H.R.6800 and S. 3554- To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.
H.R 6800 was introduced on 17 December, 2025 by Representative David Kustoff (R-TN-8). It is currently pending before the House Committee on the Judiciary, and has 0 co-sponsors.
S.3554 was introduced on 17 December, 2025 by Senator John Cornyn (R-TX). It is currently pending before the Committee on Finance and has 1 cosponsor on a partyline basis.
Related legislation: H.R. 9495 (118th Congress)
Bill Summary: H.R. 6800 and S. 3554 seek to amend the Internal Revenue Code to automatically suspend and terminate the tax-exempt status of nonprofit organizations designated as “terrorist supporting organizations.” They expand Section 501(p) to cover organizations that, within the prior three years, are determined by the Secretary of the Treasury to have provided more than a de minimis amount of material support or resources to a U.S. designated terrorist organization, as defined under federal criminal law, while exempting certain State Department approved activities and OFAC approved humanitarian aid.
The bill establishes a designation and due process framework, requiring Treasury to notify an organization of its potential designation, provide details of the alleged support, and allow a 90 day opportunity to cure by disproving 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 judicial review in federal district court, including procedures for handling classified information Once designated, an organization’s tax-exempt status is suspended until the designation is rescinded. Rescission is limited to specific circumstances, such as an erroneous designation or satisfaction of cure requirements. The changes apply to designations made after enactment and to taxable years ending after enactment
Context: H.R. 6800 and S. 3554 would significantly expand the authority of the Secretary of the Treasury and the executive branch to remove tax-exempt status from nonprofit organizations based on administrative determinations of material support for terrorism. Although the bills include procedural safeguards, they shift a core feature of the American justice system by placing the burden of proof on the accused organization to disprove or remediate alleged wrongdoing in order to avoid severe and immediate penalties. Both bills create a system in which organizations face punitive consequences prior to a final adjudication, effectively reversing the traditional presumption that penalties follow a finding of wrongdoing rather than precede it.
Political leaders have publicly accused organizations advocating for Palestinian human rights or self-determination of support for Hamas, a designated foreign terrorist organization. Within this political environment, and as seen in Senator Cornyn’s and Representative Kustoff’s announcements of these bills, H.R. 6800 and S. 3554 create a system where political rhetoric influences designations and places the burden of proof on the organization to cure or contest the designation. The notification procedure, opportunity to cure, administrative appeals, and judicial review mechanisms do not meaningfully constrain the practical risks posed by these bills. The Secretary of the Treasury is not prohibited from publicly announcing a designation at the outset of the process. Such an announcement alone could dry up donations, terminate grant funding, and irreparably damage an organization’s reputation before any appeal is resolved. A future President, of any party, could appoint a Secretary of the Treasury empowered to designate rival political nonprofit organizations as terrorist supporting organizations, creating a mechanism vulnerable to abuse across administrations.
Currently, the cases under review by the IRS Independent Office of Appeals take an average of six to seven months, even in routine cases. Designations under this bill would likely require extensive investigation and potentially the handling of classified information, factors that would substantially extend the appeals timeline. As a result, even organizations that ultimately prevail may cease to be operational or credible long before their designation is rescinded.
American Values Analysis: H.R. 6800 and S. 3554 depart from foundational American principles by authorizing severe penalties before the government bears the burden of proving wrongdoing in a neutral adjudicatory forum. By prioritizing executive discretion, the bills conflict with the core American value that the burden of proof is on the state, not the accused.
American Interest Analysis: H.R. 6800 and S. 3554 undermine U.S. interests by weakening America’s credibility as a defender of human rights and international law By enabling the executive branch to financially cripple NGOs advocating for Palestinian self-determination through discretionary and politicized tax enforcement, these bills erode U.S. moral authority and reinforce perceptions that American policy selectively applies democratic principles based on political convenience.
A New Policy’s Recommendation: OPPOSE
A New Policy opposes H.R 6800 and S. 3554 to increase the power of the executive branch to designate a NGO advocating for Palestinian self-determination as a material supporter of terrorism and place the burden of proof of innocence on the NGO. These create a political climate where the executive branch can damage any NGO it feels is not politically aligned and result in significant damage to any NGO accused of being a material supporter of terrorism.
For more information please contact: Josh Paul, (202) 770-0055, info@anewpolicy.org
