House voting on bill to allow US government to remove tax-exempt status from nonprofits

By Joe Fisher
Nov. 12, 2024 / 

Congress is voting on a bill Tuesday that will empower the executive branch to remove the tax-exempt status from any nonprofit it deems to be supporting terrorists. More than 120 nonprofit organizations have signed a letter urging Congress to reject the bill out of concern that it will be politicized and enforced in a discriminatory manner

. Photo by Ken Cedeno/UPI | License Photo


Nov. 12 (UPI) -- Congress is voting on a bill Tuesday that will empower the executive branch to remove the tax-exempt status from any nonprofit it deems to be supporting terrorists.

The Stop Terror-Financing and Tax Penalties on American Hostages Act gives this authority to the secretary of the Treasury. More than 120 nonprofit organizations have signed a letter urging Congress to reject the bill out of concern that it will be politicized and enforced in a discriminatory manner.

The House will go into session at noon.

"An investigation by our committee has also revealed that some of the same groups holding Americans hostage like Hamas may be receiving support from American tax-exempt organizations to help finance their terror," Rep. Jason Smith said in a statement.

"The Stop Terror-Financing and Tax Penalties on American Hostages Act -- would prevent the IRS from charging penalties on back-due taxes owed by Americans held hostage or wrongfully detained abroad and require the IRS to revoke the tax-exempt status of any organization that provides financial support or resources to designated terrorist groups like Hamas."

The coalition of organizations speaking out against the bill includes civil liberties, religious, reproductive health, immigrant, human rights, racial justice, LGBTQIA+, environmental and educational advocacy organizations.

These organizations say the bill aims to skirt due process, allowing the executive branch to unilaterally squash nonprofit organizations and chill free speech.

"These efforts are part of a concerted attack on civil society that is targeted at more than just groups involved in the campus protests regarding Gaza. The executive branch could use this authority to target its political opponents and use the fear of crippling legal fees, the stigma of the designation, and donors fleeing controversy to stifle dissent and chill speech and advocacy," the letter reads.

"And while the broadest applications of this authority may not ultimately hold up in court, the potential reputational and financial cost of fending off an investigation and litigating a wrongful designation could functionally mean the end of a targeted nonprofit before it ever has its day in court."

It is already a federal crime to provide material support to terrorist organizations.

The bill has several components to it, including some that the coalition of nonprofit organizations are not opposed to. One such aspect is it will forgive taxes accrued by individuals who are wrongfully detained or kept hostage abroad. This will also apply to spouses. Individuals that this applies to may also receive refunds and abatement for the fines and penalties they had received.