Sponsor
William Francis Hagerty
Senator · R-TN
Senator · R-TN
The bill strengthens IRS authority to revoke tax‑exempt status for organizations aiding undocumented immigrants and shields nonprofits that avoid such assistance, but it likely chills humanitarian services, raises compliance costs for charities, and creates due‑process risks for vulnerable people.
Tax authorities (IRS) gain a clearer statutory basis to deny or revoke tax-exempt status for organizations that assist undocumented immigrants, strengthening enforcement of tax rules related to immigration‑related activities.
Nonprofit organizations that do not assist undocumented individuals will be less likely to face scrutiny and are more likely to preserve their tax‑exempt status, protecting compliant charities from enforcement risk.
Undocumented immigrants are likely to face reduced access to food, shelter, medical care, and other humanitarian services because charities may pull back from serving them out of fear of losing tax benefits.
Recipients lacking documentation may suffer erosion of rights and due‑process protections as eligibility and enforcement decisions get tied to immigration status checks and determinations.
Nonprofit charities (including those providing humanitarian aid) could lose tax‑exempt status if volunteers or staff cannot perfectly verify the immigration status of those they serve, putting many charities at risk.
Based on analysis of 2 sections of legislative text.
Disqualifies 501(c)(3) status for organizations that engage in a pattern or practice of providing material support to people they know or reasonably should know are unlawfully present in the U.S.
Official title: Amend the Internal Revenue Code of 1986 to modify eligibility for 501(c)(3) status.
Introduced February 10, 2025 by William Francis Hagerty · Last progress February 10, 2025
Limits tax-exempt status for charities that provide material support to people they know or should reasonably know are unlawfully present in the United States. It changes the rules for 26 U.S.C. §501(c)(3) so organizations that engage in a pattern or practice of such assistance cannot qualify as tax-exempt charities, effective on enactment. The change inserts a new exclusion into the list of qualifying criteria for 501(c)(3) organizations, keeping most existing language but adding a clause that disqualifies entities that routinely provide financial assistance, benefits, services, or other material support to unlawfully present individuals when the organization knows or should know of the individual's immigration status.