Legislators in the United States House of Representatives have voted down a bill that would have granted the Department of the Treasury broad authority to revoke the tax-exempt status of nonprofits deemed to be supporting “terrorism”.
On Tuesday, the Stop Terror-Financing and Tax Penalties on American Hostages Act, or HR 9495, failed to reach the two-thirds majority needed in the House to pass.
Critics had feared the legislation would have been used against pro-Palestinian and other rights groups.
It was first introduced in response to widespread campus protests against Israel’s war on Gaza — during which several Palestinian solidarity groups were branded as “pro-Hamas” by pro-Israeli politicians and news outlets.
But the potentially sweeping implications of the legislation took on new urgency in the aftermath of President-elect Donald Trump’s win in last week’s US election.
Even before the election, civil rights advocates had widely condemned the proposed legislation. In a letter signed by more than 100 groups in September, they warned that the bill “raises significant constitutional concerns” and that because it vests “vast unilateral discretion in the Secretary of Treasury, it creates a high risk of politicized and discriminatory enforcement”.
Now that Trump is headed back to the White House — prompting widespread fears of an impending crackdown on civil rights — advocates warned the legislation could empower the incoming administration with an incredibly dangerous tool to crack down on dissent with few checks and balances.
“This is much more of a real threat right now,” Kia Hamadanchy, a senior policy counsel at the American Civil Liberties Union, told Al Jazeera ahead of Tuesday’s House vote. “We know that Trump is going to be president. I don’t know if it’s the time to give him additional authority.”
Losing nonprofit status, Hamadanchy said, would threaten many organisations’ financial viability by depriving them of tax exemptions. While targeted organisations would have a 90-day window to challenge the designation, they would not necessarily be provided with the underlying evidence used to make the determination against them.
“The entire process is run at the sole discretion of the secretary of [the] treasury,” said Hamadanchy. “So you could have your nonprofit status revoked before you ever have a chance to have a hearing.”
But being unilaterally declared as “pro-terrorist” has even broader implications, he added.
“You have the stigma of being designated a terror-supporting organisation,” Hamadanchy said. “You have all the legal fees costs you’re going to incur from having to actually go to court to fight this, and you have donors who might be running away from you because they don’t want to deal with the controversy, they might be afraid that if they donate money to you they’re going to be accused of providing material support to a terror group.”
No due process
The bill also included a measure that would offer tax relief to US citizens who are being held captive by “terror groups” or who are unjustly imprisoned abroad.
By combining both provisions under the same legislation — with the second one a politically popular one across both parties — the bill’s sponsors were hoping to rush it through with as little opposition as possible, critics said.
But the more insidious element of the bill, the one targeting nonprofits, doubled down on existing legislation.
Providing “material support” for US-designated “terror” groups is already against the law, noted Lara Friedman, president of the Foundation for Middle East Peace.
“It’s already illegal for [nonprofits] to support terror and the Department of Justice actually has a path to say, ‘This is illegal, and this is a foreign terrorist organisation, and here’s our proof,’” she told Al Jazeera. “And it’s accountable: they can take your nonprofit status away, but there’s actual due process.”
Congressman David Kustoff, a Republican and a co-sponsor of the bill, argued when he first introduced the legislation that the current process is insufficient.
“Right now, our ability to crack down on tax-exempt organisations that support terrorism is inadequate,” Kustoff said in April. “Doing so, under current law, requires a time-consuming bureaucratic process that has sometimes prevented federal authorities from acting.”
Not just pro-Palestine groups
But removing checks and balances from the process could turn the legislation into a weapon to be deployed against any group the administration in office may not like.
When the bill was first introduced, it generated pushback from across the political spectrum, Friedman noted.
“Including from the right that said, ‘Well, if this is in the hands of a government that’s anti the things we care about, this could hurt us,’” she said. “Are we at a point now where Republicans have decided there will never again be a government that could come back to bite them so they’re going to support unlimited anything? I don’t know. Trump could do all of this by executive order anyway.”
But critics had expressed hope that Trump’s re-election would have Democrats in Congress on the lookout for measures, like this one, that could empower him further.
“The MAGA crackdown on free speech is already starting in Congress,” Eva Borgwardt, a national spokesperson for the IfNotNow Movement, wrote in a statement. “It is unconscionable that any Democrat would sign over these sweeping powers to a Trump administration hellbent on destroying not only groups working for peace, equality and justice, but also any semblance of democratic dissent in this country.”
Basim Elkarra, executive director of CAIR Action, also had warned that the bill “would set a dangerous precedent, allowing the government to silence and disband organisations on a whim, with no real oversight or accountability”.
“Organisations advocating for Palestinian rights may be the first targeted,” echoed Chris Habiby, advocacy director at the Arab American Anti-Discrimination Committee.
“But they will not be the last.”
