White House weighs an order that would label some nonprofits as terror-linked and suspend their tax exemption, report says
The Wall Street Journal reported Nov. 6 that officials have worked for months on an order under section 501(p) of the tax code. Nothing has been signed, a White House official called the talk speculative, and which groups it could name is unknown.
Washington. The Trump administration is weighing an executive order that would identify some nonprofits as having ties to terrorism, a step that would immediately suspend their federal tax exemption, The Wall Street Journal reported on Nov. 6. No order has been signed. Officials have worked on it for months, but it is still under deliberation and may never be signed, the Journal reported, citing people familiar with the talks.
It is not known how many organizations, or which ones, an order would name, the Journal reported. Officials have reviewed nonprofits' bank records and other documents to help decide which groups to include and have consulted IRS experts, the Journal reported. A White House official told the Journal that any discussion of a possible order was speculative; in April, the White House told reporters that no such action was being drafted or considered. The Treasury Department and the IRS did not respond to the paper.
What section 501(p) does
The order would rest on section 501(p) of the Internal Revenue Code, which the Journal called untested. The section suspends the exemption of an organization designated as a terrorist organization under immigration law or under sanctions orders. A third route covers an organization named in an executive order issued under any federal law as supporting or engaging in terrorist activity, if the order refers to section 501(p).
During a suspension, the organization cannot apply for recognition of exemption, and no gift to it is deductible. Neither the organization nor anyone else may challenge the suspension or the designation in a proceeding about federal tax liability. If every designation is later found to be erroneous, the organization gets a refund of overpaid tax with interest. An IRS page last reviewed on June 28 lists nine organizations whose exemptions are suspended under the section, the same number the Journal gave.
The IRS's usual process for penalizing a nonprofit involves a detailed audit, formal notice and the right to challenge the decision in court, the Journal reported.
“None of these tools is new. What is new and potentially very consequential is putting them together around the same organizations and the same conduct.”
Earlier steps
In a memorandum of Sept. 25, 2025, President Trump directed the IRS commissioner to ensure that no tax-exempt entity is directly or indirectly financing political violence or domestic terrorism, and to refer such organizations and their officers to the Justice Department. Three days earlier he had designated antifa a domestic terrorist organization. On July 16, Treasury Secretary Scott Bessent said the department was examining where tax-exempt status has been exploited and added, "Where the evidence leads, we will not hesitate to follow."
About this story
501c3.help wrote this story from the sources listed with it, not from material an organization sent. Our editors approved it on Nov. 9, 2026. Stories in The Nonprofit Herald are free, and nothing is asked in return. Editorial rules.
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