Planned Parenthood, other groups decry executive power in House bill

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More than 130 national nonprofit organizations, including Planned Parenthood Federation of America, have voiced their opposition to a pending bill in the U.S. House of Representatives that would effectively give President-elect Donald Trump's administration unilateral authority to remove nonprofits' tax-exempt status.

The Stop Terror-Financing and Tax Penalties on American Hostages Act was struck down last week due to a majority of House Democrats voting against the bill, but according to The Intercept, Republicans are pushing forward with a hearing before the Committee for Rules that could set up a new floor vote on the bill.

The bill would grant authority to the Secretary of the Treasury to deem a nonprofit a "terrorist-supporting organization" and subsequently revoke its tax-exempt status. Republicans have said the bill is a response to a "troubling pattern" of nonprofits operating in the U.S. with suspected ties to terrorism while still maintaining their tax-exempt status.

In a letter to House Speaker Mike Johnson and House Democratic Leader Hakeem Jeffries, the coalition of 150 civil liberties, immigrant rights, LGBTQ+ and media organizations, among others, said the bill introduces "broad and easily abused new powers for the executive branch."

"It grants the Secretary of the Treasury virtually unfettered discretion to designate a U.S. nonprofit as a 'terrorist supporting organization' and to strip it of its tax-exempt status if the Secretary finds that the nonprofit has provided material support to a terrorist group, even if the 'support' is not intentional or connected to actual violence," the groups wrote.

WHAT'S THE IMPACT?

According to the groups, if the bill became law, the Treasury Secretary could strip a nonprofit of its tax-exempt status without providing the nonprofit an opportunity to defend itself before a neutral decision-maker. The legislation also does not require the Secretary to disclose the reasons for its decision or the evidence upon which it was based. 

While the legislation's sponsors have said they seek to avoid time-consuming bureaucratic processes, the letter claims that this ultimately seeks to avoid fundamental due process, "leaving an accused nonprofit entirely in the dark about what conduct the government believes qualifies as material support."

The groups contend that this creates the potential for abuse, as the bill could theoretically be used to dampen free speech, censor nonprofit media outlets, target political opponents and punish unfavored groups. 

"Moreover, the addition of this authority to the tax code would allow the IRS to explicitly target and harass domestic nonprofits using its investigative authority," the letter read. "And while the broadest applications of this authority may not ultimately hold up in court, the potential reputational and financial cost of fending off an investigation and litigating a wrongful designation could functionally mean the end of a targeted nonprofit before it ever has its day in court."

When Democrats nixed the bill last week during the first attempt at passage, it inspired a strong response from House Committee on Ways and Means Chairman Jason Smith, a supporter of the bill who said it would "would halt tax subsidies going to U.S. nonprofits that materially support terrorist organizations and provide fair tax treatment for Americans held hostage or wrongfully detained abroad and their families by preventing the Internal Revenue Service from charging penalties or assessing interest on their past-due taxes."

Smith pointed to Democrats' opposition to incoming President Donald Trump as the sole reason for the bill's rejection.

"The Democrats' attacks against this legislation ring particularly hollow given that this bill passed with unanimous support through the Ways and Means Committee on two separate occasions and includes policies already approved with broad bipartisan support in the House of Representatives earlier this year by an overwhelming margin of 382-11," said Smith in a statement. "This shameful partisan play only sets back efforts to halt the abuse of America's tax code by terrorist organizations, and it furthers the abuse suffered by Americans held hostage by terrorist groups or foreign governments who Democrats just voted to continue punishing for tax bills they could not pay while in captivity."

Smith added that the Ways and Means Committee has exposed the activities of U.S. nonprofits with suspected ties to terrorism, such as the Alliance for Global Justice (AGJ), a tax-exempt nonprofit he said was funding a group recently designated by the U.S. government as a sham charity and funder of terrorism. Smith said the IRS has yet to revoke Alliance for Global Justice's tax-exempt status. The Alliance for Global Justice was not among the signers of the letter.

THE LARGER TREND

Other groups have come out in strong opposition to the bill, including Arab and Muslim groups such as the American-Arab Anti-Discrimination Committee (ADC), American Muslims for Palestine (AMP), Council on American-Islamic Relations (CAIR), ICNA Council for Social Justice, Justice For All, Muslim American Society (MAS), and Muslim Public Affairs Council (MPAC). The Council on American-Islamic Relations signed the letter.

Those groups issued a joint statement in which they called the bill's initial defeat "a momentary victory in protecting free speech, due process, and the vital role nonprofits play in American democracy."

The group acknowledged that the bill could still pass by a simple majority, and is expected to be reintroduced and debated in the next congressional session.

"This bill was designed to criminalize organizations and activists who oppose the U.S.'s unconditional support of Israel's genocide of Palestinians and the slaughter of Lebanese civilians," the groups said. "Such legislation threatened the constitutional rights of American nonprofits, houses of worship, and advocacy organizations – regardless of political orientation. Lawmakers must understand the serious, long-term dangers of advancing bills or investigations that seek to suppress lawful activism and silence dissent."

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.