The NGO Killer Strikes Back, but it Sounds Nicer
By Robert McDonald, Senior Legislative Researcher, A New Policy
Imagine a world where the Treasury Secretary, under the cover of national security, can devastate any non-profit not politically aligned with the administration. Well, you may not need to imagine that world anymore. Congress is considering legislation that would dramatically expand the executive branch’s power, H.R. 6800 in the House and S.3554 in the Senate, might be creating it. These bills create a mechanism for suspending and terminating the tax-exempt status of organizations accused of providing material support to terrorism. They are follow up bills to H.R. 9495, introduced in the 118th Congress in 2024, known as the NGO killer.
These bills raise serious concerns about civil liberties, due process, and the politicization of the IRS to attack non profits by the current administration and any administration in the future.
What Do H.R. 6800 and S. 3554 Do?
H.R. 6800, introduced by Rep. David Kustoff (R-TN-8), and its Senate companion, S. 3554, introduced by Sen. John Cornyn (R-TX), amend the Internal Revenue Code to expand Section 501(p). Under these bills, nonprofit organizations designated by the Secretary of the Treasury as “terrorist supporting organizations” would have their tax-exempt status automatically suspended, and potentially terminated.
The bills apply to organizations that, within the previous three years, are determined to have provided more than a de minimis (minimal) amount of material support or resources to a U.S. designated foreign terrorist organization. While the legislation includes carve outs for State Department approved activities and office of foreign asset controlled (OFAC) approved humanitarian aid, the core authority rests with the executive branch and the Secretary of Treasury.
Once designated, an organization loses its tax-exempt status. Donations become taxable, grants are jeopardized, and the organization’s financial viability is thrown into question, before any court has ruled on the underlying allegation.
How the Designation Process Works, and Why That’s Unusual
Under H.R. 6800 and S. 3554, Treasury must notify an organization of a potential designation and provide details of the alleged support. The organization then has 90 days to “cure” the issue by disputing the allegation, attempting to recover the support, or certifying that no future support will be provided. Organizations may seek administrative review through the IRS Independent Office of Appeals and, later, judicial review in federal district court.
Critically, Cases currently under review by the IRS Independent Office of Appeals take an average of six to seven months, even in routine matters. Designations under these bills would likely involve extensive investigations, complex financial records, and potentially classified information, factors that would significantly lengthen the process. During that time, donations could dry up, grant funding could be terminated, and reputational damage could become irreversible. Even organizations that ultimately prevail on appeal may cease operations long before their designation is rescinded. In effect, the process itself becomes the punishment.
If an accused organization attempts to cure or rescind a designation the power to do so is solely on the Treasury Secretary and the political whims of the executive branch. If the designated organization decides to utilize the courts then the bills route all legal challenges to federal district courts, but they do so on terms that overwhelmingly favor the executive branch. If Treasury relies on classified information (most information regarding terrorist organizations can be assumed to be classified), that evidence may be submitted to the court privately, without any disclosure to the accused organization. In effect, an organization may be required to disprove allegations it is not allowed to fully see or respond to. While judicial review technically exists, the structure limits transparency and weakens the adversarial process that due process depends on.
Why These Bills Matter in the Current Political Environment
These bills do not exist in a vacuum. In recent years, political leaders have publicly accused organizations advocating for Palestinian human rights or self-determination of supporting Hamas, a designated foreign terrorist organization. Both Rep. Kustoff’s and Sen. Cornyn’s announcements surrounding these bills reflect this political objective.
Against that backdrop, H.R. 6800 and S. 3554 create a system where political rhetoric can directly influence administrative designations with immediate, punitive consequences. Even if procedural safeguards technically exist on paper, they do little to mitigate the real-world risks posed by politicized enforcement.
The authority granted by these bills would not be limited to one administration or one political party. A future president could appoint a Secretary of the Treasury empowered to target rival or disfavored nonprofit organizations under the same framework, creating a mechanism vulnerable to abuse across administrations.
Why This Conflicts with American Values
H.R. 6800 and S. 3554 depart from core American values by placing the burden of proof on the accused. The shift in burden of proof is especially troubling in a system that prides itself on due process, fairness, and the presumption of innocence. These are not abstract ideals; they are safeguards designed to prevent exactly this kind of overreach.
Why This Undermines U.S. Interests
Beyond civil liberties, these bills risk damaging U.S. credibility abroad. By enabling the executive branch to financially devastate NGOs advocating for Palestinian self-determination through discretionary and politicized tax enforcement, the United States reinforces perceptions that it applies democratic principles selectively.
That erosion of moral authority weakens America’s standing as a defender of human rights and the rule of law. It also risks entangling U.S. institutions in efforts that appear less about combating terrorism and more about silencing political advocacy.
Looking into the Future
These bills will not only affect our current political environment. A President in the future can use these powers to appoint a treasury secretary who wants to attack pro-choice or pro-life nonprofits, those who advocate for gun safety ot the second amendment, these bills are not isolated to Palestinian self-determination, although pro-Palestinian organizations were named in Rep Kustoffs and Sen Cornyn’s announcement, it will not be limited to them.
