# What This Bill Does

This bill would give the federal government the power to strip tax-exempt status from organizations that provide financial or material support to designated terrorist groups. Right now, many nonprofits and charitable organizations don't have to pay federal taxes because they're considered tax-exempt. This bill creates a new mechanism to revoke that status if an organization is found to be supporting terrorism.

Here's how it would work in practice: If the Treasury Department determines that an organization has given money, resources, or other support to a designated terrorist organization over the past three years, they can label it a "terrorist supporting organization." The organization would then lose its tax-exempt status, meaning it would have to start paying federal taxes. Before making this designation official, the government must send the organization a written notice explaining what support they allegedly provided and to which terrorist groups. The organization then gets 90 days to either prove they didn't provide that support, or to show they made good-faith efforts to get the money or resources back and promise not to do it again in the future.

The practical impact would mainly affect nonprofits, charities, and other tax-exempt groups. If an organization is designated as supporting terrorism, it would face significant financial consequences—not just losing tax-exempt status, but potentially losing donor support and credibility. However, the bill does include some protections: organizations can challenge the designation, and the government must follow specific procedures before making it official. The designation can also be reversed if the government made a mistake or if the organization successfully demonstrates it didn't actually provide the support in question.

To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.

Kustoff, David

This bill suspends the tax-exempt status of a terrorist supporting organization. The bill defines terrorist supporting organization as any organization designated as having provided (during the three-year period prior to its designation) material support or resources to a terrorist organization in excess of a de minimis amount. The Department of the Treasury must provide notice to such an organization of its impending designation and an opportunity to cure. Treasury must rescind a designation that it determines was erroneous or if the organization did not receive notice of designation.