[Pages H2371-H2374]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TERMINATION OF TAX-EXEMPT STATUS OF TERRORIST SUPPORTING ORGANIZATIONS

Mr. SMITH of Missouri. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 6408) to amend the Internal Revenue Code of 1986 to
terminate the tax-exempt status of terrorist supporting organizations,
as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:

H.R. 6408

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. TERMINATION OF TAX-EXEMPT STATUS OF TERRORIST
SUPPORTING ORGANIZATIONS.

(a) In General.--Section 501(p) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new paragraph:
``(8) Application to terrorist supporting organizations.--
``(A) In general.--For purposes of this subsection, in the
case of any terrorist supporting organization--
``(i) such organization (and the designation of such
organization under subparagraph (B)) shall be treated as
described in paragraph (2), and
``(ii) the period of suspension described in paragraph (3)
with respect to such organization shall be treated as
beginning on the date that the Secretary designates such
organization under subparagraph (B) and ending on the date
that the Secretary rescinds such designation under
subparagraph (D).
``(B) Terrorist supporting organization.--For purposes of
this paragraph, the term `terrorist supporting organization'
means any organization which is designated by the Secretary
as having provided, during the 3-year period ending on the
date of such designation, material support or resources
(within the meaning of section 2339B of title 18, United
States Code) to an organization described in paragraph (2)
(determined after the application of this paragraph to such
organization) in excess of a de minimis amount.
``(C) Designation procedure.--
``(i) Notice requirement.--Prior to designating any
organization as a terrorist supporting organization under
subparagraph (B), the Secretary shall mail to the most recent
mailing address provided by such organization on the
organization's annual return or notice under section 6033 (or
subsequent form indicating a change of address) a written
notice which includes--

``(I) a statement that the Secretary will designate such
organization as a terrorist supporting organization unless
the organization satisfies the requirements of subclause (I)
or (II) of clause (ii),
``(II) the name of the organization or organizations with
respect to which the Secretary has determined such
organization provided material support or sources as
described in subparagraph (B), and
``(III) a description of such material support or resources
to the extent consistent with national security and law
enforcement interests.

``(ii) Opportunity to cure.--In the case of any notice
provided to an organization under clause (i), the Secretary
shall, at the close of the 90-day period beginning on the
date that such notice was sent, designate such organization
as a terrorist supporting organization under subparagraph (B)
if (and only if) such organization has not (during such
period)--

``(I) demonstrated to the satisfaction of the Secretary
that such organization did not provide the material support
or resources referred to in subparagraph (B), or
``(II) made reasonable efforts to have such support or
resources returned to such organization and certified in
writing to the Secretary

[[Page H2372]]

that such organization will not provide any further support
or resources to organizations described in paragraph (2).

A certification under subclause (II) shall not be treated as
valid if the organization making such certification has
provided any other such certification during the preceding 5
years.
``(D) Rescission.--The Secretary shall rescind a
designation under subparagraph (B) if (and only if)--
``(i) the Secretary determines that such designation was
erroneous,
``(ii) after the Secretary receives a written certification
from an organization that such organization did not receive
the notice described in subparagraph (C)(i)--

``(I) the Secretary determines that it is reasonable to
believe that such organization did not receive such notice,
and
``(II) such organization satisfies the requirements of
subclause (I) or (II) of subparagraph (C)(ii) (determined
after taking into account the last sentence thereof), or

``(iii) the Secretary determines, with respect to all
organizations to which the material support or resources
referred to in subparagraph (B) were provided, the periods of
suspension under paragraph (3) have ended.

A certification described in the matter preceding subclause
(I) of clause (II) shall not be treated as valid if the
organization making such certification has provided any other
such certification during the preceding 5 years.
``(E) Administrative review by internal revenue service
independent office of appeals.--In the case of the
designation of an organization by the Secretary as a
terrorist supporting organization under subparagraph (B), a
dispute regarding such designation shall be subject to
resolution by the Internal Revenue Service Independent Office
of Appeals under section 7803(e) in the same manner as if
such designation were made by the Internal Revenue Service
and paragraph (5) of this subsection did not apply.
``(F) Jurisdiction of united states courts.--
Notwithstanding paragraph (5), the United States district
courts shall have exclusive jurisdiction to review a final
determination with respect to an organization's designation
as a terrorist supporting organization under subparagraph
(B). In the case of any such determination which was based on
classified information (as defined in section 1(a) of the
Classified Information Procedures Act), such information may
be submitted to the reviewing court ex parte and in camera.
For purposes of this subparagraph, a determination with
respect to an organization's designation as a terrorist
supporting organization shall not fail to be treated as a
final determination merely because such organization fails to
utilize the dispute resolution process of the Internal
Revenue Service Independent Office of Appeals provided under
subparagraph (E).''.
(b) Effective Date.--The amendment made by this section
shall apply to designations made after the date of the
enactment of this Act in taxable years ending after such
date.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Missouri (Mr. Smith) and the gentleman from Illinois (Mr. Schneider)
each will control 20 minutes.
The Chair recognizes the gentleman from Missouri.

