House Votes To Let Treasury Kill Politically Disfavored Nonprofits
On Thursday, the U.S. House of Representatives passed a bill that frees Americans held hostage or unjustly detained overseas from the fear of crushing tax penalties upon returning home. Unfortunately, as is often the case with legislation, that’s not all it does. The bill also lets the government designate nonprofit groups as supporters of terrorism, with minimal safeguards, and strip them of their tax-exempt status. It’s good that lawmakers want to grant tax relief to people recovering from kidnapping ordeals, but we shouldn’t further weaponize tax rules and financial power for political purposes.
Against Terrorism—and Due Process
Celebrating the passage of the bill, main sponsor Rep. Claudia Tenney (R–N.Y.) commented, “I am pleased this legislation passed the House, ensuring that Americans who have endured the horrors of being held hostage can return home without facing punitive tax penalties while also strengthening our stance against terrorism.”
Tenney wasn’t alone. The Stop Terror-Financing and Tax Penalties on American Hostages Act drew the votes of 204 Republicans and 15 Democrats. In opposition were 183 Democrats and one Republican (Kentucky’s Rep. Thomas Massie).
As advertised, the bill provides that “the period during which an applicable individual was unlawfully or wrongfully detained abroad, or held hostage abroad, shall be disregarded in determining, under the internal revenue laws, in respect of any tax liability of such individual.”
But rolled into the legislation is language originally from another bill that allows for the “termination of tax-exempt status of terrorist supporting organizations.” The designation of organizations as such is left to the discretion of the Secretary of the Treasury, based on that official’s judgment that a non-profit group has, in the last three years, provided “material support or resources” to what the U.S. government considers a terrorist organization. The language provides for a 90-day window during which time supposed “terrorist supporting organizations” can appeal the designation, but the burden is on them to prove that they’re not guilty.
This bill “creates a high risk of politicized and discriminatory enforcement,” according to a letter sent this week to House Speaker Mike Johnson (R–La.) and Minority Leader Hakeem Jeffries (D–N.Y.) by a coalition of civil liberties and activist groups including the ACLU and the Brennan Center for Justice. “The executive branch already has extensive authority to prohibit transactions with individuals and entities it deems connected to terrorism and nonprofit organizations are already prohibited from providing material support to terrorist organizations. In fact, it would be a federal crime for
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