H.R. 1168 — Protecting Federal Funds from Human Trafficking and Smuggling Act of 2025

This section provides the short title of the Act as the “Protecting Federal Funds from Human Trafficking and Smuggling Act of 2025.”

This section limits Federal funding and tax-exempt status for nonprofit entities that do not certify compliance with Federal laws on human trafficking, alien smuggling, fraud, bribery, and gratuity, or that have been convicted of an offense under section 274 of the Immigration and Nationality Act (8 U.S.C. 1324). Beginning not later than 120 days after enactment, no Federal funds may be awarded to a nonprofit entity unless it submits the required certification to the Director of the Office of Management and Budget (OMB). Not later than 60 days after enactment, nonprofit entities that are already receiving Federal funds on the date of enactment, or that received Federal funds before January 1, 2025, must also submit the certification; if they do not, or if OMB determines they violated 8 U.S.C. 1324, they must repay the funds awarded. This section also amends section 503 of the Internal Revenue Code of 1986 to deny tax-exempt status under section 501(a) to an organization described in section 501(c) that does not submit the required certification or is determined by OMB to have violated 8 U.S.C. 1324. Such an organization may reapply for exemption not sooner than 1 year after losing exempt status. This section directs the Secretary of Homeland Security, within 120 days after enactment, to develop a written strategy and best practices guide for nonprofit entities on compliance with Federal law, including how to detect, deter, and report human trafficking and alien smuggling; publish on the Department of Homeland Security website information on nonprofit violations of State and Federal laws related to human trafficking and alien smuggling; and develop a written strategy to improve cooperation with nonprofit entities and State and Federal law enforcement agencies to deter, detect, report, and remove aliens. This section requires the Comptroller General of the United States to report to Congress not later than 180 days after enactment, and annually thereafter, on each violation by a nonprofit entity of the certification requirement. The certification requirement applies to any nonprofit entity awarded Federal funding, including entities with an agreement, contract, award, or other relationship with the Federal Government on the date of enactment.

This section terminates the exemption from verification requirements for nonprofit charitable organizations under 8 U.S.C. § 1642(d). (Thus, nonprofit charitable organizations would no longer be expressly exempted from the immigration-status verification rules applicable to the provision of Federal public benefits and State or local public benefits.)