Sponsors
The bill strengthens national security by stripping tax benefits from entities tied to designated terrorist groups and adds judicial review and a cure period, but it empowers swift administrative suspensions that can economically and reputationally harm nonprofits (and their donors), may limit their ability to rebut classified allegations, and increases government workload and litigation risk.
Nonprofit organizations that provide material support to designated terrorist groups can lose tax-exempt status, removing tax benefits from entities that aid terrorism and reducing incentives/support for terrorist activity.
Nonprofits and taxpayers can obtain federal court review of Treasury/IRS designations with procedures to handle classified evidence, providing judicial oversight of executive action.
Organizations receive written notice and a 90-day cure period to rebut allegations or return support, giving affected entities an opportunity to respond before permanent consequences are imposed.
Nonprofits (and their donors) risk immediate loss of tax benefits, financial costs, and reputational harm because the Secretary can unilaterally suspend tax-exempt status tied to the designation date—potentially imposing economic consequences before criminal or judicial findings.
Organizations' ability to rebut allegations may be impaired because the government can withhold descriptions for national security or law enforcement reasons, limiting effective defense and increasing risk of erroneous or unchallengeable suspensions.
The administrative designation and suspension process may increase IRS/Treasury workload and invite litigation, raising costs for taxpayers and creating additional government administrative burdens.
Based on analysis of 2 sections of legislative text.
Creates a Treasury-made "terrorist supporting organization" designation that suspends federal tax-exempt status for entities that provided material support within the prior 3 years, with notice and a 90-day cure period.
Creates a new Treasury-administered designation, “terrorist supporting organization,” that suspends an entity’s federal tax-exempt status if the Treasury Secretary finds the entity provided more than de minimis material support to a designated terrorist organization during the prior three years. The suspension runs from the date of Treasury designation until the Secretary rescinds it, and the measure requires prior written notice to the organization and a 90-day period for the organization to cure the alleged conduct (subject to limited nondisclosure for national security or law enforcement reasons).
Introduced December 17, 2025 by David Kustoff · Last progress December 17, 2025