Breaking: Joint Committee on Taxation Confirms Nonprofit Targeting Tax Bill Provision Lacks Basic Due Process
FOR IMMEDIATE RELEASE
Tuesday, May 13th, 2025
CONTACT
Caitlin Legacki
press@stopgovernmentcensorship.org
WASHINGTON, D.C. – The Joint Committee on Taxation just confirmed that a controversial last minute provision in House Republicans’ draft Budget Reconciliation package currently being marked up in the House Ways and Means Committee would give the federal government unilateral power to target nonprofit organizations they disagree with without judicial due process.
This confirmation came during the hearing’s technical questions section when Representative Don Beyer (VA-8) questioned Thomas Barthold, Chief of Staff of the nonpartisan Joint Committee on Taxation, on whether or not the language outlined in section Section 112209 (p. 380) would grant the Treasury Secretary authority to designate a nonprofit organization as “terrorist-suppporting” and strip it of its tax-exempt status without providing evidence to the organization or prior judicial review.
When asked by Representative Beyer if there are scenarios where a target organization would not have an opportunity to review the evidence against it in order to meaningfully respond to allegations, Mr. Barthold failed to fully address the question, answering: “The proposal contemplates and allows the Secretary to withhold a description of the nature of the material provided by the organization if the Secretary is determined doing so is inconsistent with national security. But the Secretary must note that he’s made such a determination in a notice to the organization. Then the organization may seek judicial review of that determination.”
Read below for the transcript of their exchange:
Representative Beyer: “Can you confirm that it would be illegal under current law for the President or Secretary of the Treasury to initiate an IRS investigation on an organization’s non-profit status?”
Mr. Barthold: “That is correct, Mr. Beyer.”
Representative Beyer: “Under current law and IRS practice, if a taxpayer has demonstrated it is operating outside the requirements of its tax-exempt status, there is an investigation by non-political IRS civil servants and due process for the organization involved—correct?”
Mr. Barthold: “Yes Mr. Beyer, there are situations where the investigation could involve Chief Counsel at the IRS, and Chief Counsel is political appointee.”
Representative Beyer: “Thank you. Now I want to turn to how this legislation. Sec. 112209 claims to combat tax-exempt organizations that provide material support for terrorism. Considering the Trump Administration’s clear weaponization of government – including the IRS – to pursue their political enemies, I want to make sure that I understand how this proposal would operate if it became law
“The language in Sec. 112209 states: “the term ‘terrorist supporting organization’ means any organization which is designated by the Secretary as having provided” material support to a terrorist organization.
“The Secretary must notify the offending organization of its forthcoming designation and the name of the terrorist organization being provided material support, “as determined by the Secretary.
“Does this language require that the offending organization be convicted in a court of law for providing material support to a terrorist organization before losing its tax-exempt status?”
Mr. Barthold: “No Mr. Beyer, the language does not require a conviction for providing material support.”
Representative Beyer: “To be clear – the only requirement is that the Secretary “determines” an offense has taken place? The Secretary can do so on their own authority and judgement without any judicial determination, correct?”
Mr. Barthold: “Yes, that’s correct Mr. Beyer. The proposal does not require judicial determination.”
Representative Beyer: “The legislation states that the Secretary must provide, “a description of such material support or resources except to the extent that the Secretary determines that disclosure of such description would be inconsistent.
“Could the Secretary assert that documentation of an offense is classified or “law enforcement sensitive” and therefore provides no substantive description – let alone evidence – to an organization on their alleged offense? In other words, if this legislation were law, are there scenarios where a target organization could have no opportunity to review the evidence against it in order to meaningfully respond to the allegations?”
Mr. Barthold: “The proposal contemplates and allows the Secretary to withhold a description of the nature of the material provided by the organization if the Secretary is determined doing so is inconsistent with national security. But the Secretary must note that he’s made such a determination in a notice to the organization. Then the organization may seek judicial review of that determination”
Representative Beyer: “In summary, this legislation would allow the Secretary, on his sole authority, to determine a tax-exempt organization has provided material support to a terrorist organization—without any prior judicial review.
“And the Secretary could do so without providing even a description of the alleged offense to the accused organization.
“The Constitution requires the Executive Branch to “faithfully execute” the law, but we have seen what contempt this President and this Administration have for due process. There are current cases in litigation where federal officials are being threatened with criminal contempt and operating in bad faith.
“If the Administration’s track record is taken to heart, this proposal would allow the Treasury Department to rescind the tax-exempt status for law abiding organizations without due process, without judicial determinations of guilt, and without providing evidence for the alleged offense.
“Mr. Barthold—if this legislation were passed into law, any Administration—the Trump Administration and future ones—would be allowed to target its political enemies through unsubstantiated claims of supporting terrorism without providing evidence and revoke their tax-exempt status. If a group—a social welfare organization, a civil rights group, a religious institution, advocacy coalitions—disagrees with the Administration, they risk their tax-exempt status. Is that right?”
[END TRANSCRIPT, CONCLUSION OF REP. BEYER’S 5-MINUTE TIME]
BACKGROUND
Section 112209 (p. 380) contains similar language to H.R.9495, giving the Treasury Secretary the ability to accuse any nonprofit organization of being “terrorist supporting,” which would then trigger a process that would jeopardize their tax exempt status, risk them being de-banked, and result in long term reputational impacts.
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