General Leave

Mr. SMITH of Missouri. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days to revise and extend their remarks
and submit extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise today in support of H.R. 6408, bipartisan
legislation introduced by Ways and Means members David Kustoff and
Brad Schneider.
This commonsense bill revokes the tax-exempt status of entities that
have been found to be providing material support to terrorist
organizations within the past 3 years.
This legislation is more important than ever, given Iran's attacks on
Israel this weekend. It is thanks to the strong alliance that exists
between the U.S. and Israel that our ally was able to defend itself.
However, this legislation speaks to the broader efforts America must
undertake to ensure our support for Israel and to counteract the forces
of violence and terrorism that threaten our ally and our own homeland.
There are multiple fronts in this battle against terrorism, and this
bill addresses one that perhaps does not get as much attention as it
should.
As part of our aggressive oversight efforts, the Ways and Means
Committee has been examining the behavior of U.S.-based organizations
that enjoy generous tax exemptions and other benefits under our tax
code.
That investigation included a hearing in November of last year
following the horrific attacks on Israel by Hamas terrorists. During
that hearing, one witness, a terrorism financing expert, remarked on
how this legislation would serve as a valuable tool to not just the
Treasury Department but the Department of Justice and the FBI to
identify and disrupt terrorism-related activities on U.S. soil.
We must continue to look into the actions of certain tax-exempt
groups that are suspected of financing the activities of known
terrorist organizations like Hamas. One example is the Holy Land
Foundation. This tax-exempt organization funneled over $12 million in
donations from Americans to fund Hamas before it was shut down by the
U.S. Government in the early 2000s.
We also suspect that there are other groups that are operating in the
United States that are providing material support to known terrorist
organizations, including Hamas.
It should go without saying that America's tax code should not be
used to support or finance violent terrorism around the world. However,
we have to be vigilant in the face of groups that seek to exploit the
generosity of the American people and American taxpayers. We should
ensure they cannot funnel resources to those that target civilians and
harm our citizens and our allies.
Mr. Speaker, I call on all my colleagues to support this legislation,
and I reserve the balance of my time.
Mr. SCHNEIDER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 6408, and I am proud to
support this important legislation today and proud that it is being
brought to the floor in a bipartisan way. I am proud to have worked to
bring this to the floor with my fellow Ways and Means colleague,
Representative David Kustoff from Tennessee.
As was mentioned, this past weekend, Iran launched an unprecedented
attack on Israel, for the very first time from Iranian territory,
firing cruise and ballistic missiles as well as suicide attack drones.
Thankfully, again as was noted, a coalition of U.S., U.K., Jordanian,
French, and other allies, coordinated a remarkable defense, defeating
99 percent of the missiles and drones before they were able to reach
their intended targets. This achievement reflects the power of
alliances, alliances we have worked incredibly hard to build and need
to work to always maintain.
Iran, on the other hand, is aligned with groups such as Hezbollah in
Lebanon, Hamas and Palestinian Islamic Jihad in Gaza, the Houthis in
Yemen, and militias in Iraq and Syria. Iran is the world's largest
state sponsor of terrorism, backing a broad group of terrorist
organizations in the region and across the world.
In fact, just last week, a court in Argentina concluded that it was
Iran that planned the fatal attack against a Jewish community center in
1994, 30 years ago, and the court declared it a crime against humanity.
The alliances we create must be able to stand up to the horrific
alliances that Iran is trying to build. That is why this legislation is
so important.
As the attacks of October 7 highlighted, we must be doing everything
we can to assist allies like Israel, to disempower the enemies who seek
to do not just our allies harm, in the case of Hamas to destroy the
Jewish state and kill the Jewish people, but to also attack the United
States. This was made even clearer this weekend when Iran launched its
multifaceted assault on Israel.
That is why Speaker Johnson must bring the Senate-passed legislation
providing for Israeli security assistance as well as funding to help
our allies in Ukraine and Taiwan. We have to have the Senate bill come
to the House floor for a vote so it can immediately go to the
President's desk for signature to assist these allies who are facing
these threats. The Senate passed it in a deeply bipartisan vote, and I
have no doubt it would have the votes to pass in the House, if the
Speaker would just bring it to the floor.
We cannot dither or wait. The Iranian attacks over the weekend
demonstrate the serious urgency with which we must act. Anything less
than the passage of the Senate-passed aid bill will be grossly
insufficient.
As members of the House Ways and Means Committee, it is our job to be
good stewards of the tax code, to ensure its faithful enforcement and
to

