Cotton Introduces Bill to Close Tax Loopholes Exploited by Far-Left Terrorist Organizations

FOR IMMEDIATE RELEASE
Contact: Tatum Wallace or Hannah McCarthy
July 23, 2026

Cotton Introduces Bill to Close Tax Loopholes Exploited by Far-Left Terrorist Organizations

Washington, DC - Senator Tom Cotton (R-Arkansas) introduced legislation to eliminate tax loopholes exploited by far-left terrorist organizations. Under current law, a charity can collect tax-deductible donations and hand the money to a group that isn't a charity at all, which allows far-left radical groups-like the Palestinian Youth Movement-to manipulate the U.S. tax code. The Fiscal Sponsorship Transparency Act would force charities to report these arrangements and impose a steep tax when they blindly pass money along without any oversight to how it's spent.

Representative Lloyd Smucker (Pennsylvania-11) introduced companion legislation in the House.

"Far-left terrorist organizations shouldn't be able to manipulate our tax code for their advantage. My bill would require public disclosure of these activities, tax the charities that don't control where their money is spent, and end tax write-offs for donors who bankroll these unchecked arrangements," said Senator Cotton.

Text of the bill can be found here.

The Fiscal Sponsorship Transparency Act would:

• Mandate Form 990 disclosure of fiscal sponsorship arrangements.
• Impose an excise tax on improper conduit arrangements.
• Deny the charitable deduction for conduit contributions.

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