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119-hr-6800119th CongressWALLET

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

Sponsored By: Representative Kustoff, David [R-TN-8]

Introduced

Summary

This bill would create a new designation system under Section 501(p) that suspends the tax-exempt status of organizations found to have provided material support to terrorist groups. It sets a suspension period tied to designation and lays out notice, a 90-day cure window, rescission rules, and review paths.

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  • Nonprofit organizations found to have given more than a de minimis amount of material support within the prior 3 years would face suspension of tax-exempt status starting on the designation date. The bill uses the criminal definition in 18 U.S.C. 2339B(g)(4) but excludes support approved by the State Department and OFAC-approved humanitarian aid.
  • Organizations would receive a mailed notice and get 90 days to "cure" by proving they did not provide the support, arranging return of the support, or filing a district court challenge. A return-and-certify cure cannot be reused if used in the prior 5 years.
  • The Secretary must rescind erroneous designations or when suspension periods end for affected recipients. Disputes can be resolved by the IRS Independent Office of Appeals and certain challenges have exclusive review in U.S. district courts, including procedures for classified evidence.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 0 benefits, 0 costs, 1 mixed.

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.

Sponsors & CoSponsors

Sponsor

Kustoff, David [R-TN-8]

TN • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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