[[Page H2373]]

empower the Treasury Department to go after tax cheats.

As my colleague mentioned, we must look into the acts of groups like
the Holy Land Foundation and others who are potentially providing
material support for terrorist groups. We must do everything we can to
cut off financing for groups like Hamas and other terrorist
organizations, and errant nonprofit organizations have been prosecuted
for funneling money to Hamas and others.
These organizations must be held accountable for providing material
support to terrorist organizations. As this legislation makes clear,
these organizations must never be allowed to enjoy the privilege of
tax-exempt status.
Financiers who exploit tax-exempt status to hide their nefarious work
behind nonprofit organizations must be held accountable. Doing so plays
an important role in our work to combat the financing of terrorist
organizations like Hamas.
This bill ensures the Treasury Department has the tools necessary to
do exactly that, while also providing thoughtful safeguards to protect
due process. That is why I am proud to be able to bring this bill to
the floor today.
Mr. Speaker, I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Tennessee (Mr. Kustoff), the sponsor of
this legislation.
Mr. KUSTOFF. Mr. Speaker, I thank Chairman Jason Smith not only for
his leadership on this legislation, this bill, but also for his
support.
H.R. 6408 is an important bipartisan piece of legislation that will
revoke the tax-exempt status for any organization that provides
financial support or resources to designated terrorist groups such as
Hamas or Hezbollah.
I do thank my colleague Representative Brad Schneider for joining me
in introducing what I think is a very important bill.
There is no doubt, Mr. Speaker, that since Hamas' barbaric attack on
Israel, we have seen a dramatic rise in anti-Semitism and, frankly,
anti-Israel-motivated attacks here at home and around the world. In
fact, we saw it here in the United States today.
Iran's recent attack on our ally, Israel, was a stark reminder of why
we must confront Iran and its terrorist proxy groups. These same groups
have also increased attacks on American troops in the region. Acts of
terror anywhere in the world will not be tolerated.
Now, a crucial pillar in the global fight against terrorism is
dismantling the financial networks of terrorist organizations. Without
access to resources and funding, terrorist organizations are seriously
restricted in their ability to carry out attacks in the very first
place.
Recent reports indicate that there are U.S.-based nonprofits that are
suspected of providing support and funding to terrorist groups. That is
an amazing statement to make. Many of these organizations have special
501(c) tax-exempt status, which allows their donors to claim a tax
deduction. To put it plainly, domestic financiers of terrorism are
currently being subsidized by U.S. taxpayer dollars.
Let me be very clear, Mr. Speaker: No American should receive a tax
benefit for funding terrorism.
Right now, our ability to crack down on tax-exempt organizations that
support terrorism is frankly inadequate. Doing so, under current law,
requires a time-consuming bureaucratic process that has sometimes
prevented Federal authorities from acting. That is why we introduced
this crucial legislation that we will be voting on, hopefully, later
today.
This legislation will authorize the United States Treasury to revoke
the tax-exempt status of any organization deemed to have provided
material support or resources to a designated terrorist group within
the past 3 years.

