I 

108TH CONGRESS 

1ST SESSION H. R. 3002

To amend the Internal Revenue Code of 1986 to suspend the tax exempt 

status of designated foreign terrorist groups, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 4, 2003

Mr. BEAUPREZ introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to suspend 

the tax exempt status of designated foreign terrorist 

groups, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Terrorist Tax Exemp5 tion Suspension Act of 2003’’. 

6 SEC. 2. SUSPENSION OF TAX-EXEMPT STATUS OF TER7 RORIST ORGANIZATIONS. 

8 (a) IN GENERAL.—Section 501 of the Internal Rev9 enue Code of 1986 (relating to exemption from tax on cor10 porations, certain trusts, etc.) is amended by redesig-
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1 nating subsection (p) as subsection (q) and by inserting 

2 after subsection (o) the following new subsection: 

3 ‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER4 RORIST ORGANIZATIONS.—

5 ‘‘(1) IN GENERAL.—The exemption from tax 

6 under subsection (a) with respect to any organiza7 tion described in paragraph (2), and the eligibility of 

8 any organization described in paragraph (2) to apply 

9 for recognition of exemption under subsection (a), 

10 shall be suspended during the period described in 

11 paragraph (3). 

12 ‘‘(2) TERRORIST ORGANIZATIONS.—An organi13 zation is described in this paragraph if such organi14 zation is designated or otherwise individually identi15 fied—

16 ‘‘(A) under section 212(a)(3)(B)(vi)(II) or 

17 219 of the Immigration and Nationality Act as 

18 a terrorist organization or foreign terrorist or19 ganization, 

20 ‘‘(B) in or pursuant to an Executive order 

21 which is related to terrorism and issued under 

22 the authority of the International Emergency 

23 Economic Powers Act or section 5 of the 

24 United Nations Participation Act of 1945 for 
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1 the purpose of imposing on such organization 

2 an economic or other sanction, or 

3 ‘‘(C) in or pursuant to an Executive order 

4 issued under the authority of any Federal law 

5 if—

6 ‘‘(i) the organization is designated or 

7 otherwise individually identified in or pur8 suant to such Executive order as sup9 porting or engaging in terrorist activity (as 

10 defined in section 212(a)(3)(B) of the Im11 migration and Nationality Act) or sup12 porting terrorism (as defined in section 

13 140(d)(2) of the Foreign Relations Author14 ization Act, Fiscal Years 1988 and 1989); 

15 and 

16 ‘‘(ii) such Executive order refers to 

17 this subsection. 

18 ‘‘(3) PERIOD OF SUSPENSION.—With respect to 

19 any organization described in paragraph (2), the pe20 riod of suspension—

21 ‘‘(A) begins on the later of—

22 ‘‘(i) the date of the first publication of 

23 a designation or identification described in 

24 paragraph (2) with respect to such organi25 zation, or 
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1 ‘‘(ii) the date of the enactment of this 

2 subsection, and 

3 ‘‘(B) ends on the first date that all des4 ignations and identifications described in para5 graph (2) with respect to such organization are 

6 rescinded pursuant to the law or Executive 

7 order under which such designation or identi8 fication was made. 

9 ‘‘(4) DENIAL OF DEDUCTION.—No deduction 

10 shall be allowed under any provision of this title, in11 cluding sections 170, 545(b)(2), 556(b)(2), 642(c), 

12 2055, 2106(a)(2), and 2522, with respect to any 

13 contribution to an organization described in para14 graph (2) during the period described in paragraph 

15 (3). 

16 ‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL

17 CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC18 TION.—Notwithstanding section 7428 or any other 

19 provision of law, no organization or other person 

20 may challenge a suspension under paragraph (1), a 

21 designation or identification described in paragraph 

22 (2), the period of suspension described in paragraph 

23 (3), or a denial of a deduction under paragraph (4) 

24 in any administrative or judicial proceeding relating 
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1 to the Federal tax liability of such organization or 

2 other person. 

3 ‘‘(6) ERRONEOUS DESIGNATION.—

4 ‘‘(A) IN GENERAL.—If—

5 ‘‘(i) the tax exemption of any organi6 zation described in paragraph (2) is sus7 pended under paragraph (1), 

8 ‘‘(ii) each designation and identifica9 tion described in paragraph (2) which has 

10 been made with respect to such organiza11 tion is determined to be erroneous pursu12 ant to the law or Executive order under 

13 which such designation or identification 

14 was made, and 

15 ‘‘(iii) the erroneous designations and 

16 identifications result in an overpayment of 

17 income tax for any taxable year by such 

18 organization, 

19 credit or refund (with interest) with respect to 

20 such overpayment shall be made. 

21 ‘‘(B) WAIVER OF LIMITATIONS.—If the 

22 credit or refund of any overpayment of tax de23 scribed in subparagraph (A)(iii) is prevented at 

24 any time by the operation of any law or rule of 

25 law (including res judicata), such credit or re-
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1 fund may nevertheless be allowed or made if the 

2 claim therefor is filed before the close of the 1-

3 year period beginning on the date of the last 

4 determination described in subparagraph 

5 (A)(ii). 

6 ‘‘(7) NOTICE OF SUSPENSIONS.—If the tax ex7 emption of any organization is suspended under this 

8 subsection, the Internal Revenue Service shall up9 date the listings of tax-exempt organizations and 

10 shall publish appropriate notice to taxpayers of such 

11 suspension and of the fact that contributions to such 

12 organization are not deductible during the period of 

13 such suspension.’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to designations made before, on, 

16 or after the date of the enactment of this Act.

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