Tax Exempt Terrorism Bill Advances

We previously blogged about a bill in Congress to inject more process into the revocation of exempt status of organizations accused of supporting terrorism here and here.  In the wake of its prolonged handwringing on war funding for Ukraine and  Israel, and to a lesser extent Taiwan, the House finally passed H.R.6408 a bill that will amend IRC 501(p) allowing summary termination of the tax-exempt status of terrorist supporting organizations.  According to media reports, the bill is being fast-tracked in the wake of middle-eastern conflicts, particularly to stem support for Iran.  Here is House Ways and Means Chairman Smith’s floor statement on the bill:

“I rise today in support of H.R. 6408, bipartisan legislation introduced by Ways and Means members David Kustoff and Brad Schneider. “This commonsense bill revokes the tax-exempt status of entities that have been found to be providing material support to terrorist organizations within the past three years.

“This legislation is more important than ever given Iran’s attacks on Israel this weekend. It is thanks to the strong alliance that exists between the U.S. and Israel that our ally was able to defend itself. However, this legislation speaks to the broader efforts America must undertake to ensure our support for Israel and to counteract the forces of violence and terrorism that threaten our ally and our own homeland. There are multiple fronts in this battle against terrorism, and this bill addresses one that perhaps does not get as much attention as it should. 

“As part of our aggressive oversight efforts, the Ways and Means Committee has been examining the behavior of U.S.-based organizations that enjoy generous tax-exemptions and other benefits under our tax code. That investigation included a hearing in November of last year following the horrific attacks on Israel by Hamas terrorists. During that hearing, one witness, a terrorism financing expert, remarked on how this legislation would serve as a valuable tool to not just the Treasury Department but the Department of Justice and the FBI to identify and disrupt terrorism-related activities on U.S. soil.

“We must continue to look into the actions of certain tax-exempt groups that are suspected of financing the activities of known terrorist organizations like Hamas. One example is the Holy Land Foundation. This tax-exempt organization funneled over $12 million in donations from Americans to fund Hamas before it was shut down by the U.S. government in the early 2000s. We also suspect that there are other groups that are operating in the United States that are providing material support to known terrorist organizations, including Hamas.

“It should go without saying that America’s tax code should not be used to support or finance violent terrorism around the world. However, we have to be vigilant in the face of groups that seek to exploit the generosity of the American people and American taxpayers. We should ensure they cannot funnel resources to those that target civilians and harm our citizens and our allies.

“I call on all of my colleagues to support this legislation, and I reserve the balance of my time.”

darryll k. jones