Turning Powerful Post 9-11 Counterterrorism Tools Onto Domestic Policy Targets

On September 25, 2025, President Trump issued National Security Presidential Memorandum 7 (NSPM-7 or the Presidential Memorandum), “Countering Domestic Terrorism and Organized Political Violence.”

The Presidential Memorandum has direct and immediate implications for tax-exempt organizations (including charities, advocacy groups, and political organizations) who the government perceives as espousing “anti-Americanism, anti-capitalism, and anti-Christian [views]; support for the overthrow of the United States Government; extremism on migration, race, and gender; [or] hostility towards those who hold traditional American views on family, religion, and morality.” The implications extend to the funders and supporters of such organizations. The Presidential Memorandum maintains that the above-listed beliefs have “animat[ed]” political violence, and it seeks to create a government-wide effort to “investigate and disrupt networks, entities, and organizations that foment political violence.” Because the Presidential Memorandum calls for criminal investigations and other legal consequences based on beliefs expressed by organizations and their affiliates, the memorandum — and especially subsequent agency actions to implement its directives — presents significant issues under the First Amendment.

NSPM-7’s Key Provisions

NSPM-7 directs the U.S. Department of Justice (DOJ), the U.S. Department of the Treasury (Treasury), and the Internal Revenue Service (IRS) to aggressively monitor, investigate, and take action against organizations purportedly linked — directly or indirectly — to acts of “political violence or domestic terrorism.” This new framework combines tax enforcement, financial tracing, and criminal prosecution tools — creating substantial risks and exposure for tax-exempt organizations (including charities, advocacy groups, and political organizations), along with their networks of funders and supporters.

Expands Definition of Political Violence and Domestic Terrorist Acts

NSPM-7 describes an “anti-fascist lie” comprising “organized campaigns of targeted intimidation, radicalization, threats, and violence designed to silence opposing speech, limit political activity, change or direct policy outcomes, and prevent the functioning of a democratic society,” including:

• Doxing, swatting, and coordinated harassment campaigns
• Organized civil disorder and riot-related activity

The breadth of this definition means organizations engaged in protest support, civil rights advocacy, or politically sensitive work may face scrutiny, if their activities are characterized as enabling or motivating such acts.

Empowers the National Joint Terrorism Task Force (NJTTF) and Joint Terrorism Task Forces With New Domestic Focus

The President directs the NJTTF and the Federal Bureau of Investigation’s local Joint Terrorism Task Forces (collectively, JTTFs) to “investigate, prosecute, and disrupt” organizations and individuals that it determines are domestic terrorist organizations “engaged in acts of political violence and intimidation designed to suppress lawful political activity or obstruct the rule of law.” Notably, the JTTFs will launch criminal investigations of “institutional and individual funders, and officers and employees of organizations, that are responsible for, sponsor, or otherwise aid and abet the principal actors engaging” in the political violence and intimidation identified in the Presidential Memorandum.

Thus, the JTTFs are instructed to target not only organizations that it decides are domestic terrorist organizations, but also individuals who are funders, officers, or employees of other organizations who “aid and abet” the “principal” organizations’ activities. The exact contours of this directive remain uncertain, but its apparent breadth raises serious legal questions for organizations, funders, and employees. The First Amendment issues, for example, appear significant. It remains to be seen how the JTTFs — and ultimately the courts — will resolve such issues.

Assigns a Central Role to Justice Department

NSPM-7 goes well beyond traditional counterterrorism enforcement, including by instructing DOJ to pursue criminal charges under a wide range of statutes against domestic entities, such as material support to terrorism, money laundering, and conspiracy.

NSPM-7 also prioritizes investigations under the Foreign Agents Registration Act (22 U.S.C. 611 et seq.) of “non-governmental organizations and American citizens residing abroad or with close ties to foreign governments, agents, citizens, foundations, or influence networks.” This focus appears to run counter to Attorney General Bondi’s policy memorandum announcing that FARA prosecutions “shall be limited to instances of alleged conduct similar to more traditional espionage by foreign government actors,” (emphasis added). That memorandum had generally shifted resources away from investigating foreign interference, including by dismantling the Foreign Influence Task Force.

Redirects the Treasury Department

NSPM-7 requires the Secretary of the Treasury to “identify and disrupt financial networks that fund domestic terrorism and political violence” by “trac[ing] illicit funding streams.” NSPM-7 also requires the Treasury to provide guidance for financial institutions to file Suspicious Activity Reports (SARs) and investigate indicia of illicit funding streams. SARs are documents that financial institutions file with the government when they notice something unusual or potentially illegal in a customer’s financial activity. They can be important tools for law enforcement to identify potentially illegal conduct. The Presidential Memorandum appears to direct Treasury to write new guidelines for financial institutions on the circumstances in which they must file a SAR that could relate to domestic terrorism.

IRS Oversight of Tax-Exempt Status

The IRS is directed to “ensure that no tax-exempt entities are directly or indirectly financing political violence or domestic terrorism,” and to refer “such organizations, and the employees and officers of such organizations,” to DOJ for investigation and possible prosecution. In so doing, the Presidential Memorandum asks the IRS to take aim at the tax-exempt status of organizations who are “directly or indirectly” funding the political violence targeted by the Presidential Memorandum. While the IRS already has the authority to revoke or deny the tax-exempt status of nonprofit organizations based on substantial illegal activity or violations of well-established public policy, the IRS has exercised its authority only in rare cases, such as when the illegal conduct constituted the primary activity or purpose of the organization.

This directive also raises implications under Section 501(p) of the Internal Revenue Code, which provides for the automatic suspension of an organization’s tax-exempt status when an organization is designated as a terrorist organization or as supporting terrorist activity under one of several enumerated legal mechanisms.

Recommended Steps and Conclusions

The stakes are high: The Presidential Memorandum makes clear that DOJ intends to target tax-exempt organizations and their funders for investigation and potential criminal prosecution, including based on activities that have historically been viewed as protected by the First Amendment. Recent reporting suggests that such investigations may be underway. By the plain terms of the Presidential Memorandum, even the “indirect” financing of “political violence” could have consequences for these organizations.

Organizations should seek legal counsel to understand what activities could create criminal or administrative exposure for them and their employees and how to mitigate any such exposure. For example, organizations would be well-served to conduct both pre- and post-award due diligence on the activities of their grantees, funders, fiscal sponsors, and partners. Some entities may also want to consider compliance certifications in connection with grants or donations, or consider enhanced reporting or oversight requirements. Organizations should also monitor DOJ, Treasury, and IRS guidance as the Presidential Memorandum is implemented, which may give additional clarity about the kind of activities that will be targeted.

By targeting tax-exempt organizations and funders targeted based on ideological considerations, the Presidential Memorandum and investigative actions implementing it could raise significant issues under the First Amendment. The First Amendment generally forbids government actions taken on the basis of disfavored viewpoints and protects the right to associate with others to engage in expressive activity. While courts often hesitate to halt ongoing government investigations, courts have developed more protective principles under the First Amendment that could support a challenge prior to the conclusion of an investigation — including to agency actions implementing the Presidential Memorandum’s directives, like guidance memoranda, warning letters, or other notices. Affected organizations should consider their potential recourse through litigation. And tax-exempt organizations should familiarize themselves with Section 501(p) of the Internal Revenue Code and engage in essential contingency planning in the event of an IRS investigation or subsequent presidential order that implicates Section 501(p).

If you have questions about this Enforcement Edge post, please contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations practice group.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.