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Introduced February 10, 2025 by William Francis Hagerty · Last progress February 10, 2025
The bill strengthens enforcement to prevent tax-exempt subsidies for unlawful immigration and protect taxpayers, but it creates legal risk and a chilling effect that may reduce services and funding for vulnerable immigrant and low-income communities.
Nonprofit organizations that do not knowingly aid undocumented individuals will retain their tax-exempt (501(c)(3)) status, providing clearer enforcement expectations for compliant charities.
Taxpayers are protected because the bill deters misuse of tax-exempt status to subsidize unlawful immigration-related activity, helping prevent public funds from indirectly supporting illegal presence.
Low-income and immigrant communities may lose access to services because organizations could reduce or stop programs to avoid risk, decreasing aid to vulnerable people.
Affected charities risk losing 501(c)(3) status, which would increase their tax liabilities and reduce funding options, raising administrative costs and potentially shrinking services.
Nonprofits that serve clients with mixed or uncertain immigration status face legal uncertainty and the risk of losing tax-exempt status if they are deemed to 'reasonably should know' recipients' status, creating compliance burdens.
Based on analysis of 2 sections of legislative text.
Amends the Internal Revenue Code rules for tax-exempt organizations to add a new disqualification: any organization that engages in a pattern or practice of providing financial assistance, benefits, services, or other material support to people the organization knows or reasonably should know are unlawfully present in the United States would lose tax-exempt status. The change takes effect on the date the law is enacted and does not include new funding or agency assignments.