SenateS. 5083119th Congress
Fiscal Sponsorship Transparency Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5083 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 5083
To amend the Internal Revenue Code of 1986 to require reporting by
certain charitable organizations relating to fiscal sponsorship
arrangements, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 22, 2026
Mr. Cotton 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 require reporting by
certain charitable organizations relating to fiscal sponsorship
arrangements, and for other purposes.
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 ``Fiscal Sponsorship Transparency Act
of 2026''.
SEC. 2. TREATMENT OF FISCAL SPONSORSHIP ARRANGEMENTS.
(a) Reporting Requirements.--
(1) In general.--Section 6033(b) of the Internal Revenue
Code of 1986 is amended by striking ``and'' at the end of
paragraph (15)(B), by redesignating paragraph (16) as paragraph
(17), and by inserting after paragraph (15) the following new
paragraph:
``(16) with respect to each fiscal sponsorship arrangement
of the organization in effect during the taxable year--
``(A) the name of each party (other than any
individuals) to such arrangement,
``(B)(i) in the case of a fiscal sponsorship
arrangement described in subsection (p)(1)(B)(ii), the
aggregate amounts made available during the taxable
year under such arrangement for the specifically
identified project described in such subsection,
``(ii) in the case of any other fiscal sponsorship
arrangement, the aggregate amounts transferred during
the taxable year under such arrangement to the person
on whose behalf the organization receives and
administers amounts, and
``(iii) a description of the activities to which
the amounts so made available or transferred, as the
case may be, relate,
``(C) the name of an individual designated as the
principal officer managing such fiscal sponsorship
arrangement on behalf of the organization, and
``(D) the date on which the arrangement began and,
if applicable, ended, and''.
(2) Fiscal sponsorship arrangement.--Section 6033 of such
Code is amended by redesignating subsection (p) as subsection
(q) and by inserting after subsection (o) the following new
subsection:
``(p) Fiscal Sponsorship Arrangement.--
``(1) In general.--For purposes of this section, the term
`fiscal sponsorship arrangement' means, with respect to an
applicable organization, an arrangement--
``(A) between the organization and another person
that is not exempt from tax under section 501(a),
``(B) under which--
``(i) the organization agrees for
consideration to receive and administer amounts
on behalf of such other person, or
``(ii)(I) the organization publicly
solicits amounts for carrying on a specifically
identified project that is represented as a
means to further an exempt purpose of the
organization,
``(II) the organization agrees to receive
and administer amounts directed to such project
and make such amounts available for the
organization to carry out the project (less an
amount specified in the arrangement to be used
by the organization for other purposes), and
``(III) either the organization or such
other person may terminate the arrangement, and
``(C) under which the organization retains
discretion and control over such amounts to ensure such
amounts are used to further an exempt purpose of the
organization.
``(2) Special rule for otherwise disregarded entities.--For
purposes of paragraph (1), any entity--
``(A) which is owned (directly or indirectly) by
the organization, and
``(B) which would (but for this paragraph) be
disregarded as an entity separate from its owner,
shall be treated as an entity that is separate from its owner
and that is not exempt from tax under section 501(a).
``(3) Applicable organization.--For purposes of this
subsection, the term `applicable organization' means an
organization to which subsection (b) applies, other than--
``(A) a private foundation (as defined in section
509(a)), or
``(B) a donor advised fund (as defined in section
4966(d)(2)).''.
(b) No Deduction Allowed for Contributions Under Improper Conduit
Arrangement.--Section 170(c) of such Code is amended by adding at the
end the following: ``The term `charitable contribution' shall not
include any contribution or gift made under an improper conduit
arrangement (as defined in section 4960A(d)(2)).''.
(c) Taxes Imposed on Improper Conduit Arrangements.--
(1) In general.--Subchapter D of chapter 42 of such Code is
amended by adding at the end the following new section:
``SEC. 4960A. TAXES ON IMPROPER CONDUIT ARRANGEMENTS.
``(a) Initial Taxes.--
``(1) On the organization.--In the case of a specified tax-
exempt organization, there is hereby imposed on any amount
knowingly transferred pursuant to an improper conduit
arrangement a tax equal to 20 percent of the amount thereof.
