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This bill would change the rules for tax-exempt charities under federal tax law. It says an organization could lose or be denied 501(c)(3) status if it has a pattern or practice of giving money, services, or other material help to people it knows, or should reasonably know, are in the United States illegally. The bill also says organizations would not be required to check a person’s citizenship or immigration status, and religious groups would not have to act against their beliefs.
- Applies to charities and similar nonprofit groups that want 501(c)(3) tax-exempt status.
- Targets organizations that regularly provide financial help, benefits, services, or other support to people who are unlawfully present in the country.
- Does not require proof of citizenship or immigration-status verification for every person helped.
- Says religious organizations cannot be forced to violate their religious beliefs.
Official Summaries
Fixing Exemptions for Networks Choosing to Enable Illegal Migration Act or the FENCE Act
This bill denies federal tax-exempt status under Internal Revenue Code (IRC) Section 501(c)(3) to an organization that engages in a pattern or practice of providing financial assistance, benefits, services, or other material support to individuals that such organization knows or reasonably should know are unlawfully present in the United States. However, the bill does not require an organization to verify an individual’s citizenship or immigration status, or act in violation of religious beliefs.
As background, an organization may be exempt from federal income tax under IRC Section 501(c)(3) if it is organized and operated exclusively (1) for religious, charitable, scientific, literary, or educational purposes; (2) for testing for public safety; (3) for the prevention of cruelty to children or animals; or (4) to foster national or international amateur sports competition (subject to limitations). However, under current law, a tax-exempt organization may not be organized for an illegal purpose or engage in substantial illegal activity.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 497 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 497
To amend the Internal Revenue Code of 1986 to modify eligibility for
501(c)(3) status.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 10, 2025
Mr. Hagerty introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to modify eligibility for
501(c)(3) status.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fixing Exemptions for Networks
Choosing to Enable Illegal Migration Act'' or the ``FENCE Act''.
SEC. 2. ORGANIZATIONS HARBORING ALIENS UNLAWFULLY PRESENT IN THE UNITED
STATES.
(a) In General.--Paragraph (3) of section 501(c) of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``animals, no part'' and inserting
``animals--
``(A) no part'',
(2) by striking ``individual, no substantial part'' and
inserting ``individual,
``(B) no substantial part'',
(3) by striking ``subsection (h)), and which'' and
inserting ``subsection (h)),
``(C) which'',
(4) by striking the period at the end and inserting ``,
and'', and
(5) by adding at the end the following:
``(D) which does not engage in a pattern or
practice of providing financial assistance, benefits,
services, or other material support to individuals
which such corporation, community chest, fund, or
foundation knows or reasonably should know to be
unlawfully present in the United States.
Subparagraph (D) shall not be construed to require proof of
citizenship or verification of an individual's immigration
status to be presented, or to require a religious organization
to act in violation of its religious beliefs.''.
(b) Effective Date.--The amendments made by this section shall take
effect upon the date of the enactment of this Act.
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