Advocacy Alert: US House Passes H.R. 9495

On November 21, the US House passed the Stop Terror-Financing & Tax Penalties on American Hostages Act (H.R. 9495) by a vote of 219-184 (roll call). The vote in the House was bipartisan with the “Yes” votes coming from 204 Republicans and 15 Democrats, and the “No” votes coming from 183 Democrats and 1 Republican.  

Up Next: The bill heads to the US Senate where it is likely to be referred to the Senate Finance Committee. See more information below on the outlook of the bill. 

Summary 

In short, HR9495 does two things: 

1. Sections 1-3 - Allows anyone held hostage overseas to file their taxes late without penalty. 

2. Section 4 - At the discretion of the Treasury Secretary, repeals the 501c3 tax status from any nonprofit found to be supporting terrorism. 
   

It is the second element (Section 4) of the bill which Together SC echos the concerns stated clearly by the National Council of Nonprofits, among many other nonprofit associations and individual organizations. 

The nonprofit sector has no concern over the stripping of nonprofits who are found to be in support of terrorism against the United States, however there are concerns over how that decision is determined in this bill, the expansive authority to make that determination by the Executive Branch, and other elements.  

Important Note: The nonprofit sector raised the same concerns for HR6408 in April, which included the exact same language. 

Impact if Adopted: 

If adopted and made law, the bill would grant expansive authority to the Treasury Secretary to determine if a nonprofit is supporting terrorism, and, if determined to be supporting terrorism, then strip the charitable tax status of American nonprofit organizations.  

The bill does lay out a process of notification, and an appeals process, but offers little guidance on how the Secretary should/can define terrorism and the evidence required to make such a determination.  

Additional concerns in the bill’s language include: 

• Under existing law, it is already illegal to support terrorist organizations. HR9495 would duplicate efforts. 

• The bill shifts the burden of proof from the government to the organization in question. The Treasury Secretary is not required to divulge full evidence of its claims, and the burden is on the organization to disprove the Treasury without full disclosure of evidence. 

• The bill could call into question organizations offering humanitarian aid in disaster/war zones, who are protected by sanctions laws, and not in the tax code (where 9495 amends language). 

Background:  

The exact same language passed the US House overwhelmingly by a vote of 382-11 in April of 2024 under the bill number H.R. 6408. In April all of South Carolina’s House delegation voted in favor of the bill. No recorded votes were taken on the matter in the Senate, and it failed when an attempt was made to attach it to another larger bill as an amendment.  

HR9495 was filed in early September and included the exact same language in regard to nonprofits as the bill in April. HR9495 passed 38-0 at the committee level (No SC members serve on the committee).  

On November 12 the bill failed to be considered “under suspension of the rules”. That action requires a 2/3 majority vote, and it failed to reach that threshold. Though it is important to note that the vote was 256-145. It was allowed to be considered under "regular order", where a simple majority is required, which occurred on November 21and passed with a vote of 219-184. 

What’s Next: 

The bill now heads to the Senate for consideration.  

Early indications are that this bill will not move forward in the Senate by the end of the 118th Congress (January 3, 2025).  

It is unlikely that the Senate calendar will have room for HR9495 to be considered as a standalone bill, nor does there appear to be a desire to allow it to be attached to another, larger, piece of legislation. The Senate will be focusing on judicial confirmations before it switches to majority parties in 2025 and must consider a few big pieces of legislation (e.g. National Defense Authorization Act).  

Any bill that does not pass by January 3 must start all over with the new Congress.  

Take Action: 

Together SC’s staff continues to be in contact with Senate offices to monitor this bill and will alert members to any opportunities to further raise these concerns.  

While we do not suspect the Senate will consider HR9495, nonprofits can reach out to Sen. Graham and Sen. Scott to communicate the sector’s continued concerns on the bill’s content.