Trump administration weighs order targeting nonprofits over alleged terrorist ties - report

Officials have spent months on an order invoking Section 501(p) of the tax code, which would let the president suspend groups’ tax-exempt status immediately, The Wall Street Journal reported.

The Donald Trump administration is weighing an executive order that would designate some nonprofit organizations as having terrorist ties, a step that would immediately suspend their tax-exempt status and could cripple their operations, The Wall Street Journal reported on Friday, citing people familiar with the matter.

Officials have been working on the order for months, but it is still under deliberation and may never be finalized or signed by President Donald Trump, the people said. 

It was unclear how many groups, or which ones, could be targeted.

A White House official told the WSJ that any discussion of a potential order was speculative. In April, the White House told reporters no such action was being drafted or considered. The Treasury Department and the IRS did not respond to the newspaper’s requests for comment.

The order would rely on a provision of the tax code that has never been used this way, and would sharply escalate the administration’s scrutiny of tax-exempt groups, possibly including some of Trump’s political opponents.

A terror designation would also take effect far faster than the IRS’s usual process for penalizing nonprofits, which involves a detailed audit, formal notice and the right to challenge the decision in court.

Trump’s widening crackdown on nonprofits

Last year, Trump signed a national security memorandum directing the IRS to ensure no tax-exempt groups are involved in domestic terrorism or political violence, and in September he designated antifa a domestic terrorist organization by executive order.

The Justice Department has since indicted the Southern Poverty Law Center, alleging it defrauded donors by secretly paying informants, charges the group denies.

Outgoing Texas Governor Greg Abbott has asked Treasury Secretary Scott Bessent to suspend the tax-exempt status of the Council on American-Islamic Relations, alleging the group has ties to terrorist networks. CAIR has denied the allegations.