In a move that has garnered significant backlash from civil rights groups, the US House of Representatives has passed the Stop Terror-Financing and Tax Penalties on American Hostages Act. If enacted, this bill would provide the Treasury Secretary with the authority to designate certain nonprofits as “terrorist supporting organizations,” thereby enabling the revocation of their tax-exempt status.
The bill outlines a “terrorist supporting organization” as any nonprofit found by the Treasury Secretary to have provided material support to a terrorist organization. This support must exceed a specified threshold over a three-year period prior to the organization’s designation. The current legislation outlines a procedure where the Secretary must notify the organization in question with written notice, detailing the intended designation, the allegations, and the nature of the support, within the constraints of national security and law enforcement interests.
Nonprofit organizations are given a 90-day window following notification to dispute the claims, either by proving the alleged support was not provided or by making reasonable efforts to retrieve the support. They must also certify that they will refrain from such actions in the future. However, organizations that have previously made similar certifications in the past five years are not eligible to use this option to disavow future support.
Prominent civil rights groups, including over 180 organizations led by the ACLU, have voiced their opposition to the bill. In a letter addressed to Congress, they warned against granting such broad powers to a single government official without essential due process safeguards. These advocates argue that the bill presents risks of politicized enforcement, potential suppression of free speech, and targeting of political groups, noting the absence of full disclosure of evidence and lack of a neutral party to mediate disputes.
The NAACP Legal Defense Fund raised a specific concern that the additional powers could be misused to target racial justice organizations. In their statement, they cautioned that labeling an organization as a “terrorist supporting organization” could inflict enduring reputational and financial damage even if the designation is later repudiated. The bill has sparked debate on the balance between national security measures and safeguarding civil liberties. As it advances through Congress, its potential implications and legal challenges will undoubtedly be keenly observed by legal experts and civil rights advocates alike.