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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3554 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3554
To amend the Internal Revenue Code of 1986 to terminate the tax-exempt
status of terrorist supporting organizations.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 17, 2025
Mr. Cornyn (for himself and Mr. Sheehy) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to terminate the tax-exempt
status of terrorist supporting organizations.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. TERMINATION OF TAX-EXEMPT STATUS OF TERRORIST SUPPORTING
ORGANIZATIONS.
(a) In General.--Section 501(p) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(8) Application to terrorist supporting organizations.--
``(A) In general.--For purposes of this subsection,
in the case of any terrorist supporting organization--
``(i) such organization (and the
designation of such organization under
subparagraph (B)) shall be treated as described
in paragraph (2), and
``(ii) the period of suspension described
in paragraph (3) with respect to such
organization shall be treated as beginning on
the date that the Secretary designates such
organization under subparagraph (B) and ending
on the date that the Secretary rescinds such
designation under subparagraph (D).
``(B) Terrorist supporting organization.--For
purposes of this paragraph--
``(i) In general.--The term `terrorist
supporting organization' means any organization
which is designated by the Secretary as having
provided, during the 3-year period ending on
the date of such designation, material support
or resources to an organization described in
paragraph (2) (determined after the application
of this paragraph to such organization) in
excess of a de minimis amount.
``(ii) Material support or resources.--The
term `material support or resources' has the
meaning given such term in subsection (g)(4) of
section 2339B of title 18, United States Code,
except that such term shall not include--
``(I) support or resources that
were approved by the Secretary of State
with the concurrence of the Attorney
General for purposes of subsection (j)
of such section, or
``(II) humanitarian aid provided
with the approval of the Office of
Foreign Assets Control.
``(C) Designation procedure.--
``(i) Notice requirement.--Prior to
designating any organization as a terrorist
supporting organization under subparagraph (B),
the Secretary shall mail to the most recent
mailing address provided by such organization
on the organization's annual return or notice
under section 6033 (or subsequent form
indicating a change of address) a written
notice which includes--
``(I) a statement that the
Secretary will designate such
organization as a terrorist supporting
organization unless the organization
satisfies the requirements of subclause
(I) or (II) of clause (ii),
``(II) the name of the organization
or organizations with respect to which
the Secretary has determined such
organization provided material support
or sources as described in subparagraph
(B),
``(III) a description of such
material support or resources except to
the extent that the Secretary
determines that disclosure of such
description would be inconsistent with
national security or law enforcement
interests, and
``(IV) if the Secretary makes the
determination described in subclause
(III), a statement that the Secretary
has made such determination and that
all or part of the description of such
material support or resources is not
included in such notice by reason of
such determination.
``(ii) Opportunity to cure.--In the case of
any notice provided to an organization under
clause (i), the Secretary shall, at the close
of the 90-day period beginning on the date that
such notice was sent, designate such
organization as a terrorist supporting
organization under subparagraph (B) if (and
only if) such organization has not (during such
period)--
``(I) demonstrated to the
satisfaction of the Secretary that such
organization did not provide the
material support or resources referred
to in subparagraph (B),
``(II) made reasonable efforts to
have such support or resources returned
to such organization and certified in
writing to the Secretary that such
organization will not provide any
further support or resources to
organizations described in paragraph
(2), or
``(III) if such notice included a
statement described in clause (i)(IV),
filed a complaint with a United States
district court of competent
jurisdiction alleging that Secretary's
determination under clause (i)(III) is
erroneous.
A certification under subclause (II) shall not
be treated as valid if the organization making
such certification has provided any other such
certification during the preceding 5 years.
``(iii) Application of opportunity to cure
following complaint regarding determination to
withhold description of material support or
resources.--In the case of a final judgment of
a court of competent jurisdiction that the
Secretary's determination under clause (i)(III)
was not erroneous, clause (ii) shall be applied
without regard to subclause (III) thereof and
as though the notice referred to in such clause
was sent on the first date that all rights of
appeal with respect to such final judgement
have concluded.
``(D) Rescission.--The Secretary shall rescind a
designation under subparagraph (B) if (and only if)--
``(i) the Secretary determines that such
designation was erroneous,
``(ii) after the Secretary receives a
written certification from an organization that
such organization did not receive the notice
described in subparagraph (C)(i)--
``(I) the Secretary determines that
it is reasonable to believe that such
organization did not receive such
notice, and
``(II) such organization satisfies
the requirements of subclause (I) or
(II) of subparagraph (C)(ii)
(determined after taking into account
the last sentence thereof), or
``(iii) the Secretary determines, with
respect to all organizations to which the
material support or resources referred to in
subparagraph (B) were provided, the periods of
suspension under paragraph (3) have ended.
A certification described in the matter preceding
subclause (I) of clause (ii) shall not be treated as
valid if the organization making such certification has
provided any other such certification during the
preceding 5 years.
``(E) Administrative review by internal revenue
service independent office of appeals.--In the case of
the designation of an organization by the Secretary as
a terrorist supporting organization under subparagraph
(B), a dispute regarding such designation shall be
subject to resolution by the Internal Revenue Service
Independent Office of Appeals under section 7803(e) in
the same manner as if such designation were made by the
Internal Revenue Service and paragraph (5) of this
subsection did not apply.
``(F) Jurisdiction of united states courts.--
Notwithstanding paragraph (5), the United States
district courts shall have exclusive jurisdiction to
review any determination of the Secretary under
subparagraph (C)(i)(III) and any final determination
with respect to an organization's designation as a
terrorist supporting organization under subparagraph
(B). In the case of any such determination which was
based on classified information (as defined in section
1(a) of the Classified Information Procedures Act),
such information may be submitted to the reviewing
court ex parte and in camera. For purposes of this
subparagraph, a determination with respect to an
organization's designation as a terrorist supporting
organization shall not fail to be treated as a final
determination merely because such organization fails to
utilize the dispute resolution process of the Internal
Revenue Service Independent Office of Appeals provided
under subparagraph (E).
``(G) Classified information.--The Secretary shall
establish policies and procedures for purposes of this
paragraph that ensure that employees of the Department
of the Treasury comply with all laws regarding the
handling and review of classified information (as
defined in section 1(a) of the Classified Information
Procedures Act).''.
(b) Effective Date.--The amendment made by this section shall apply
to designations made after the date of the enactment of this Act in
taxable years ending after such date.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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