Bill to revoke tax-exempt status of terror-supporting NGOs fails to pass US House

A bill that would have granted the US Treasury the power to revoke the tax-exempt status of nonprofit terror-supporting groups failed to pass in the House of Representatives on Tuesday.

The bipartisan ‘Stop Terror-Financing and Tax Penalties on American Hostages Act’ (HR9495) did not meet the required two-thirds majority to pass, as 256 voted yes, but 145 voted no.

The bill was 9 votes short of passing. Of the yes votes, 52 were Democrats, and 204 were Republicans.

The bill’s failure to pass was met with jubilation from opponents, including the Council on American-Islamic Relations (CAIR), which called it a “significant victory.” CAIR had renamed the bill the ‘Non-Profit Killer Bill.’

Bill HR9495 was sponsored by Rep. Claudia Tenney and cosponsored by two Republican representatives (Rep. David Kustoff and Rep. Nicole Malliotakis) and two Democratic representatives (Rep. Bradley Schneider and Rep. Dina Titus).

The first part of the bill would postpone tax filing deadlines for US nationals and their spouses who are unlawfully or wrongfully detained or for hostages held abroad.

The second would terminate the tax-exempt status of terrorist-supporting organizations.

Organizations would be considered “terrorist supporting” if they had provided material support to terrorist organizations (as defined in US Code Title 18, section 2339B) within the last three years, beyond a minimal amount.

The bill would have allowed the organization 90 days after being notified with details of its alleged support to either disprove the claim or demonstrate efforts to reclaim any material support given.

Should the organization be designated, its tax-exempt status would be suspended from the date of designation until rescinded.

Rep. Kustoff said the bill was aimed at “dismantling the financial networks of terrorist organizations, including Hamas.”

In November, Congressman Jason Smith said that “tax-exempt charities operating in the United States are providing support, encouragement, and potential financing to Hamas and Hamas-affiliated groups.”

Opposition to the bill

The bill was strongly opposed by various individuals and organizations, which claimed that the legislation would target pro-Palestinian groups in the US that were facilitating aid into Gaza.

A CAIR-led coalition of over 120 groups signed a letter to the House urging lawmakers against passing the bill, which they claimed would “grant the executive branch extraordinary power to investigate, harass, and effectively dismantle any nonprofit organization – including news outlets, universities, and civil liberties organizations like ours.”

In a statement sent to the House on Tuesday, Robert McCaw, the government affairs director of CAIR, said, “This bill dangerously weaponizes the Treasury against nonprofit organizations and houses of worship – Christian, Jewish, or Muslim – that dare to support Palestinian and Lebanese human rights or criticize Israel’s genocidal actions.”

However, Congresswoman Cori Bush said the bill would have been a “dangerous threat to democracy” and would have given Donald Trump “unprecedented power to shut down any nonprofit or group that he disagrees with.”

Rep. Jamaal Bowman and Congresswoman Rashida Tlaib, like Bush, members of the so-called anti-Israel ‘Squad,’ also said the bill would have led to “dictatorial authoritarianism.”