{time} 1700

Material support includes financing, services, and training. It is
any tangible or intangible aid that helps terrorist groups advance
their objectives.
Under no circumstances should organizations that support terrorism be
allowed to receive preferential treatment under the United States tax
code.
This bill, Mr. Speaker, is a crucial step towards dismantling the
financial networks of terrorist organizations across the globe
including Hamas, Hezbollah, and the Islamic Revolutionary Guard Corps.
I urge all my colleagues, Mr. Speaker, to support this important,
bipartisan piece of legislation that will bring us one step closer to
eradicating terrorism around the world.
Mr. SCHNEIDER. Mr. Speaker, I yield such time as he may consume to
the gentleman from Connecticut (Mr. Larson).
Mr. LARSON of Connecticut. Mr. Speaker, I first and foremost want to
commend Brad and David for their incredible work and also point out
that it is not often when you bring out a piece of legislation that you
author that you get an opportunity to have your mother in the audience
and observe. That legislation is about to be voted on as it was in the
committee, and I commend Chairman Smith for his efforts.
This is an important piece of legislation. As David was just saying,
no one should ever receive a tax benefit for aiding and abetting
terrorists. It is just absurd. Sometimes it takes common sense and
practical individuals to stand up and make sure that we get this right,
and I commend both of these gentlemen for their outstanding work.
I also thank Mr. Schneider for bringing this up. What we experienced
on Saturday was incredible, but it demonstrated that when nations stick
together in common bond as allies against terrorism and terrorist
attacks, good things can transpire and happen.
The world was taking notice of the way in which the attack on Israel
on Saturday was thwarted by Israel, the United States, and our allies.
Nonetheless, as Mr. Schneider pointed out, the world also took notice
this weekend on what was transpiring in Ukraine.
Mr. Speaker, imagine, during this same time, 130 drones, 80 missiles,
and 700 bombs, just in the last week alone were directed at the people
of Ukraine.
The President asked for the supplemental back in October. The Senate
passed the supplemental bill more than 2 months ago. That bill is
sitting in this Chamber waiting for Congress, the House of
Representatives, to stand up on behalf of the Ukrainian people, on
behalf of our allies. The world is watching while the House of
Representatives dithers.
People's lives are at stake. This is nothing short of a catastrophic
tragedy for the people of Ukraine as they must watch aghast as the
House of Representatives sits and does not take action to come to their
aid and relief.
It is long overdue--as this legislation does--for us to act in a
bipartisan basis. There is no question, Mr. Speaker, that if this bill
that has been passed by the Senate, the supplemental bill that sits
here waiting for our approval, is brought to the floor, it will pass
overwhelmingly and with bipartisan support.
Stop holding the supplemental back. Bring it forward. Provide the
people of Ukraine the relief they need. Provide the humanitarian relief
for the Palestinians, and make sure that Israel and Taiwan get the
fortification and support that they need from the American Government.
That is our responsibility.
I don't know how people can go home and look in the mirror knowing
that a valued ally of ours has put so much on the line and is standing
up to Putin. They are standing up to a dictator, and they are standing
up to a tyrant who is using the same formula as Adolph Hitler.
Mr. Speaker, Congress needs to rise up and do our job.
Mr. Speaker, I thank David and Brad for the bill.
Mr. SCHNEIDER. Mr. Speaker, I have no further speakers, and I yield
myself the balance of my time to close.
Mr. Speaker, I thank my friend, John Larson, for his passionate words
and his urgent plea to pass the essential national security legislation
that will bring aid to our allies in Ukraine, in Israel, and in Taiwan.
Enjoying tax exempt status under section 501 of the tax code is
indeed a privilege. As good stewards of the U.S. tax code, it is our
duty to ensure the Treasury Department has the tools it needs to
enforce this section.
At a time of great threat to our allies, and, in particular, to
Israel from

[[Page H2374]]

Hamas, Hezbollah, and Iran, we must exercise all powers that are at our
disposal to constrain funding for these terrorist organizations,
including combating errant nonprofit organizations based here in the
United States who provide material support for these groups overseas.
I, again, thank my colleague, Representative Kustoff, for his
partnership and work on this legislation. I thank Ranking Member Neal
and Chairman Smith for their leadership.
Mr. Speaker, I urge all of my colleagues to not only support this
legislation but also, as we have said, to support the essential
security funding that came from the Senate.
Mr. Speaker, I yield back the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself the remainder of
my time.
Mr. Speaker, the United States must use every tool in our toolbox to
combat organizations that threaten America and our allies like Israel.
That includes going after the flow of money and resources from U.S.-
based, so-called charitable organizations to the terrorist groups that
murder civilians around the world.
We cannot turn a blind eye to entities that support terrorism and
known terrorist groups while exploiting our tax code to cover their
tracks and pursue their malicious goals.
It is unacceptable for any organization to receive taxpayer support
while they are funneling millions of dollars to Hamas, an organization
responsible for the horrific attacks against the people of Israel on
October 7. We must do more to ensure such groups are not able to
operate under the cover of our tax code.
Mr. Speaker, I urge all my colleagues to vote ``yes'' on this
measure, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Missouri (Mr. Smith) that the House suspend the rules
and pass the bill, H.R. 6408, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. SMITH of Missouri. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.

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