Maryland lawmakers propose bill to revoke nonprofit tax exemptions for terrorist support

On February 6, 2025, House Bill 1192 was introduced in the Maryland General Assembly, aiming to address the tax-exempt status of nonprofit organizations found to support terrorist activities. The bill, sponsored by Delegates R. Long, Buckel, Hornberger, and Pippy, seeks to establish a framework for the Comptroller and the Director of the State Department of Assessments and Taxation to regularly assess and rescind the tax-exempt status of such organizations.

The primary provisions of House Bill 1192 require the state authorities to jointly determine whether a nonprofit organization has been identified as supporting terrorism. If such a designation is confirmed, the bill mandates the rescission of the organization’s tax-exempt status concerning Maryland income tax, sales and use tax, and property tax exemptions. Additionally, the bill outlines procedures for both the rescission and potential reinstatement of tax-exempt status, ensuring a structured approach to managing these sensitive determinations.

The introduction of this bill has sparked discussions regarding its implications for nonprofit organizations operating within Maryland. Proponents argue that it is a necessary measure to prevent financial support for terrorism through tax benefits, thereby enhancing state security and accountability. However, concerns have been raised about the potential for misuse of the bill, with critics warning that it could lead to the unjust targeting of legitimate organizations under the guise of national security.

As the bill progresses through the legislative process, it is expected to undergo further scrutiny and debate, particularly regarding the criteria for determining terrorist support and the safeguards needed to protect innocent organizations from wrongful classification. The economic implications of the bill could be significant, as it may affect the funding and operational capabilities of nonprofits that play crucial roles in community services.

In conclusion, House Bill 1192 represents a critical step in Maryland's legislative efforts to combat terrorism financing through the tax system. As discussions continue, stakeholders from various sectors will be closely monitoring the bill's developments and potential impacts on the nonprofit landscape in the state.