To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.
- Bill Number
- H.R. 6800
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-12-17: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-01-21T16:02:27Z
AI-Generated Summary
Purpose
This bill aims to prevent tax-exempt organizations from supporting terrorism by amending the Internal Revenue Code (IRC) to automatically revoke their tax-exempt status if they provide material support to designated terrorist groups. It ensures that such organizations lose benefits like tax deductions for donors, while including procedures for notification, challenges, and potential reversal.
Key Provisions
- Definition of Terrorist Supporting Organization: An organization is designated as such by the Secretary of the Treasury if, in the past three years, it provided more than a minimal ("de minimis") amount of material support or resources to a terrorist organization. "Material support" follows the legal definition from federal anti-terrorism laws (18 U.S.C. § 2339B(g)(4)), but excludes U.S. government-approved aid or humanitarian assistance cleared by the Office of Foreign Assets Control (OFAC).
- Loss of Tax-Exempt Status: Upon designation, the organization is treated as supporting terrorism under existing IRC rules (Section 501(p)(2)), suspending its tax-exempt status starting from the designation date until rescinded. This applies to the period of suspension outlined in IRC Section 501(p)(3).
- Designation Process:
- The Secretary must send written notice to the organization's last known address (from tax filings), including details of the alleged support (unless classified for national security reasons).
- The organization has 90 days to respond by: (1) proving no support was provided, (2) returning the support and certifying no future support (with a 5-year limit on repeat certifications), or (3) if info is withheld, filing a court complaint challenging that decision.
- If unresolved after 90 days, designation occurs.
- Rescission (Reversal) of Designation: The Secretary must rescind if the designation was erroneous, if the organization didn't receive notice and then cures the issue, or if the terrorist groups' suspension periods end. Repeat certifications are invalid within 5 years.
- Review Mechanisms:
- Administrative appeals go to the IRS Independent Office of Appeals, similar to other IRS disputes.
- U.S. district courts have exclusive jurisdiction over challenges, including reviews of classified information (submitted privately to the court if needed). Failure to use IRS appeals doesn't prevent court review.
- Handling Classified Information: The Treasury Department must follow laws on managing sensitive national security data.
- Effective Date: Applies to designations after the bill's enactment, for tax years ending after that date.
Significant Changes to Existing Law
- Expands IRC Section 501(p), which already revokes tax-exempt status for direct terrorist support, to cover indirect supporters providing material aid.
- Introduces a structured "cure" period and notification requirements, providing more due process than some prior revocation processes.
- Adds specific exclusions for approved aid, clarifying that legitimate humanitarian or government-sanctioned activities aren't penalized.
- Shifts some authority to the Treasury Secretary for designations, with integrated IRS and judicial oversight, differing from purely OFAC or State Department terrorism designations.
Potential Impacts
- Government Agencies: Increases workload for the Treasury Secretary, IRS (for appeals and enforcement), and courts (for reviews). Enhances coordination with agencies like the State Department and OFAC on approvals and designations, potentially streamlining anti-terrorism efforts.
- Citizens and Organizations: Tax-exempt nonprofits (e.g., charities) risk losing status and facing back taxes if designated, affecting their operations and donors' ability to claim deductions. This could deter unintentional support but might complicate legitimate international aid.
- International Relations: Strengthens U.S. efforts to cut off terrorist financing globally by targeting supporters, possibly pressuring foreign entities. However, it could strain relations with allies if designations affect shared humanitarian programs.
Main Stakeholders Affected
- Tax-Exempt Organizations: Primarily nonprofits, charities, and foundations engaged in international activities, who must ensure compliance to avoid revocation.
- U.S. Government Entities: Treasury Department (designations), IRS (enforcement and appeals), Department of State and Justice Department (approvals and legal input), and federal courts (reviews).
- Donors and Taxpayers: Individuals or businesses donating to affected organizations lose tax benefits, indirectly impacting charitable giving.
- Terrorist Groups: Indirectly harmed by reduced funding channels, though the bill focuses on supporters rather than the groups themselves.
Notable Legal, Constitutional, or Political Implications
- Legal: Provides due process through notice, cure periods, and multi-level reviews (administrative and judicial), aligning with administrative law standards. Allows classified evidence in court, balancing security with fairness under the Classified Information Procedures Act.
- Constitutional: Could raise free speech or association concerns (under the First Amendment) if designations are seen as overly broad, but the bill's exclusions for approved aid and challenge mechanisms aim to mitigate this. No direct equal protection issues noted.
- Political: Enhances U.S. counterterrorism tools post-9/11 frameworks, potentially appealing to security-focused policymakers. May spark debate on overreach into nonprofit oversight, especially for groups aiding conflict zones, but remains focused on material support rather than ideology.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-12-17: Referred to the House Committee on Ways and Means.
- 2025-12-17: Introduced in House
- 2025-12-17: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations. — issued 2025-12-17 — PDF (10 pages)