A new bill known as HR 9495 has recently passed in the US House of Representatives, allowing the treasury secretary, appointed by the president, to revoke a nonprofit’s tax-exempt status if it is labeled as a “terrorism-supporting” organization. The bill was approved by a vote of 219 to 184, primarily along partisan lines, with Republicans generally in support while most Democrats opposed it, although 15 Democrats did cross party lines to vote in favor.
Officially titled the Stop Terror-Financing and Tax Penalties on American Hostages Act, this legislation has stirred significant anxiety within the nonprofit sector and among civil rights advocates. Various organizations ranging from civil rights groups to nonprofit media and service providers have rallied against the bill due to concerns over its implications.
Originally, the bill garnered some bipartisan support amid heightened activism surrounding campus protests related to the conflict in Gaza, leading to fears that organizations supporting or organizing those protests might be accused of backing terrorism. Such assumptions heighten concerns regarding potential political retribution from the president, particularly after Donald Trump’s recent reelection, as critics worry he could misuse the bill to target dissenting nonprofit groups.
In September, the ACLU and approximately 150 organizations signed a letter expressing serious worries about the legislation, arguing it grants the executive branch excessive power to dismantle nonprofit organizations—including media and civil liberties entities—without due process. Another letter from major nonprofit organizations indicated that the bill would empower the Secretary of the Treasury to designate nonprofits as “terrorist supporting organizations” without disclosing evidence, thus violating due process principles.
Despite failing an earlier vote requiring a two-thirds majority, the bill was able to pass this time with a simple majority. During the debate, Democratic representatives criticized the bill as a tool for potential political targeting and oppression. Rep. Lloyd Doggett described it as a “death penalty for nonprofits,” fearing it would enable Trump to wield it against political adversaries. Other Democrats echoed similar sentiments, labeling the measure as dangerous and unconstitutional.
Republican leaders defended the bill, arguing it ensures due process and maintains protections for legitimate nonprofits. They blamed Democrats for opposing the legislation simply because of Trump’s presidency, contending that their concerns had been addressed.
With the bill now proceeding to the Senate, its future remains uncertain. Many expect that it could resurface in some form in 2025 under a Republican administration, indicating ongoing debates about the balance of power and the protection of free speech within the nonprofit sector.
Overall, while the passage of this bill raises legitimate concerns regarding civil liberties, it serves as a critical point of discussion about the delicate balance between national security and the protection of organizations operating in the public interest. Advocacy groups continue to assert the importance of safeguarding nonprofit sectors from potential political interference, framing the situation as a call to action for defending democracy and civic engagement.