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SECTION 1. SUSPENSION OF TAX-EXEMPT STATUS OF DES-
IGNATED TERRORIST ORGANIZATIONS.
(a) IN GENERAL.—Section 501 of the Internal Rev-
enue Code of 1986 (relating to exemption from tax on cor-
porations, certain trusts, etc.) is amended by redesig-
nating subsection (p) as subsection (q) and by inserting
after subsection (o) the following new subsection:
‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF DES-
IGNATED TERRORIST ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—The exemption from tax
under subsection (a) with respect to any organiza-
tion shall be suspended during any period in which
the organization is a designated terrorist organiza-
tion.
‘‘(2) 
DESIGNATED
TERRORIST
ORGANIZA-
TION.—For purposes of this subsection, the term
‘designated terrorist organization’ means an organi-
zation which—
‘‘(A) is designated as a terrorist organiza-
tion in or pursuant to an Executive order or
otherwise under the authority of—
‘‘(i) section 212(a)(3) or 219 of the
Immigration and Nationality Act,
‘‘(ii) the International Emergency
Economic Powers Act, or
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‘‘(iii) section 5 of the United Nations
Participation Act, or
‘‘(B) is designated in or pursuant to an
Executive order or otherwise as supporting ter-
rorist 
activity 
(as 
defined 
in 
section
212(a)(3)(B) of the Immigration and Nation-
ality Act) or terrorism (as defined in section
140(d)(2) of the Foreign Relations Authoriza-
tion Act, Fiscal Years 1988 and 1989).
‘‘(3) DENIAL
OF
DEDUCTION.—No deduction
shall be allowed under section 170, 545(b)(2),
556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for
any contribution to an organization during the pe-
riod such organization is a designated terrorist orga-
nization.
‘‘(4) DENIAL OF ADMINISTRATIVE OR JUDICIAL
CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC-
TION.—Notwithstanding section 7428 or any other
provision of law, no organization or other person
may challenge a suspension under paragraph (1), a
designation described in paragraph (2), or a denial
of a deduction under paragraph (3) in any adminis-
trative or judicial proceeding relating to the Federal
tax liability of such organization or other person.
‘‘(5) ERRONEOUS DESIGNATION.—
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‘‘(A) IN GENERAL.—If a designation of an
organization pursuant to 1 or more of the pro-
visions of law described in paragraph (2) is de-
termined to be erroneous pursuant to such law
and the erroneous designation results in an
overpayment of income tax for any taxable year
with respect to such organization, credit or re-
fund (with interest) with respect to such over-
payment shall be made.
‘‘(B) WAIVER OF LIMITATIONS.—If credit
or refund of any overpayment of tax described
in subparagraph (A) is prevented at any time
before the close of the 1-year period beginning
on the date of the determination of such credit
or refund by the operation of any law or rule
of law (including res judicata), such refund or
credit may nevertheless be made or allowed if
claim therefor is filed before the close of such
period.’’.
(b) NOTICE OF SUSPENSIONS.—If the tax exemption
of any organization is suspended under section 501(p) of
the Internal Revenue Code of 1986 (as added by sub-
section (a)), the Internal Revenue Service shall update the
listings of tax-exempt organizations and shall publish ap-
propriate notice to taxpayers of such suspension and of
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the fact that contributions to such organization are not
deductible during the period of such suspension.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
Passed the House of Representatives October 21,
2002.
Attest:
Clerk.