The House Ways and Means Committee met a year ago, on Nov. 15, 2023, for a hearing titled “From Ivory Towers to Dark Corners: Investigating the Nexus between Antisemitism, Tax-exempt Universities, and Terror Financing.” Committee members and witnesses, including Hillel International President and CEO Adam Lehman and Anti-Defamation League CEO Jonathan Greenblatt, revisited the still-fresh heartache of the gruesome Hamas attack on Israel on Oct. 7.
U.S. Rep. Jimmy Panetta (D-Carmel Valley) spoke about joining the first congressional delegation to Israel following the attack.
Part of what emerged was HR 6408, amending IRS code to terminate the tax-exempt status of terrorist-supporting organizations. It passed 382-11 in the House in April, with bipartisan support.
It would allow the Treasury secretary to revoke the tax-exempt status of an organization believed to be materially supporting a designated terrorist group. The nonprofit would receive a 90-day notice, have an opportunity to make its case, and could later appeal to the IRS.
Given that it is already illegal to provide material support to terrorist organizations, this all sounds like bureaucratese—so what’s the point? It would streamline things for an overburdened IRS. And as Kia Hamadanchy, senior policy counsel for the ACLU, says, “This gives the Treasury the ability to weaponize the tax code.”
Hamadanchy wrote to the Senate back in May urging them to oppose the bill; it was never taken up there.
The bill recently made the rounds in the House again in a new form, HR 9495. The ACLU was joined by dozens of groups including Freedom of the Press Foundation, Oxfam America, Planned Parenthood, and the New Israel Fund in urging the House to vote down the bill.
“The potential for abuse is immense as the executive branch would be handed a tool it could use to curb free speech, censor nonprofit media outlets, target political opponents, and punish disfavored groups across the political spectrum,” they wrote.
The updated bill returned to the House on Nov. 12, diminished in popularity; a 256-145 vote, however, did not meet the two-thirds threshold required for passage.
It came back under a different procedure that required just 50 percent to pass, and in a vote on Thursday, Nov. 21, it passed the House with a 219-184 vote.
Panetta supported the bill, even though many Democratic colleagues have defected. He’s one of just two Democrats on the Ways and Means Committee who voted yes on Nov. 21, compared to 14 who voted no.
U.S. Rep. Salud Carbajal (D-Santa Barbara) voted against the bill, as did U.S. Rep. Zoe Lofgren (D-San Jose). She voted yes back in April, and no in November.
“While I strongly support efforts to combat terrorism financing, I have serious concerns,” Lofgren said by email. “As written, the bill risks undermining civil liberties, reducing transparency, and diverting resources away from more effective counterterrorism strategies. We must be cautious not to overreach.”
That is of utmost importance now that President-elect Donald Trump is preparing for another term. He has pledged revenge against opponents. A bill like this makes that especially convenient for nonprofits.
“This is the first battle of many to try to make sure that executive power is not abused over the next four years,” Hamadanchy said. “There’s going to be a lot more of this.”
Panetta dismisses the change of heart among his colleagues as political, now that the presidential election is over. He also says there is enough evidence—of ISIS, Hamas, and Al Qaeda raising funds via charitable donations—to show a need for the legislation and sufficient protections in place.
“The incoming administration will test our political fortitude,” he said by email. “That is exactly why this policy has so many guardrails and appeals in place while clarifying existing legal authorities to protect our national security.
“I realize that politics can play into the perception of legislation. However, I try my best to operate based on the merits of the policy, rather than the politics of fear.”
Of course, politics are always at play. An analysis by Open Secrets shows Panetta’s largest donor this election was the American Israel Public Affairs Committee (AIPAC), which gave $248,467. Δ
Sara Rubin is the Monterey County Weekly’s editor. Reach her at sara@montereycountynow.com. Write a letter in response for publication by emailing it to letters@newtimesslo.com.
This article appears in Nov 28 – Dec 8, 2024.
