House Passes Bill: Treasury's New Power Over Nonprofits

The U.S. House of Representatives has passed a controversial bill, H.R. 9495, which grants the Treasury Department unprecedented authority to target and revoke the tax-exempt status of nonprofits deemed to support terrorism. The bill, initially introduced with bipartisan support, has sparked concerns about potential misuse and the chilling effect it may have on nonprofit advocacy and activism.

The bill, titled the "Stop Terror-Financing and Tax Penalties on American Hostages Act," allows the Treasury Secretary to designate nonprofits as "terrorist-supporting organizations" and strip them of their 501(c)(3) status. Critics argue that the bill's vague definition of "terrorist-supporting" and the Treasury Secretary's broad discretion could lead to arbitrary and politicized enforcement.



The 90-day appeal process granted to nonprofits may be insufficient to effectively challenge the Treasury's designation. The burden of proof lies with the nonprofit, placing an undue burden on organizations that may lack the resources to contest the designation. Moreover, the lack of due process protections and the requirement for the Treasury Secretary to share evidence raise concerns about potential misuse and arbitrary targeting.

The bill's passage comes amidst concerns about the incoming Trump administration's potential use of the legislation to target political opponents. Critics fear that the bill's vague definition of "terrorist-supporting" could be used to silence dissent and stifle advocacy, particularly among nonprofits critical of the administration.



The bill's implications for nonprofits and their advocacy efforts are significant. Nonprofits may self-censor or avoid certain issues to avoid the designation, stifling dissent and chilling advocacy. The potential damage to an organization's operations and reputation, even if cleared, could be irreparable.

In conclusion, the House-passed bill grants the Treasury Department broad authority to target nonprofits it deems to support terrorism. While the bill's intentions may be noble, its vague definition and lack of safeguards against politicized enforcement raise serious concerns. As the bill moves to the Senate, it is crucial for lawmakers to consider the potential chilling effects on nonprofit advocacy and activism and to ensure adequate protections for organizations targeted under the legislation.