The U.S. House passed a bill that would authorize the treasury secretary to designate nonprofit organizations as supporters of terrorism and remove their tax-exempt status. The bill passed by a vote of 219-184, with potential repercussions for nonprofits providing support or resources to terror groups. It also includes provisions to reimburse late fees for Americans held hostage abroad. Opponents of the bill, including the ACLU, NAACP, Greenpeace USA, and Planned Parenthood, argue that it creates a risk of politicized enforcement and executive branch abuse. Supporters see it as a way to strengthen the fight against terrorism funding.
Critics warn that the bill could have a devastating impact on nonprofits, leading to donor stigma and financial repercussions. According to the ACLU, the authority granted to the executive branch could be abused and result in a “death spiral” for affected organizations. Federal law already prohibits providing support to terrorist organizations, and the IRS has a process to revoke tax-exempt status for groups involved in terrorism.
Despite passing in the House, the bill lost Democratic support and faces uncertainty in the Senate due to the current Democratic majority. Concerns have been raised about potential unintended consequences and the vulnerability of nonprofits to politically motivated attacks. It is unclear whether the bill will become law in this session, but nonprofits are wary of its implications and possible return in the future.
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