House approves legislation granting increased federal authority to investigate nonprofits

The U.S. House passed a bill, H.R. 9495, that would allow the treasury secretary to designate nonprofits as supporters of terrorism and remove their tax-exempt status. The bill also includes measures to assist Americans held hostage abroad. Proponents argue it will strengthen the fight against terrorism, while opponents, including the ACLU and NAACP, fear it could lead to abuse and discrimination. The bill passed with less Democratic support than before, and concerns have been raised about its potential impact on nonprofits, including humanitarian organizations, news outlets, and universities. Critics worry that the bill could cause unintended consequences and create a “death spiral” for designated groups due to stigma and lack of financial support. Currently, the IRS has a process to revoke tax-exempt status for organizations providing support to terrorist groups. The bill’s future is uncertain in the Senate, but nonprofits are concerned it may resurface in future sessions with potential implications for their operations.

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