CDT Joins Others in Opposing Bill That Could Strip Organizations of Tax Exempt Status Without Due Process

The Center for Democracy & Technology has joined over 120 other NGOs in opposing H.R. 9495, a bill that would grant the Treasury Department the authority to revoke the tax exempt status of an organization without due process and with a substantial risk that revocation decisions would be politically-based. The bill would empower the Secretary of the Treasury Department to designate a domestic non-profit organization as “terrorist supporting organization” and strip it of its tax exemption if they find that the non-profit has provided “material support” to a terrorist organization. The provision of material support to a terrorist organization is already a crime, but the imposition of criminal sanctions is subject to at least some level of due process. 

Stripping an organization of its tax-exempt status would be death knell for many non-profits, and the threat of such an action could chill their speech. Proponents of the legislation have cited student groups’ pro-Palestinian advocacy regarding the war in Gaza as a motivator for the legislation. This advocacy is often manifested on social media such as Facebook, TikTok and YouTube.  

The bill, captioned the Stop Terror-Financing and Tax Penalties on American Hostages Act, would also prevent the Internal Revenue Service from imposing tax-related fines and penalties on people who are held hostage abroad. Our joint letter indicates that we do not oppose that portion of the legislation.

Read the full letter here.