WASHINGTON – The U.S. House of Representatives recently fast-tracked H.R. 6408, a bill that would grant the Treasury Department unprecedented authority to revoke the tax-exempt status of nonprofits accused of supporting terrorism.
The bill’s advocates argue it would prevent terrorist organizations from benefiting financially.
Critics warn that this legislation could severely limit civil society’s independence and endanger organizations advocating for diverse causes. As the Senate prepares to consider a companion bill, S. 4136, nonprofits, activists, and civil liberties groups are voicing concerns over the bill’s potential to be misused for political suppression.
The bill was introduced in November 2023 and passed the House, but it stalled in committee by April 2024. Financing terrorism is, to be clear, strictly prohibited under U.S. law. Providing funds, goods, or services to any U.S.-designated terrorist organization is a felony under both the Antiterrorism Act and the International Emergency Economic Powers Act. Additionally, such organizations are barred from receiving tax-exempt status under Section 501(c)(3) of the tax code. Since 2001, nine charities have been shut down under these regulations.
The bill was passed in the House on April 15, 2024. It states:
This bill suspends the tax-exempt status of terrorist-supporting organizations. It defines a terrorist-supporting organization as any organization designated as having provided (during the three years before its designation) material support or resources to a terrorist organization over a de minimis amount.
The Department of the Treasury must notify such organizations of the impending designation and an opportunity to cure. Treasury must rescind a designation that it determines was erroneous or if the organization did not receive notice of designation.
The bill provides for administrative review by the IRS Independent Office of Appeals of any dispute regarding a designation. U.S. district courts shall have exclusive jurisdiction to review any such designation.
Shortly after the bill’s passage in the House, Rep. David Kustoff (R-TN), its author, issued a press release stating, “Recent reports indicate there are U.S.-based nonprofits suspected of providing support and funding to terrorist groups.”
The companion bill, S. 4136, was received in the Senate, introduced by Senators John Cornyn (R–TX) and Angus King (I–ME), and referred to the Senate Finance Committee. It has since seen no further action.
United States House of Representatives chamber at the United States Capitol in Washington, D.C. [public domain
This week, post-election, the House is revisiting H.R. 6408 and fast-tracking its progression. A new bill, H.R. 9495, titled the “Stop Terror-Financing and Tax Penalties on American Hostages Act,” was also introduced on September 9, 2024, by Rep. Claudia Tenney (R-NY) along with Reps. David Kustoff (R-TN), Brad Schneider (D-IL), and Dina Titus (D-NV).
This bill has two main components: it aims to amend the Internal Revenue Code to postpone tax deadlines and reimburse late fees for U.S. nationals wrongfully detained or held hostage abroad, while also terminating the tax-exempt status of organizations found to have provided material support to designated terrorist groups. Previously, on September 11, 2024, the House Committee on Ways and Means unanimously approved the bill.
Potential for Misuse
If passed, H.R. 6408 and derivative legislation would enable the Treasury secretary to designate any nonprofit as a “terrorist-supporting organization,” effectively ending its ability to operate by revoking its tax-exempt status. Although the bill provides a 90-day window for organizations to appeal, critics argue that this “cure” period is an illusion. Nonprofits may not receive a clear explanation of the charges against them, making it difficult to mount an effective defense. The burden of proof shifts away from the government, leaving accused organizations without traditional protections like the presumption of innocence.
Critics argue that, with such broad language, H.R. 6408 could be used by any administration to silence dissenting voices under the pretense of national security. In “How Democracies Die,” political scientists Steven Levitsky and Daniel Ziblatt warn that selective investigations are a hallmark of democratic backsliding.
They also argue that this bill would give the executive branch tools to target and disable ideological opponents.
Proponents say they are designed to keep America safe.
United States Senate chamber [Public Domain
Implications for Charitable Organizations
H.R. 6408 could impact many different organizations, from activist groups to universities. If the bill becomes law, universities permitting student groups to organize protests could risk losing tax-exempt status. Members of Congress, for example, have connected student protests supporting Palestine with foreign terrorist organizations, suggesting that allowing such groups to operate on campuses could qualify as providing “material support.”
Beyond internationally affiliated charities or large universities with international reach, this legislation could enable the government to investigate any nonprofit with a political stance contrary to the administration’s. Environmental organizations, human rights groups, and even pro-life or pro-choice organizations could be labeled as threats if their activism is deemed controversial or inconvenient to those in power.
The bill could impact Pagan organizations using a 501(c)(3) charity designation, the code used IRS to identify charitable, religious, educational, scientific, or literary, operating for the public good rather than private profit.
Organizations like the Charity and Security Network and the ACLU have raised concerns. ACLU policy counsel Kia Hamadanchy warns that the bill would “stifle dissent and chill advocacy” as organizations might curtail activities to avoid the risk of being targeted. If H.R. 6408 becomes law, even unproven accusations could have significant consequences for nonprofits.
“Charitable organizations, especially those who work in settings where designated terrorist groups operate, already undergo strict internal due diligence and risk mitigation measures and…face extra scrutiny by the U.S. government, the financial sector, and all actors necessary to operate and conduct financial transactions in such complex settings,” wrote the Charity and Security Network last November during H.R. 6408’s initial submission in 2023.
“Policymakers must consider the potential cascade of harmful consequences from broad legislation targeting charities for larger political motives. Globally, we’ve seen counter-terrorism measures weaponized against civil society. It is crucial to prevent the enactment of legislation enabling this kind of weaponization,” they added in April 2024.
Historical Context
The bill echoes disturbing historical precedents. Post-9/11 material support laws were disproportionately applied to Muslim and Arab groups, often without solid evidence, yet with severe impacts. Civil liberties advocates fear H.R. 6408 could reignite such patterns of discrimination and even expand them.
Under previous administrations, investigative powers have targeted nonprofits opposing prevailing policies. During the Obama administration, the IRS was accused of targeting conservative groups; under the Biden administration, Catholic organizations were reportedly labeled as potential threats. With H.R. 6408, the risk of politically motivated investigations into charities could significantly increase.
The Wild Hunt is not responsible for links to external content.
To join a conversation on this post:
Visit our The Wild Hunt subreddit! Point your favorite browser to https://www.reddit.com/r/The_Wild_Hunt_News/, then click “JOIN”. Make sure to click the bell, too, to be notified of new articles posted to our subreddit.