H.R. 3284: To require audits of institutions with respect to disclosures of foreign gifts, and for other purposes.

This bill seeks to enhance oversight concerning foreign contributions to educational institutions in the United States by introducing auditing requirements and imposing tax penalties for non-compliance. Below is a summary of the main provisions of the bill.

Audits of Institutions

The bill mandates that the Secretary of Education conduct audits every two years to evaluate whether educational institutions comply with disclosure requirements regarding foreign gifts. Key points include:

• The Secretary will audit at least 30 institutions starting no later than 60 days after the bill's enactment.
• Priority will be given to auditing institutions that:
• Rank in the top 1% based on endowment size.
• Have a history of receiving significant foreign contributions.
• Have been non-compliant in the past regarding reporting foreign gifts.
• Publicly report receiving funds from specific foreign entities of concern.
• Have agreements with federal agencies.
• Audits will assess compliance over the prior two reporting years, identifying any discrepancies in gift reporting.
• Results from the audits will be reported to Congress and made publicly available.

Excise Taxes on Foreign Contributions

The bill introduces two new excise taxes affecting educational institutions that accept foreign contributions:

• Tax on Contributions from Foreign Countries of Concern: A tax of 300% of the income received from any foreign country listed as a concern will be imposed on institutions, specifically targeting foreign entities deemed risky under specific definitions.
• Tax on Unreported Contributions: Institutions failing to report foreign funding as mandated will incur a tax of 110% of the unreported amounts. This applies to amounts that should have been disclosed according to audit findings.

Each tax will become relevant in the taxable year following the implementation of the bill, and institutions will have 180 days to settle these taxes upon receiving audit results.

Implementation and Reporting

The findings from these audits and the requirements for tax payments will create a more regulated environment for foreign contributions to U.S. educational institutions, aiming to ensure transparency and accountability in financial dealings.

Relevant Companies

• None found