House Ways and Means Committee Advances Four Bills Affecting Tax-Exempt Organizations

AAFCPAs would like to make clients aware that the House Ways and Means Committee recently advanced four bills, which included proposals to: 1) increase reporting requirements for foreign funding, 2) stop foreign influence in elections, 3) increase fiscal sponsorship transparency, and 4) preserve protections for religious organizations. 

Foreign Funding Transparency Act (H.R. 9772)

Under this proposal, tax-exempt organizations would be required to collect and report to the Internal Revenue Service the aggregate amount of donations received from foreign nationals. Tax-exempt organizations would also be required to include a separate line item to identify the aggregate amount of donations from foreign nationals who are from a foreign country designated as a country of concern. The list of these countries of concern currently includes China, North Korea, Russia, and Iran.

Restrictions on Foreign Money in Political Activity (H.R. 9771)

Under current law, foreign nationals are prohibited from donating money to U.S. campaigns directly. Under this proposal, a penalty would be created on large tax-exempt organizations who receive contributions from foreign nationals and then donate to a political committee or a 501(c)(4). There would also be a secondary excise tax on organizations who contribute to a political committee or 501(c)(4) organization if they have received a contribution or gift from a foreign national within the last two years. Under the proposal, should the organization make a third contribution to a political committee, their tax-exempt status will be suspended for two years. 

Fiscal Sponsorship Transparency Act (H.R. 9721)

This proposal would require tax-exempt organizations to disclose the following information regarding their fiscally sponsored projects;

• Name of each party;
• Amount of funds made available or transferred to the project;
• Description of the activities;
• Name of the individual designated as the principal officer managing the fiscal sponsorship arrangement; and
• Date on which the fiscal sponsorship began, and date on which it ended, if applicable.

There would also be an excise tax imposed on tax-exempt organizations who are acting as simply conduits for the third parties’ funds.

Treatment of Religious Organizations Act (H.R. 9722)

This proposal would amend IRC §501 to require that determinations of religious purpose, in regard to whether it qualifies as tax-exempt under §501(c)(3), be made without regard to an organization’s beliefs or practices, even if inconsistent with public policy. This amendment would apply to taxable years beginning after December 31, 2025. 

All four bills advanced out of committee without Democratic support. As a result, their prospects for Senate approval remain uncertain. AAFCPAs will continue to monitor legislation and provide updates as appropriate.

Putting This Into Practice: Nonprofit Audit and Tax

AAFCPAs works with nonprofit and other tax-exempt organizations to navigate complex tax, compliance, and operational matters, helping leadership teams and boards understand emerging developments and assess their potential impact. Our multidisciplinary team provides nonprofit audit, tax, accounting, and advisory solutions designed to support sound governance, regulatory compliance, and informed decision-making. Whether evaluating new reporting requirements, addressing tax-exempt organization matters, strengthening internal processes, or responding to changes in the legislative environment, we help organizations move forward with clarity and confidence.

These insights were contributed by Chris Consoletti, Esq., Consulting Attorney, Director.

Questions? Reach out to our author directly or your AAFCPAs partner.

AAFCPAs offers a wealth of resources on nonprofit finance and governance. Subscribe to get alerts and insights in your inbox.