The U.S. House passed the Stop Terror-Financing and Tax Penalties on American Hostages Act, H.R. 9495, which would allow the treasury secretary to designate nonprofit organizations as terrorist supporters and revoke their tax-exempt status. The bill would also provide relief for Americans wrongfully detained abroad. While the Senate previously approved a similar measure, the bill faces opposition from organizations like the ACLU and Planned Parenthood, who argue it could lead to politicized enforcement and discrimination.
Supporters of the bill argue it strengthens the government’s stance against terrorism financing, but opponents fear it could be abused and have devastating effects on nonprofits, including humanitarian aid organizations and universities. The bill would allow the executive branch to designate groups as terrorist organizations without due process, potentially leading to donors and banks shunning these organizations out of fear of association with terrorism support.
The current federal law prohibits providing support to terrorist organizations, and the IRS already has a process in place to revoke tax-exempt status for groups supporting terrorism. However, proponents of the bill believe the current process is inadequate and too slow, necessitating the need for H.R. 9495.
While the bill received bipartisan support in April, the latest version, H.R. 9495, faced opposition from Democrats, with many expressing concerns about the potential impact on nonprofits. Despite passing in the House, it may face challenges in the Senate. Nonprofits are worried about potential unintended consequences if the bill becomes law, and there are concerns about how it could be applied in a criminal context, as seen in previous administrations.
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