CRS Reports on Suspending Tax Exemption for Supporting Terrorism

The Congressional Research Service has a new report out called “Suspending the Tax-Exempt Status of Terrorist and Terrorist Supporting Organizations: H.R. 6408 in Context”.  Here is the introduction:

H.R. 6408 would establish a process for suspending the tax-exempt status of organizations if the Secretary of the Treasury designates them as “terrorist supporting organizations.” The suspended organizations would then be subject to income tax and unable to receive tax-deductible contributions. The House Ways and Means Committee reported on the bill on December 19, 2023, and it passed the House on April 15, 2024. The Senate is currently considering the bill, which has been referred to the Senate Committee on Finance. An identical bill was introduced in the Senate on April 17, 2024, as S. 4136. H.R. 6408 seeks to amend Section 501(p) of the Internal Revenue Code (IRC), which currently suspends the tax-exempt status of “terrorist organizations.” H.R. 6408 would create a separate category of “terrorist supporting organizations” with different suspension and review procedures than those currently in place for terrorist organizations.

This Legal Sidebar describes the Section 501(p) procedure for suspending the tax-exempt status of terrorist organizations, explains how H.R. 6408 would create a different process to suspend the tax-exempt status of terrorist supporting organizations, identifies existing legal authority under which the Internal Revenue Service (IRS) already can revoke the tax-exempt status of organizations that materially support terrorist organizations, and summarizes the debate over H.R. 6408.

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darryll k. jones