To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.

Nonprofits could lose tax-exempt status

This bill would let the Treasury Secretary label an organization a "terrorist supporting organization" if it gave material support to a terrorist group in the prior 3 years. A designation would suspend the group's federal tax-exempt status from the designation date until the Secretary rescinds it. Before designation, Treasury would mail a notice and give the group 90 days to avoid designation by proving it did not provide the support, recovering the support and certifying it will stop, or challenging withheld details in U.S. district court. Certifications to return funds would be invalid if the group made a similar certification in the prior 5 years. Support approved by the State Department/Attorney General under the criminal statute or humanitarian aid approved by OFAC would not count. Groups could use the IRS Independent Office of Appeals, and federal courts would have exclusive review of final designations; classified evidence could be submitted to courts under special procedures. The rule would apply to designations made after enactment for taxable years ending after that date.