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S. 4136Senate118th Congress (2023-2025)In Committee

A bill to amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.

Sponsored by John CornynSen. John Cornyn (R-TX)
Introduced April 17, 2024

AI-Generated Summary

Updated January 20, 2026 at 4:00 PM UTC

The bill adds a new paragraph to the Internal Revenue Code that defines "terrorist supporting organization" and gives the Treasury Secretary authority to strip tax‑exempt status from any nonprofit that has provided material support to a terrorist group. It creates a formal process for designation, notice, a chance to cure, possible rescission, and avenues for appeal. The changes apply to organizations the Secretary determines meet the definition, affecting their tax‑exempt status and related benefits.

Key Provisions

  • Defines "terrorist supporting organization" as any nonprofit that, in the prior three years, gave material support or resources to a terrorist group above a minimal amount, as determined by the Secretary.
  • Allows the Secretary to designate such organizations and automatically suspend their tax‑exempt status from the designation date until the designation is rescinded.
  • Requires the Secretary to send written notice to the organization, giving a 90‑day period to either prove it did not provide support or to return support and certify it will not do so in the future.
  • Permits rescission of the designation if it was made in error, if the organization never received proper notice, or when the suspension period ends.
  • Provides an administrative appeal to the IRS Independent Office of Appeals, but gives U.S. district courts exclusive jurisdiction over final designations, including handling classified information.
  • Effective for designations made after enactment and for taxable years ending after that date.

Legislative Activity

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SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

April 17, 2024

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SenateIntro Referral

Introduced in Senate

April 17, 2024

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

April 17, 2024

Bill Text

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Introduced in SenateIssued April 17, 2024

II

118th CONGRESS

2d Session

S. 4136

IN THE SENATE OF THE UNITED STATES

April 17, 2024

Mr. Cornyn (for himself and Mr. King) 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.

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, 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 (within the meaning of section 2339B of title 18, United States Code) to an organization described in paragraph (2) (determined after the application of this paragraph to such organization) in excess of a de minimis amount.

(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), and

(III)

a description of such material support or resources to the extent consistent with national security and law enforcement interests.

(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), or

(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).

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.
(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 a 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).

.

(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.