We write to express our deep concerns with H.R. 9495, the Stop Terror-Financing and Tax Penalties on American Hostages Act. Specifically, this bill includes the text of H.R. 6408, legislation we strongly oppose as it raises significant constitutional concerns. Because H.R. 6408 vests vast unilateral discretion in the Secretary of Treasury, it creates a high risk of politicized and discriminatory enforcement. The executive branch already has extensive authority to prohibit transactions with individuals and entities it deems connected to terrorism and nonprofit organizations are already prohibited from providing material support to terrorist organizations. In fact, it would be a federal crime for them to do so.
Moreover, we do not oppose the provisions in H.R. 9495 that relate to preventing the IRS from imposing fines and penalties on hostages while they are held abroad. Indeed, these provisions have already passed the Senate on their own, and if the House of Representatives were to pass a version of this bill that did not include the text of H.R. 6408, it could be sent immediately to the President for his signature.
Without any evidence as to the need for this legislation, H.R. 6408 authorizes broad and easily abused new powers for the executive branch. It grants the Secretary of the Treasury virtually unfettered discretion to designate a U.S. nonprofit as a “terrorist supporting organization” and to strip it of its tax-exempt status if the Secretary finds that the nonprofit has provided material support to a terrorist group, even if the “support” is not intentional or connected to actual violence.
While the sponsors of this legislation have stated that it is needed to avoid what they refer to as “time-consuming bureaucratic process” under current law, what the bill sponsors are actually seeking to avoid is fundamental due process. If this bill were to become law, the Secretary of Treasury could strip a US nonprofit of its tax-exempt status without providing the nonprofit a meaningful opportunity to defend itself before a neutral decisionmaker. The legislation further does not require disclosure of all the reasons for such a decision or the evidence relied upon to support it. Nor would the government be required to provide any evidence in its possession that might undermine its decision, leaving an accused nonprofit entirely in the dark about what conduct the government believes qualifies as material support.
The potential for abuse under H.R. 6408 is immense as the executive branch would be handed a tool it could use to curb free speech, censor nonprofit media outlets, target political opponents, and punish disfavored groups across the political spectrum. Moreover, the addition of this authority to the tax code would allow the IRS to explicitly target and harass domestic nonprofits using its investigative authority. It is also not hard to imagine a future administration using this power in far broader circumstances that have nothing to do with the hostilities in Gaza. And as more recent congressional oversight efforts make clear, these efforts are part of concerted attack on civil society that is targeted at more than just groups involved in the campus protests regarding Gaza.
The executive branch could use this authority to target its political opponents and use the fear of crippling legal fees, the stigma of the designation, and donors fleeing controversy to stifle dissent and chill speech and advocacy. And while the broadest applications of this authority may not ultimately hold up in court, the potential reputational and financial cost of fending off an investigation and litigating a wrongful designation could functionally mean the end of a targeted nonprofit before it ever has its day in court.
The lack of guardrails creates the potential for future administrations to weaponize these powers against groups on both ends of the ideological spectrum. Even if they may never be designated as “terrorist-supporting,” let alone charged with a crime, nonprofits will curtail their activities as a precaution in order to avoid stigmatizing and financially devastating punishments. That is why we strongly urge you to oppose the inclusion of H.R. 6408 in H.R. 9495.
Sincerely,
#WelcomeWithDignity 18 Million Rising
Advocacy for Principled Action in Government Alliance for Peacebuilding
American Atheists
American Civil Liberties Union American Federation of Teachers
American Friends Service Committee Amnesty International USA
Anethum Global
Arab American Institute (AAI)
Asian Americans Advancing Justice | AAJC Asian Law Caucus
Aunties Coalition Ayuda
Bend the Arc: Jewish Action Borderlands Resource Initiative
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Othman Bin Affan Mosque Oxfam America
Palestine Legal PASNY
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Presbyterian Church (USA), Office of Public Witness Project On Government Oversight
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Protect Democracy Public Citizen
Refreshed Refined Reformed R3 Inc
Reproductive Freedom for All (former NARAL Pro-Choice America) Restore the Fourth
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The X-Lab Tides Center
Tides Foundation
Unitarian Universalist Service Committee (UUSC)
US Campaign for Palestinian Rights Action (USCPR Action) Win Without War
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