Once again, Congress has given in to terror-supporting organizations by stripping Section 112209 from President Trump’s One Big Beautiful Bill, which would have amended the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.
This action took place during the third weekend of May 2025. In a 17-16 vote, with four Republicans voting “present,” the House Budget Committee advanced the revised version of the bill without the nonprofit clause.
Sec 112209. Termination of tax-exempt status of terrorist supporting organizations.
Current Law: Under current law, the IRS generally only issues a letter revoking recognition of an organization’s tax-exempt status after (1) conducting an examination of the organization; (2) issuing a letter to the organization proposing revocation; and (3) allowing the organization to exhaust the administrative appeal rights that follow the issuance of the proposed revocation letter.
Provisions of Section 112209: This provision grants the Secretary of the Treasury authority to suspend the tax-exempt status of any tax-exempt organization that, during the three years prior to designation, provided more than a minor amount of material support or resources to a listed terrorist organization. The provision allows suspensions to be lifted only when the supported terrorist organization is de-listed as a terrorist organization, but the Treasury Department’s ability to suspend tax-exempt status is subject to a robust set of procedural and due process protections, including notice requirements and an opportunity to challenge the designation.
The Council on American-Islamic Relations (CAIR), an unindicted co-conspirator in the 2007 Holyland Foundation Trial, the largest terror financing trial in U. S. history, along with other such organizations, are celebrating the removal of this provision from the bill passed by the House on a vote of 215-214.
A federal judge denied CAIR’s request to have its name removed from the co-conspirator list, stating that there was “ample evidence” of its involvement.
Florida’s legislature recently passed a resolution citing CAIR’s links to terrorist organizations such as Hamas and the Muslim Brotherhood, both enemies of the United States. They also cite CAIR’s leadership’s open praise for acts of terror and defended violence against innocent civilians. Several CAIR leaders have been convicted of providing material support to a designated foreign terrorist organization. Additionally, Randall Todd Royer, also known as Ismail Royer, a communication specialist for CAIR, was convicted of conspiring to help al Qaeda and the Taliban battle American troops fighting in Afghanistan and was sentenced to 20 years in prison in 2004.
Ghassan Elashi, a CAIR-Texas board member was sentenced to 65 years in federal prison for funneling money to Hamas.
CAIR claimed that Section 112209 “would have given the Treasury Secretary broad, unchecked power to revoke nonprofit tax-exempt status based on vague and politically motivated accusations of ‘terrorism support,’ often relying on classified evidence and without due process.”
A 2023 report by Committee on Ways and Means stated: “The Committee recently has received testimony about links between domestic organizations with tax-exempt status and international terrorist organizations and believes the Internal Revenue Code should not be used to subsidize or finance violent terrorism around the world. The provision addresses this concern by providing for the suspension of the tax-exempt status of certain organizations that provide material support or resources to terrorist organizations, prohibiting such organizations from applying for tax- exempt status, and disallowing charitable deductions for contributions to such organizations.”
“The provision extends section 501(p) such that it applies not only to terrorist organizations (as under present law) but also to terrorist supporting organizations. The provision treats a terrorist supporting organization as a terrorist organization described in section 501(p)(2). The effect of this treatment is that the tax-exempt status of a terrorist supporting organization, and the eligibility of such organization to apply for tax-exempt status, are suspended.”
“A terrorist supporting organization is any organization that is designated by the Secretary as having provided, during the three- year period ending on the date of such designation, material support or resources to a terrorist organization or terrorist supporting organization … in excess of a de minimis amount.”
The change to the Internal Revenue Code also provided notice requirements, opportunities to cure, rescission of designation and administrative and judicial review of the designation.
Notice requirement. Before designating an organization as a terrorist supporting organization, the Secretary is required to mail to the most recent mailing address provided to the IRS on its most recent annual information return or notice filed with the IRS (or subsequently submitted form indicating a change of address) a written notice. The notice must include: (1) a statement that the Secretary will designate the organization as a terrorist supporting organization unless the organization satisfies the requirements outlined in the following paragraph (relating to opportunity to cure), (2) the name of the organization or organizations with respect to which the Secretary has determined such organization provided material support or resources, and (3) a description of such material support or resources, to the extent consistent with national security and law enforcement interests.
Opportunity to cure. In the case of such a notice, the Secretary shall, at the end of the 90-day period beginning on the date the notice was sent, designate the organization as a terrorist supporting organization if, and only if, the organization has not during such period: (1) demonstrated to the satisfaction of the Secretary that the organization did not provide the material support or resources, or (2) made reasonable efforts to have such support or resources returned to such organization and certified in writing to the Secretary that such organization will not provide any further support or resources to a terrorist organization or terrorist supporting organization described in section 501(p)(2). Such a certification is not valid if the organization making the certification has provided any other such certification during the preceding five years.
Rescission of designation. The Secretary shall rescind a designation if and only if: (1) the Secretary determines that the designation was erroneous; (2) after the Secretary receives a certification from an organization that it did not receive the notice described above, (a) the Secretary determines that it is reasonable to believe that the organization did not receive the notice, and (b) the organization satisfies the above requirements relating to curing a deficiency (that is, the organization demonstrates that it did not provide material support or resources or made reasonable efforts to have such support or resources re turned and makes the required certification); or (3) the Secretary determines that the periods of suspension for all organizations to which the material support or resources were provided have ended. The certification described in (2) above is not treated as valid if the organization making the certification has provided any other such certification during the preceding five years.
Administration and judicial review of designation. Notwithstanding the present-law rule that disallows a challenge to a designation as a terrorist organization in certain administrative or judicial proceedings (section 501(p)(5)), in the case of the designation of an organization as a terrorist supporting organization, a dispute regarding such designation is subject to resolution by the IRS Independent Office of Appeals (‘‘IRS Appeals’’) under section 7803(e) (which describes IRS Appeals). The dispute is subject to IRS Appeals resolution in the same manner as if the designation were made by the IRS. In addition, notwithstanding section 501(p)(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. In the case of a determination that 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 such judicial review, a determination shall not fail to be treated as a final determination merely because the organization fails to utilize the dispute resolution process of IRS Appeals described above.”
It should be obvious that the Committee on Ways and Means provided ample protections for nonprofits, if in fact, the nonprofit was not supporting a terrorist organization.
Given the number of terror supporting organizations currently enjoying 501(c)(3) status this change to the IRS code is sorely needed to address these concerns. No patriotic American would agree to a charitable non-profit accepting funding from a terror organization. If an organization is accepting terror funding and secreting that fact, there can be no doubt that their tax-exempt status should be terminated.
As for those in congress who in the dead of night pulled this section of the mega bill and the four Republicans who voted “present,” shame on them and shame on the organizations who continue to distort the facts surrounding this bill.
Robert J. Bodisch, Sr.
Deputy Director (Retired)
Texas Dept. of Public Safety
Texas Homeland Security
Senior Fellow, Center for Security Policy
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