The U.S. House of Representatives approved a bill on Thursday that grants the Treasury Department the power to unilaterally revoke the tax-exempt status of nonprofit organizations that are accused of supporting terrorism. This development has raised concerns among civil liberties groups, who worry that a potential second term for President Trump could result in the misuse of this authority to target political adversaries.
The bill was passed with a vote of 219-184, with the majority of support coming from Republicans. They accused Democrats of changing their stance on the “common sense” proposal only after Donald Trump was re-elected for a second term earlier this month.
During his speech on the House floor before the vote, Representative Jason Smith, the GOP chair of the House Ways and Means Committee, pointed out that if Vice President Kamala Harris had won the presidential election, his colleagues across the aisle would still be backing the bill. He emphasized the importance of ensuring that taxpayers are not inadvertently supporting terrorism and emphasized that it is a straightforward matter for members of Congress to address.
Nonprofits across various sectors have expressed concern regarding the proposal, as they fear it may be employed to selectively target organizations like news outlets, universities, and civil society groups, based on disagreements with a future presidential administration. These organizations argue that the proposal lacks adequate provisions for ensuring due process for targeted groups.
“This bill, according to Rep. Pramila Jayapal, the chair of the Congressional Progressive Caucus, is an attempt by Republicans to increase the authority of the executive branch. Its purpose is to target political opponents and suppress political dissent. Jayapal expressed her concerns about the bill’s authoritarian nature during her speech on the House floor before the vote.”
Critics argue that the proposal is unnecessary since it is already illegal in the United States to provide support to designated terrorist groups. The fate of the proposal is now uncertain as it heads to the Democratic-controlled Senate. Additionally, the proposal includes a provision to extend tax filing deadlines for Americans who are held hostage or unlawfully detained overseas.
According to a previous analysis by the Congressional Research Service, the bill aims to establish a new classification known as “terrorist supporting organizations.” This classification refers to any organization that has been identified by the Treasury Secretary as having provided material support to a terrorist organization within the last three years.
Jenn Holcomb, the vice president of government affairs at the Council on Foundations, expressed her belief that the proposed legislation is an overreach. She stated, “It would grant the Secretary of the Treasury the power to label a 501c nonprofit as a terrorist organization based on their own judgment. Our concern lies in the lack of provisions to ensure that a nonprofit fully comprehends the rationale behind such a designation.”
The bill grants a nonprofit labeled as “terror-supporting” a 90-day window to contest the designation. According to the American Civil Liberties Union, the bill does not mandate the Secretary of Treasury to disclose all the evidence utilized in the designation process.
According to the bill text, the Treasury is required to send a description of the material support or resources, to the extent that it aligns with national security and law enforcement interests.
The Council on Foundations, in partnership with the Independent Sector, National Council of Nonprofits, and United Philanthropy Forum, expressed concerns in a collaborative statement. They highlighted that the proposed legislation would place the onus on nonprofits to prove their innocence. Even if an organization is ultimately cleared, the potential damage to their operations and reputation could be irreparable.
The bill, if passed, would have an impact on various types of nonprofits, such as membership organizations, unions, and private foundations.
The bill was initially introduced in response to the Hamas attack on Israel on October 7, 2023. The House had previously passed a version of the bill in April, with the support of some Democrats.
Last week, the bill was brought up for a vote but did not receive the required two-thirds majority under the suspension of the rules.
In a recent statement, Democrat Representative Rashida Tlaib, who is the sole Palestinian-American representative in Congress, expressed her intention to vote against the bill for the third time.
“I couldn’t care less about the president of the United States,” she declared firmly. “This bill is both dangerous and unconstitutional, as it grants unrestricted authority to target nonprofit organizations as political adversaries and shut them down without any regard for due process.”
