or the two false prophets - Al-'Ansi in Yemen and Musaillama in Najd.
The position of Abu Bakr was strong and a critical point in the history of this Ummah. He would not accept the differentiation between one obligation in Islam (prayer) and another (zakat). He would not accept even a single small goat or piece of rope which was paid during the time of the Prophet (sas) to be withheld after his (sas) departure.
Many of the Companions opposed him in this at first. Among them was 'Umar ibn Al-Khattab who said to Abu Bakr: "How can you fight the people when the Prophet (sas) has said: 'I have been ordered to fight the people until they say laa ilaha illa Allah and once they say it, their blood and their property is protected from me except for its rights and their account is upon Allah'? Abu Bakr answered: "By Allah, I will fight anyone who differentiates between the prayer and the zakat. And zakat is the right of their property. By Allah, if they were to withhold from me a piece of rope which they used to pay to Allah's Messenger, I will fight them over that." Then 'Umar said: "So, by Allah it was nothing other than that Allah had inspired the heart of Abu Bakr to fighting and I knew that it was the truth."