Fiscal Sponsorship Transparency Act of 2026

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9721 Introduced in House (IH)]

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119th CONGRESS
  2d Session
                                H. R. 9721

  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 HOUSE OF REPRESENTATIVES

                             July 16, 2026

 Mr. Smucker introduced the following bill; which was referred to the
                      Committee on Ways and Means

_______________________________________________________________________

                                 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
        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
                clause (i) 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)(i) and 4960A(d)(2)(B) of
        such Code (as added by this Act).
    (e) Effective Date.--The amendments made by this subsection shall
apply to taxable years beginning after December 31, 2027.
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