S. 3554

119 S3554 IS: To amend the Internal Revenue Code of 1986 to terminate the tax-exempt status of terrorist supporting organizations.
 U.S. Senate
 2025-12-17
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 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS
  1st Session  S. 3554  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.
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.