1. United States
2. Calif.
3. Letter

The proposed Stop Terror-Financing and Tax Penalties on American Hostages Act aims to provide relief to American hostages and wrongfully detained individuals by postponing tax deadlines, reimbursing paid late fees, and terminating the tax-exempt status of organizations that provide material support to terrorist groups. While well-intentioned, there are concerns about the broad scope and potential unintended consequences. This legislation would grant the Secretary of the Treasury extensive authority to designate organizations as "terrorist supporting" based on a low evidentiary standard, potentially impacting civil society groups engaged in humanitarian aid or peacebuilding efforts. The limited due process protections raise constitutional issues around depriving organizations of tax-exempt status without fair notice or robust appeals. Additionally, the retroactive provisions allowing refunds of past penalties paid by detainees could open the door to widespread claims and impose substantial administrative burdens on the IRS. There are better ways to support American captives, such as increasing diplomatic efforts and providing direct assistance to families. Rather than rushing this far-reaching bill, a more prudent approach would be to narrowly target true bad actors while safeguarding legitimate nonprofits and ensuring robust due process protections. Comprehensive review and stakeholder input is warranted to address the complex issues at hand responsibly and within constitutional bounds.