[Congressional Record Volume 170, Number 64 (Monday, April 15, 2024)]
[House]
[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.

                          ____________________