Aprill on Procedural Elements of Anti-Terrorism Bill H.R. 6408
H.R. 6408 would amend Internal Revenue Code section 501(p) to suspend the tax-exempt status not only of terrorist organizations, as under present law, but also terrorist supporting organizations. That is, it adds a new category to section 501(p).
This short memo describes the procedural elements of H.R. 6408. It considers only the procedural provisions, not the definition of the new category of “terrorist supporting organizations.” To best do so, it contrasts current procedures with those provided in H.R 6408. This comparison is needed because current procedures are not specified in section 501(p) itself but by cross-reference to provisions of law outside of the Internal Revenue Code. Only by detailing current procedures can both the strengths and weaknesses of the procedures provided in H.R. 6408 be understood.
As explained in the memo, the particular strength of H.R. 6408, as compared to current section 501(p), is that it permits an organization to seek pre-designation review. Its key weakness is that it relies solely on the discretion of the Secretary of Treasury. In contrast, the non-law provisions that trigger designation under current section 501(p) require consultation among various cabinet departments, including the Department of Treasury, the Department of State, the Secretary of Homeland Security, and the Attorney General. The Congressional Research Service Legal Sidebar, “Suspending the Tax-Exempt Status of Terrorist and Terrorist Supporting Organizations,” https://crsreports.congress.gov/product/pdf/LSB/LSB11176, as useful as it is, does not discuss this important difference between current section 501(p) and H.R. 6408.
Lloyd Mayer