U.S. Reps. Chris Pappas and Annie Kuster, D-N.H., opposed legislation which cleared the U.S. House over concerns that as written it could threaten nonprofit organizations that could be branded as terrorist organizations.
The 215-184 vote for the Stop Terror-Financing and Tax Penalties on American Hostages Act faces an uncertain fate in the Democratically controlled U.S. Senate for the balance of this year.
Whatever happens in the final weeks of 2024, however, this issue is likely to be resurrected in the next Congress, which will be completely under Republican control.
Last spring, this bill had overwhelming bipartisan support after widespread protests over the war in Gaza on college campuses with the implication that some of these groups were supporting “terrorism” against Israel.
Pappas changed his vote from a week ago, when he was one of 52 House Democrats who had supported it.
On Thursday, only 15 House Democrats voted yes after scores of nonprofit and civil rights groups across the country mounted a fierce lobbying campaign against it.
“I strongly support the provisions in H.R. 9495 that stop the IRS from penalizing people who haven’t filed their taxes because they are being held as hostages overseas and cut off potential funding streams to terrorist organizations,” Pappas said in a statement.
“In speaking to nonprofit leaders in New Hampshire doing vital work to increase housing, fight the opioid and addiction epidemic, and help families and small businesses thrive, it is clear that those who do this work every day in my district have concerns that more guardrails are needed to ensure this legislation is properly implemented.”
“For that reason, I will vote against H.R. 9495 on the floor today and will work with New Hampshire’s nonprofit community to advocate for updates to the legislation that guarantees tax-exempt organizations can never aid terror organizations while providing needed safeguards to ensure that good actors are not wrongly targeted.”
Among the groups that Pappas heard from with concerns about the bill were the N.H. Charitable Foundation, the N.H. Center for Nonprofits, NAMI N.H. and the Coalition Against Domestic and Sexual Violence, according to Pappas’s staff.
Kuster says GOP failed to compromise
Kuster, who is retiring next month after serving six terms in Congress, said House Republicans refused to compromise on this measure.
“Nonprofits in New Hampshire and across the country play a valuable role in supporting our communities, from helping individuals access substance use disorder treatment and recovery services to addressing homelessness and housing affordability, and so much more,” Kuster said in her statement.
“Today, I voted against H.R. 9495, misguided legislation that would have threatened nonprofit organizations’ ability to carry out their crucial work. I support tax protections for Americans held hostage or wrongly detained abroad and urge Republicans to work in a bipartisan way to fix this problem rather than playing games with the non-profits Granite Staters rely on.”
The bill would give the Treasury Department the power to strip nonprofits of their tax-exempt status if they were found in support of terrorism.
Groups could appeal that designation to the Internal Revenue Service or the courts but opponents said this branding could have a chilling effect on nonprofit advocacy and financial health.
Kuster and Pappas did not cite the election of Donald Trump as a reason to oppose the bill.
Yet many House Democrats speaking on the floor said they feared this would give Trump’s as-yet-unnominated Treasury secretary authority to go after groups that have opposed Trump in the past.
“It is not just Trump imposing a death sentence that should concern us, but it is his power to intimidate,” said U.S. Rep. Lloyd Doggett, D-Texas. “Clearly the bill would have a chilling effect on any group that has the audacity to challenge his chilling vision.”
House Ways and Means Chairman Jason Smith, R-Missouri, criticized Democratic colleagues who changed their views.
“Despite that consistent bipartisan support, the majority of our Democrat colleagues voted last week to block passage of this bill. Why? Because President Trump won the election,” Smith said.
“They now believe the authorities in this bill might be abused but every concern raised by Democrats has been addressed in this bill to ensure due process and to protect legitimate nonprofits.”
Leaders of groups who praised many House Democrats for changing their views noted that a broad coalition of Jewish groups in recent weeks had come out against it.
