Termination of Tax-Exempt Status of Terrorist Supporting Organizations
Floor Speech
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Mr. SMITH of Missouri. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6408) to amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 6408
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. TERMINATION OF TAX-EXEMPT STATUS OF TERRORIST SUPPORTING ORGANIZATIONS.
(a) In General.--Section 501(p) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
``(8) Application to terrorist supporting organizations.--
``(A) In general.--For purposes of this subsection, in the case of any terrorist supporting organization--
``(i) such organization (and the designation of such organization under subparagraph (B)) shall be treated as described in paragraph (2), and
``(ii) the period of suspension described in paragraph (3) with respect to such organization shall be treated as beginning on the date that the Secretary designates such organization under subparagraph (B) and ending on the date that the Secretary rescinds such designation under subparagraph (D).
``(B) Terrorist supporting organization.--For purposes of this paragraph, the term `terrorist supporting organization' means any organization which is designated by the Secretary as having provided, during the 3-year period ending on the date of such designation, material support or resources (within the meaning of section 2339B of title 18, United States Code) to an organization described in paragraph (2) (determined after the application of this paragraph to such organization) in excess of a de minimis amount.
``(C) Designation procedure.--
``(i) Notice requirement.--Prior to designating any organization as a terrorist supporting organization under subparagraph (B), the Secretary shall mail to the most recent mailing address provided by such organization on the organization's annual return or notice under section 6033 (or subsequent form indicating a change of address) a written notice which includes--
``(I) a statement that the Secretary will designate such organization as a terrorist supporting organization unless the organization satisfies the requirements of subclause (I) or (II) of clause (ii),
``(II) the name of the organization or organizations with respect to which the Secretary has determined such organization provided material support or sources as described in subparagraph (B), and
``(III) a description of such material support or resources to the extent consistent with national security and law enforcement interests.
``(ii) Opportunity to cure.--In the case of any notice provided to an organization under clause (i), the Secretary shall, at the close of the 90-day period beginning on the date that such notice was sent, designate such organization as a terrorist supporting organization under subparagraph (B) if (and only if) such organization has not (during such period)--
``(I) demonstrated to the satisfaction of the Secretary that such organization did not provide the material support or resources referred to in subparagraph (B), or
``(II) made reasonable efforts to have such support or resources returned to such organization and certified in writing to the Secretary that such organization will not provide any further support or resources to organizations described in paragraph (2). A certification under subclause (II) shall not be treated as valid if the organization making such certification has provided any other such certification during the preceding 5 years.
``(D) Rescission.--The Secretary shall rescind a designation under subparagraph (B) if (and only if)--
``(i) the Secretary determines that such designation was erroneous,
``(ii) after the Secretary receives a written certification from an organization that such organization did not receive the notice described in subparagraph (C)(i)--
``(I) the Secretary determines that it is reasonable to believe that such organization did not receive such notice, and
``(II) such organization satisfies the requirements of subclause (I) or (II) of subparagraph (C)(ii) (determined after taking into account the last sentence thereof), or
``(iii) the Secretary determines, with respect to all organizations to which the material support or resources referred to in subparagraph (B) were provided, the periods of suspension under paragraph (3) have ended. A certification described in the matter preceding subclause (I) of clause (II) shall not be treated as valid if the organization making such certification has provided any other such certification during the preceding 5 years.
``(E) Administrative review by internal revenue service independent office of appeals.--In the case of the designation of an organization by the Secretary as a terrorist supporting organization under subparagraph (B), a dispute regarding such designation shall be subject to resolution by the Internal Revenue Service Independent Office of Appeals under section 7803(e) in the same manner as if such designation were made by the Internal Revenue Service and paragraph (5) of this subsection did not apply.
``(F) Jurisdiction of united states courts.-- Notwithstanding paragraph (5), the United States district courts shall have exclusive jurisdiction to review a final determination with respect to an organization's designation as a terrorist supporting organization under subparagraph (B). In the case of any such determination which was based on classified information (as defined in section 1(a) of the Classified Information Procedures Act), such information may be submitted to the reviewing court ex parte and in camera. For purposes of this subparagraph, a determination with respect to an organization's designation as a terrorist supporting organization shall not fail to be treated as a final determination merely because such organization fails to utilize the dispute resolution process of the Internal Revenue Service Independent Office of Appeals provided under subparagraph (E).''.
(b) Effective Date.--The amendment made by this section shall apply to designations made after the date of the enactment of this Act in taxable years ending after such date.
Mr. Speaker, I rise today in support of H.R. 6408, bipartisan legislation introduced by Ways and Means members David Kustoff and Brad Schneider.
This commonsense bill revokes the tax-exempt status of entities that have been found to be providing material support to terrorist organizations within the past 3 years.
This legislation is more important than ever, given Iran's attacks on Israel this weekend. It is thanks to the strong alliance that exists between the U.S. and Israel that our ally was able to defend itself. However, this legislation speaks to the broader efforts America must undertake to ensure our support for Israel and to counteract the forces of violence and terrorism that threaten our ally and our own homeland. There are multiple fronts in this battle against terrorism, and this bill addresses one that perhaps does not get as much attention as it should.
As part of our aggressive oversight efforts, the Ways and Means Committee has been examining the behavior of U.S.-based organizations that enjoy generous tax exemptions and other benefits under our tax code.
That investigation included a hearing in November of last year following the horrific attacks on Israel by Hamas terrorists. During that hearing, one witness, a terrorism financing expert, remarked on how this legislation would serve as a valuable tool to not just the Treasury Department but the Department of Justice and the FBI to identify and disrupt terrorism-related activities on U.S. soil.
We must continue to look into the actions of certain tax-exempt groups that are suspected of financing the activities of known terrorist organizations like Hamas. One example is the Holy Land Foundation. This tax-exempt organization funneled over $12 million in donations from Americans to fund Hamas before it was shut down by the U.S. Government in the early 2000s.
We also suspect that there are other groups that are operating in the United States that are providing material support to known terrorist organizations, including Hamas.
It should go without saying that America's tax code should not be used to support or finance violent terrorism around the world. However, we have to be vigilant in the face of groups that seek to exploit the generosity of the American people and American taxpayers. We should ensure they cannot funnel resources to those that target civilians and harm our citizens and our allies.
Mr. Speaker, the United States must use every tool in our toolbox to combat organizations that threaten America and our allies like Israel. That includes going after the flow of money and resources from U.S.- based, so-called charitable organizations to the terrorist groups that murder civilians around the world.
We cannot turn a blind eye to entities that support terrorism and known terrorist groups while exploiting our tax code to cover their tracks and pursue their malicious goals.
It is unacceptable for any organization to receive taxpayer support while they are funneling millions of dollars to Hamas, an organization responsible for the horrific attacks against the people of Israel on October 7. We must do more to ensure such groups are not able to operate under the cover of our tax code.
Mr. Speaker, I urge all my colleagues to vote ``yes'' on this measure, and I yield back the balance of my time.
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Mr. SMITH of Missouri. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
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