This move comes as a stark contrast to the overwhelming Democratic support for a similar bill during the Biden-Harris administration. The previous version of the bill was introduced following an attack by Hamas against Israel on October 7, 2023, and managed to secure 179 Democratic votes in the House, although it failed to gain momentum in the Senate.
According to the Daily Caller, the recent vote saw 204 Republicans and 52 Democrats in favor of the new bill, with Kentucky Republican Representative Thomas Massie being the sole Republican opposing it. The bill required a two-thirds majority to pass. While its defeat was hailed as a triumph for civil liberties by critics, proponents argued it was a necessary measure to target entities funding terrorism.
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The proposed legislation, House Resolution 9495 or the Stop Terror-Financing and Tax Penalties on American Hostages Act, was put forth by Republican New York Representative Claudia Tenney. The bill aimed to "postpone tax deadlines and reimburse paid late fees" for American hostages, while also revoking "the tax-exempt status of terrorist supporting organizations."
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"The Stop Terror-Financing and Tax Penalties on American Hostages Act targets tax-exempt nonprofits that back terrorist organizations and ensures that Americans held hostage or wrongfully detained are not subject to tax penalties," Rep. Tenney explained in a statement to the Daily Caller. The bill is set to be reviewed by the Committee on Rules on Monday, after which it could be advanced for another floor vote.
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The legislation defines "terrorist supporting organizations" as non-profits that the Treasury Secretary identifies as having provided material support or resources to terrorist groups. The Secretary would then issue a notice to the non-profit, designating it as a "terrorist supporting organization." The organization would then have 90 days to prove that it did not provide the material support or resources, or that it made reasonable efforts to have such support or resources returned. In the latter case, the organization would also need to provide written certification that it plans to discontinue further support or resources to terrorist organizations.
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Supporters of the bill argued that it would prevent non-profits allegedly supporting terrorism from receiving tax benefits. "Despite passing unanimously out of the Ways and Means Committee, some of my Democratic colleagues have decided to play partisan politics with this common sense, bipartisan legislation, allowing the abuse of our tax code and putting politics above Americans’ safety," Tenney told the Caller. "They should be ashamed that they voted to defend nonprofits that support violent terrorist organizations and unfairly penalize American hostages."
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However, opponents of the bill expressed concerns about potential misuse. Nevada Democratic Representative Dina Titus, who originally co-sponsored the bill, ended up voting against it. "The bill contains provisions I support that provide essential tax relief to Americans wrongfully detained and held hostage, but I voted against it in light of recent concerns that the provisions added by Republicans related to non-profit tax-exempt status could be abused by a future administration," she said in a statement to the Caller.
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Democratic California Representative Ro Khanna also opposed the legislation, citing concerns about free speech. "The bill is overbroad and could strip nonprofit status simply for speech or humanitarian work the President doesn’t like. We have to stand up for everyone’s right to free speech," he stated in an online post. When asked by the Caller if he favored another method to target terrorist-supporting organizations, Khanna responded, "I would support a narrowly tailored bill that did not implicate free speech concerns or nonprofit groups like Human Rights Watch and others doing meaningful work."
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Despite the bill's failure, the Treasury Department still possesses tools to combat terrorism. In 2019, President Trump's treasury implemented sanctions to target entities funding terrorism. The department's Office of Foreign Assets Control (OFAC) is responsible for enforcing sanctions against certain foreign countries, terrorists, drug traffickers, and others engaged in threats to national security. Financing terrorism is already illegal in the U.S. under the Antiterrorism and Effective Death Penalty Act of 1996. The USA PATRIOT Act granted Treasury the authority to freeze organizations’ assets, according to the Charity and Security Network. Nine charities have been forced to close under these laws since 2001, with their assets also being frozen.
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The majority of Republicans supported the bill due to national security concerns. However, recent measures purportedly aimed at countering terrorism have been used to target conservatives. The Biden-Harris administration released the first-ever National Strategy For Countering Domestic Terrorism in response to the events of January 6, 2021. The document suggested that "narratives of fraud" in the 2020 presidential election and "conditions related to the COVID-19 pandemic" could incite violence from "domestic violent extremists." The document also highlighted the role of social media in recruiting "domestic terrorists," citing "disinformation and misinformation online."
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The White House collaborated with Facebook to censor certain COVID-19 views, according to a letter from Mark Zuckerberg. The intelligence community under Biden-Harris censored the Hunter Biden laptop story, according to a House Judiciary report. The Department of Justice (DOJ) and the FBI also infamously targeted parents protesting school board meetings, whistleblowers said. The FBI investigated parents using its Counterterrorism Division, according to a letter from Republicans on the House Judiciary Committee. An FBI memo targeting "radical, traditional Catholic" groups was leaked last year, although it has since been retracted.
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While H.R. 9495 was defeated on Tuesday, its counterpart, the Stop Tax Penalties On American Hostages Act, which does not include the provision regarding nonprofits, passed the Senate in May. This raises questions about the future of legislation aimed at countering terrorism and its potential implications for non-profit organizations and civil liberties.
