“A bill to require audits of institutions with respect to disclosures of foreign gifts, and for other purposes.”
No CRS summary available for this bill.
This section establishes requirements for the Secretary of Education to audit no fewer than 30 higher education institutions biennially, beginning no later than 60 days after enactment, to assess compliance with foreign gift and contract disclosure requirements under Section 117 of the Higher Education Act of 1965 (i.e., quarterly reports on gifts or contracts worth $250,000 or more from foreign sources). In selecting institutions, the Secretary must prioritize (1) those in the top 1% of endowments by size; (2) those with a history of substantial foreign gifts or contracts; (3) those previously noncompliant; (4) those publicly reporting contributions from a foreign entity of concern; and (5) those with formal agreements with a federal agency. Each audit must determine compliance for the two prior reporting years and, if noncompliance is found, identify underreported or overreported gifts or contracts—including the discrepancy amount, foreign source, country of origin, and receipt or contract dates. (Thus, audits target large or high-risk institutions to enforce transparency on foreign funding that could influence U.S. higher education.) Within 30 days of completing an audit, the Secretary must submit a report to Congress—made available to specified leaders and members upon request—and publish it on the Department of Education website.
This section establishes two new excise taxes in subchapter H of chapter 42 of the Internal Revenue Code applicable to taxable years beginning more than 60 days after enactment. (1) Section 4969 imposes a tax equal to 300% of income received during the taxable year from a foreign country of concern (as defined in section 10612(a) of the Research and Development, Competition, and Innovation Act) by an applicable institution—defined as an eligible educational institution (i.e., postsecondary institution eligible for higher education tax credits under section 25A(f)(2)) with at least 500 tuition-paying students in the prior taxable year where more than 50% of such students are located in the United States (per rules of section 4968(b)(2)). (2) Section 4970 imposes a tax equal to 110% of unreported foreign funding—defined as the value of any gift, contract, or change in ownership or control required to be reported under section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f) but determined unreported by audit under that section's subsection (g)—with the tax due within 180 days of audit notification and in addition to any section 4969 tax if from a foreign country of concern. (Thus, the taxes target large U.S.-focused colleges and universities receiving foreign funding subject to disclosure requirements, with rules for related organizations adapted from the existing section 4968 endowment tax.)