H.R. 9495: What Nonprofits Need to Know About the New Legislation
H.R. 9495, a bill granting the Treasury Secretary authority to revoke a nonprofit’s tax-exempt status over alleged ties to terrorism, passed the House along party lines but stalled in the Senate. While it has not yet been refiled, many anticipate it will be, with a potentially different outcome under the new congressional majority.
While H.R. 9495, officially titled the Stop Terror-Financing and Tax Penalties on American Hostages Act, may appear straightforward, its provisions raise concerns about their potential use to suppress the advocacy and programs of nonprofit organizations at odds with the administration. By granting unilateral authority to revoke a nonprofit’s tax-exempt status, the bill—sometimes referred to as the Nonprofit Killer Bill—could effectively dismantle such organizations, subjecting them to corporate taxes and removing their ability to accept tax-deductible donations. The prospect of such penalties may prompt some nonprofits to reassess their messaging to avoid such outcomes.
Is there a Risk to Nonprofits?
Although H.R. 9495 has not been refiled, the possibility remains that it could be introduced and approved under the current legislative session. This, combined with concerns over the administration’s use of other current legislation to curtail opposition, presents a potential risk to nonprofit organizations.
Less widely known is that current law already includes a provision allowing the Treasury Secretary to revoke a nonprofit’s tax-exempt status if the organization is deemed to support terrorism. Following the September 11 attacks, a law was enacted in 2011 granting the Treasury Secretary authority to indefinitely revoke a domestic nonprofit’s tax-exempt status if the organization is determined to support terrorism. While similar in scope to H.R. 9495, this law has been in place since 2011 and has been sparingly used.
Renewed fervor around H.R. 9495 is that it appears the current administration is far more likely to use the punitive powers in either H.R. 9495 or, even if not refiled, the current law, to strip the tax-exempt status of organizations with missions and initiatives at odds with theirs. Should H.R. 9495 be refiled, or if the current administration chooses to use the broad provisions also found in the previous law, there is a clear and obvious risk to nonprofit organizations who publicly oppose the administration’s agenda. The mission of nonprofits is critical, and AAFCPAs advises organizations to remain focused on their work despite the potential threat to their tax-exempt status. Nonprofits are encouraged to use their voice to contact senators and representatives and oppose punitive measures proposed by these laws.
AAFCPAs will continue to monitor this legislation and future actions.
Federal Funding Uncertainty: Stay Informed
Federal funding uncertainty has major implications for organizations relying on grants, loans, and contracts. With new updates unfolding, now is the time to assess your funding streams, review cash flow strategies, and plan for contingencies.
AAFCPAs is closely monitoring developments and will continue providing insights to help organizations navigate this uncertainty. Stay tuned for updates as more information becomes available.
If you have questions, please contact Chris Consoletti, Esq., Director & Consulting Attorney at 774.512.4180 or cconsoletti@nullaafcpa.com—or your AAFCPAs Partner.
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