Ways and Means Passes Bipartisan Legislation to Revoke Tax-Exempt Status to Nonprofits Supporting Hamas and Terrorist Organizations

WASHINGTON –  Yesterday, the Ways and Means Committee unanimously passed Congressman Brad Schneider’s (IL-10) and Congressman David Kustoff’s (TN-08) bipartisan legislation to revoke the tax-exempt status of any U.S. organization that provides material support, such as funds, training, or other resources, to designated terrorist groups.

“Since October 7, we have all been reeling from the vicious and barbaric attack in which Hamas and other terrorists killed more than 1,200 people and took more than 240 hostages, including many Americans. Congress must do our part to hinder the flow of resources to Hamas terrorists and fulfill our duty as stewards of the U.S. tax code. We cannot allow tax-exempt organizations to exploit their privileged status to provide support to terrorist organizations,” said Schneider. “I thank my friend Rep. Kustoff for his partnership on this bill and the committee for helping stop terrorism financing. I look forward to the whole of the House passing this bill to remove bureaucratic red tape from law enforcement's efforts to stop terrorism financing.”

More information on the bill and the markup, including bill text, can be found here.

Congressman Brad Schneider (IL-10) spoke in support of his of bill during today’s Ways and Means markup hearing. Video of his remarks can be found here.

Schneider gave the below remarks during the Ways and Means Committee Markup:

Thank you, Mr. Chairman, Mr. Neal, and Mr. Chairman, for giving me this time and I want to thank you for your continued leadership.

I also want to thank my good friend and colleague on the other side of the dais Mr. Kustoff for your partnership on this important bill to stop terrorism financing, and make sure that no US organizations are being subsidized to support Hamas.

Since October 7, we've all been reeling from the vicious barbaric attack in which Hamas and other terrorist groups and individuals killed more than 1200 people, killing parents in front of their kids, kids in front of their parents, utilizing rape, and torture. Then took more than 240 hostages into Gaza, including many Americans.

And we have seen sadly that the actions of the extremist terrorist have fueled antisemitic attacks, hateful speech, intimidation, and violent threats across the country across the United States.

The United States must do and is doing everything we can to support our partner, Israel.  We cannot rest until the hostages, every single one of them are returned.  A major component of that duty is combating and defeating Hamas, its funders and those who seek to provide the terrorists with material support.

One of our most important roles on the Ways and Means Committee is to be good stewards of the United States tax code and taxpayer dollars to ensure its proper enforcement and to provide the Treasury Department with all the tools it needs to be judicious on behalf of US taxpayers.

Tax exempt status is a privilege afforded to critical institutions in our country: charities and organizations that support our communities, universities and places of worship, and other organizations that help our districts thrive. These entities are granted a special status because they play a beneficial, beneficial, and high impact role in our communities.

Tax-exempt status is a privilege, not a right; when the Treasury Department identifies organizations straying from these principles, it must actively enforce the tax code and revoke their tax-exempt status.

Tax exempt organizations in this country must abide by rules and standards to enjoy their 501(c) status of privilege and position of trust bestowed upon them by U.S. taxpayers.

No organization providing material support or directly assisting terrorist organizations, such as Hamas, should ever enjoy this privilege.

We must ensure that the Treasury Department enforces the tax code and holds errant tax-exempt organizations accountable. Further, we must give Treasury the tools it needs to nimbly pursue organizations that might try to evade enforcement.

This bill supports that effort by building on Treasury’s existing authority in 501(p) to terminate the tax-exempt status of organizations which provide material support to terrorist organizations. This is an ever-important mission made all the more timely by the ongoing crisis in the Middle East.

This legislation also includes thoughtful safeguards to ensure due process, including a procedure for designation and rescission as well as an opportunity to cure.

We must be do our part to hinder the flow of resources to Hamas terrorists and fulfill our duty as stewards of the U.S. tax code. We cannot allow tax-exempt organizations to exploit their privileged status to provide support to terrorist organizations.

This bill enables Treasury to make sure that does not happen. It removes bureaucratic red tape from law enforcement's efforts to stop terrorism financing.

I urge all my colleagues to support this legislation. 

Again, I want to thank Mr. Kustoff, for his partnership and Ranking Member Neal for the time to speak on this effort.

I yield back.

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