Sponsors (3)
The bill strengthens tools to cut off tax advantages for organizations tied to terrorism and adds procedural notice, but does so in a way that can immediately and substantially harm charities, concentrates designation power in the executive branch, and raises due‑process and overbreadth risks for legitimate nonprofit activity.
Nonprofit groups that materially support designated terrorist organizations lose federal tax-exempt benefits, removing a financial advantage for entities that fund terrorism and helping disrupt terrorist financing.
Nonprofits that face potential designation must receive formal notice and a 90-day cure period, giving organizations an opportunity to rebut allegations or remediate conduct before final adverse action.
Charitable organizations engaged in State‑approved or OFAC‑approved humanitarian assistance are explicitly excluded from designation, protecting lawful relief operations from being wrongly penalized.
Nonprofits can have their tax-exempt status immediately suspended upon designation, risking loss of donations, program disruption, and financial harm during potentially prolonged review periods.
The bill vests significant designation authority in Treasury/IRS administrative processes, concentrating power in the executive branch and creating risk of inconsistent, opaque, or politically influenced decisions.
Use of withheld classified evidence in designation proceedings can limit an organization's ability to see and contest the case against it, raising due‑process and transparency concerns for affected nonprofits.
Based on analysis of 2 sections of legislative text.
Gives the Treasury/IRS power to designate organizations as "terrorist supporting" and suspend or terminate their tax-exempt status after a notice-and-cure process.
Introduced December 17, 2025 by John Cornyn · Last progress December 17, 2025
Creates a new rule in the tax code letting the Treasury Secretary (through the IRS) label a nonprofit as a “terrorist supporting organization” and suspend or terminate its tax-exempt status while that label remains. The designation applies if the organization provided material support or resources (as defined in federal criminal law) to certain terrorist organizations within the prior three years, subject to narrow exceptions for State Department-approved support and humanitarian aid cleared by OFAC. Before making a designation, the IRS must send a written notice to the organization and give it 90 days to respond or try to "cure" the issue; the suspension lasts from designation until the IRS rescinds it. The text provided here cuts off mid-sentence, so some specifics of the notice-and-cure response options are incomplete in the available summary.