We Oppose H.R.9495

The Council on Foundations, Independent Sector, National Council of Nonprofits, and United Philanthropy Forum express our opposition to Section 4 of H.R.9495 and its predecessor, H.R.6408. We have no opposition to the provision in the bill postponing tax deadlines for those unlawfully or wrongfully detained or held hostage abroad. And we strongly support stopping bad actors from using nonprofit organizations to fund terrorism. Unfortunately, this legislation as drafted also includes language from H.R.6408 that creates redundancies and confusion while providing the executive branch with expansive new authority that could be abused.

This legislation would allow the Secretary of the Treasury to designate section 501(c) nonprofits as “terrorist supporting organizations” at the Secretary’s discretion, without requiring the Secretary to share their full evidence or reasoning with accused nonprofits. Furthermore, the legislation runs counter to constitutional due process protections by placing the burden of proof on the accused organization and providing only 90 days for organizations to demonstrate their innocence before revoking their tax-exempt status.

Even if the Secretary’s decision were successfully reversed, designees would risk irreparable damage to their operations and reputation. The implication that an organization could be associated with terrorism could cause it to lose not only access to banks and other financial institutions but also the trust of donors and the communities it serves. In the end, the beneficiaries of nonprofits’ work would suffer the most.

In addition, under H.R.9495, law-abiding organizations could be stripped of their tax-exempt status for providing humanitarian assistance in conflict zones even when operating under Office of Foreign Assets Control authorizations. These authorizations protect nonprofits under sanctions law, but not under tax law.

It is already illegal to provide material support to foreign terrorist organizations. Organizations suspected of violating the law are rightly subject to criminal investigation and prosecution. Section 4 of H.R.9495 may achieve the goal of expediting these cases, but it does so at the expense of fairness and transparency. If the investigation process needs refinement or expedition, we stand ready to work with policymakers on changes that protect due process rights of nonprofit organizations and guard against future abuse.

We urge you to oppose H.R.6408/H.R.9495 unless amended to address the foregoing concerns.