The tax imposed by this paragraph shall be paid by the
organization.
``(2) On the management.--In any case in which a tax is
imposed by paragraph (1) with respect to a transfer pursuant to
an improper conduit arrangement, there is hereby imposed on the
agreement of any organization manager to the making of such
transfer, knowing such arrangement is an improper conduit
arrangement, a tax equal to 5 percent of the amount thereof,
unless such agreement is not willful and is due to reasonable
cause. The tax imposed by this paragraph shall be paid by the
organization manager who agreed to the transfer.
``(b) Additional Taxes.--
``(1) On the organization.--In any case in which an initial
tax is imposed by subsection (a)(1) with respect to a transfer
pursuant to an improper conduit arrangement and such transfer
is not corrected within the taxable period, there is hereby
imposed a tax equal to 100 percent of the amount of the
transfer. The tax imposed by this paragraph shall be paid by
the organization.
``(2) On the management.--In any case in which an
additional tax is imposed by paragraph (1), if an organization
manager refused to agree to part or all of the correction,
there is hereby imposed a tax equal to 50 percent of the amount
of the transfer. The tax imposed by this paragraph shall be
paid by any organization manager who refused to agree to part
or all of the correction.
``(c) Special Rules.--For purposes of this section--
``(1) Joint and several liability.--If more than one person
is liable under subsection (a)(2) or (b)(2) with respect to a
transfer, all such persons shall be jointly and severally
liable under such paragraph with respect to such transfer.
``(2) Limit for management.--With respect to any improper
conduit arrangement, the maximum amount of the tax imposed by
subsection (a)(2) shall not exceed $10,000, and the maximum
amount of the tax imposed by subsection (b)(2) shall not exceed
$20,000.
``(d) Definitions.--For purposes of this section--
``(1) Specified tax-exempt organization.--The term
`specified tax-exempt organization' means--
``(A) an organization that is exempt from tax under
section 501(a) and is described in section 501(c)(3),
or
``(B) any organization which was described in
subparagraph (A) at any time during the 5-year period
ending on the date of the transfer pursuant to an
improper conduit arrangement.
``(2) Improper conduit arrangement.--The term `improper
conduit arrangement' means, with respect to a specified tax-
exempt organization, an arrangement (express or implied) with
another person under which--
``(A) contributions are solicited or received to be
transferred to a specifically identified person not
exempt from tax under section 501(a), and
``(B) the organization fails to exercise discretion
and control over the use of the funds.
``(3) Correction.--The terms `correction' and `correct'
mean, with respect to any transfer to which this section
applies, recovering part or all of the transfer to the extent
recovery is possible, and where full recovery is not possible
such additional corrective action as is prescribed by the
Secretary by regulations.
``(4) Taxable period.--The term `taxable period' means,
with respect to any transfer under an improper conduit
arrangement, the period beginning with the date on which the
transfer occurs and ending on the earlier of--
``(A) the date of mailing of a notice of deficiency
with respect to the tax imposed by subsection (a)(1)
under section 6212, or
``(B) the date on which tax imposed by subsection
(a)(1) is assessed.
``(5) Organization manager.--The term `organization
manager' means, with respect to any specified tax-exempt
organization, any officer, director, or trustee of such
organization (or any individual having powers or
responsibilities similar to those of officers, directors, or
trustees of the organization).''.
(2) Clerical amendment.--The table of sections for
subchapter D of chapter 42 of such Code is amended by adding at
the end the following new item:
``Sec. 4960A. Taxes on improper conduit arrangements.''.
(d) Regulations.--The Secretary of the Treasury shall prescribe
such regulations as may be necessary or appropriate to clarify--
(1) arrangements to which section 6033(p)(1) of the
Internal Revenue Code of 1986 (as added by this Act) applies,
and
(2) what constitutes ``discretion and control'' for
purposes of sections 6033(p)(1)(C) and 4960A(d)(2)(B) of such
Code (as added by this Act).
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2027.
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