I
107TH CONGRESS
2D SESSION
H. R. 5603
To amend the Internal Revenue Code of 1986 to suspend the tax-exempt
status of designated terrorist organizations, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 10, 2002
Mr. THUNE (for himself, Mr. RAMSTAD, and Mrs. JOHNSON of Connecticut)
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 terrorist organiza-
tions, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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 by an Executive order 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
‘‘(iii) section 5 of the United Nations
Participation Act, or
‘‘(B) is a person listed in or designated by
an Executive order as supporting terrorist ac-
tivity (as defined in section 212(a)(3)(B) of the
Immigration and Nationality Act) or terrorism
(as defined in section 140(d)(2) of the Foreign
Relations Authorization 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
determination or listing under paragraph (2), or a
denial of a deduction under paragraph (3) in any
administrative or judicial proceeding relating to the
Federal tax liability of such organization or other
person.
‘‘(5) ERRONEOUS DESIGNATION.—
‘‘(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,
such designation (and any suspension under
paragraph (1) occurring pursuant thereto) shall
be treated as having not been made for pur-
poses of this title.
‘‘(B) WAIVER OF LIMITATIONS.—If credit
or refund of any overpayment of tax which oc-
curs by operation of subparagraph (A) is pre-
vented at any time before the close of the 1-
year period beginning on the date of the deter-
mination of such credit or refund by the oper-
ation of any law or rule of law (including res
judicata), such refund or credit may neverthe-
less 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
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.
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