Bill Would Allow Exempt Orgs to Provide De Minimis Support to Terrorists
IRC 501(p) already denies tax exemption to designated terrorist organizations. By limiting the law’s effect to designated organizations, and because designated organizations must be foreign, the law does not necessarily apply (it does actually but through a very roundabout way) to domestic organizations, whose exemption can be revoked or denied under the broader “illegality” doctrine. But now House Democrats and Republicans are joining forces in an effort to broaden the prohibition to “terrorist supporting organizations,” defined as “any organization which is designated by the Secretary as having provided, during the 3-year period ending on the date of such designation, material support or resources to a [designated terrorist] organization in excess of a de minimis amount.” So now, a domestic organization can be designated as supporting another terrorist organization and by that designation lose its tax exemption presumably with a lot less process since IRC 7428 does not apply. Here is a press release announcing the bill.
I added the emphasis above because I am not sure the bill is saying what the sponsors intend. Does it, by negative implication, condone small amounts of material support to terrorists? Or is the de minimis language a built in escape hatch for organizations whose activities are characterized as supporting terrorists even if unintentionally? I’m being an obnoxious law prof, aren’t I, asking nit-picky aggravating questions? But the question seems fair given the history of the material support prosecutions. There was a lot of concern back in the day about how broad the definition of “material support” can be. The United States indicted Mohammed Yousry just for translating a letter written by a terrorists. He was a court appointed interpreter for the terrorist on trial, no less, and translated the letter at the request of the terrorist’s court appointed attorney. Still, he did a year and some months in federal prison. “What are you in for?” I translated a letter.” So there must be some kind of back story to the “de minimis” exception. Anyway, here is the definition of material support (incorporated by reference into the bill):
darryll k. jones