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

The reported proposal would use an executive order to designate certain nonprofit organizations as having terrorist ties. It matters because the designation could suspend a group’s tax-exempt status immediately, rather than after the usual IRS process. The order would also expand the administration’s scrutiny of nonprofits, potentially reaching political opponents.

Officials have reportedly worked on the proposal for months. The article does not identify the possible targets or say how many groups could be involved. It says the provision being considered has never been used in this way. A designation would therefore represent a major change in how nonprofit organizations are handled.

The proposal remains uncertain. Officials are still deliberating, and the order may never be finalized or signed by President Donald Trump. A White House official called discussion of a possible order speculative, while the Treasury Department and IRS did not comment to The Wall Street Journal.

In this proposal, designation would mean the government formally classifies a nonprofit as having ties to terrorism. The immediate practical effect described in the article is suspension of the organization’s tax-exempt status. That could undermine its ability to operate, because the group would lose a status central to its nonprofit activities.

The proposed designation would rely on a provision of the tax code that has never been used this way. It would also move faster than the IRS’s normal enforcement process. The article does not describe a separate criminal conviction requirement, nor does it explain whether other penalties would follow the designation.

The idea remains only under consideration. Officials have not said which groups might be targeted or how many. The White House called discussion of a potential order speculative. Because the order may never be finalized or signed, its exact meaning and practical reach remain uncertain.

The article gives no estimate of how many nonprofits could be targeted. It also says officials have not disclosed which organizations might be included. That uncertainty matters because the proposal could affect a broad range of tax-exempt groups, including some of President Donald Trump’s political opponents.

Officials have reportedly worked on the order for months, but it remains under deliberation. The proposal would use a tax-code provision that has never been used in this manner. Until officials settle the order’s language and scope, there is no confirmed list or count of possible targets.

The uncertainty is also political and procedural. A White House official said discussion of a potential order was speculative. The official added context to earlier White House comments in April, when reporters were told that no such action was being drafted or considered. The order may ultimately never be finalized or signed.

The proposed designation would immediately suspend the targeted nonprofit’s tax-exempt status. The article says that loss could cripple the organization’s operations. Because the status is tied to the group’s tax treatment, immediate suspension would create a sharp and sudden financial and administrative burden.

The key mechanism is an unusual provision of the tax code. Officials are considering using it to label organizations as having terrorist ties, even though the provision has never been used for that purpose. The article does not specify every operational consequence, but it clearly describes the possible effect as severe.

This approach would also remove much of the time normally available to a nonprofit. The IRS generally uses a detailed audit, formal notice, and an opportunity to challenge the decision in court. A terrorist designation would take effect far faster, making the consequences immediate while the proposal’s legal and practical scope remains unsettled.

The proposed process would be faster and more direct than the IRS’s usual method for penalizing tax-exempt organizations. A terrorist designation could immediately suspend a nonprofit’s tax-exempt status. That timing is important because the organization could face serious consequences before completing a traditional administrative review.

Under the normal IRS process described in the article, officials conduct a detailed audit. The agency then gives formal notice and allows the nonprofit to challenge the decision in court. This process creates steps for fact-finding and response before the penalty takes effect.

The proposed order would sharply shorten that path. It would rely on a tax-code provision that has never been used in this way and would let the designation take effect far faster. The article does not say whether the proposed process would preserve the same court challenge rights. The order is still under deliberation and may never become policy.

The article describes involvement by the White House, Treasury Department, IRS, Justice Department, and several nonprofit organizations. President Donald Trump is considering the reported executive order. Treasury Secretary Scott Bessent received a request from outgoing Texas Governor Greg Abbott concerning one organization.

Abbott asked Bessent to suspend the tax-exempt status of the Council on American-Islamic Relations, alleging ties to terrorist networks. CAIR denied those allegations. Separately, the Justice Department indicted the Southern Poverty Law Center, alleging that it defrauded donors by secretly paying informants. The group denies those charges.

The Treasury Department and IRS did not respond to The Wall Street Journal’s requests for comment. A White House official said discussion of a possible order was speculative. The article also mentions antifa, which Trump designated a domestic terrorist organization by executive order in September. It does not state that antifa is a nonprofit target under the proposed order.

Tax-exempt status generally means an organization qualifies for special treatment under tax law, including exemption from certain taxes. The article focuses on nonprofits whose status could be suspended. That status matters because losing it can sharply affect an organization’s finances and operations.

The government grants the status through the tax system when an organization meets legal requirements. The IRS normally reviews whether a tax-exempt group continues to comply. If the agency finds a problem, the article says it uses a detailed audit, formal notice, and an opportunity to challenge the decision in court.

The proposed executive order would use a provision of the tax code in a new way. It would connect a terrorist-ties designation to immediate suspension of tax-exempt status. The article does not explain every legal requirement for receiving or losing the status, so this general definition relies on established tax-law understanding. The proposal’s legality and final scope remain uncertain.