Fiscal Sponsorship Transparency Act

Summary#

This bill would change federal tax reporting and add taxes related to "fiscal sponsorship" arrangements. It requires certain tax-exempt charitable organizations to report details about any fiscal sponsorships they had during a tax year. It defines what counts as a fiscal sponsorship arrangement and treats some formerly ignored subsidiary entities as separate. The bill also says donations made under an "improper conduit arrangement" are not charitable contributions for tax deduction purposes. It creates a new tax section that imposes taxes on amounts transferred under improper conduit arrangements: an initial 20% tax on the organization and a 5% tax on an organization manager who agreed to the transfer (with limits). If the transfer is not corrected in time, the organization can owe 100% of the transferred amount and managers who refused corrective action can owe 50% (with caps on manager taxes). The Treasury Secretary must write rules to explain which arrangements are covered and what counts as "discretion and control." The changes take effect for taxable years beginning after December 31, 2027.

What it means for you#

• If you run or work for a tax-exempt charity (other than a private foundation or a donor advised fund), and your organization acts as a fiscal sponsor, you will have to report: the non-individual parties to each arrangement; the total amounts made available or transferred for the project; a description of the activities paid for; the principal officer who manages the arrangement; and the start and end dates of the arrangement.
• The bill defines a fiscal sponsorship arrangement as one where the charity receives and administers funds for a non-exempt person or where the charity solicits funds for a specific project and agrees to receive and make funds available, while keeping discretion and control over funds.
• Donors: a gift given under an "improper conduit arrangement" (where funds are solicited to be passed to a non-exempt identified person and the charity lacks control over use) would not count as a deductible charitable contribution.
• Organization leaders: officers, directors, or trustees (and similar persons) may face personal tax liability if they agreed to transfers under an improper conduit arrangement or if they refuse to cooperate with corrective actions.

Expenses#

No publicly available information on estimated costs, budget effects, or revenue estimates is included in the bill text or provided materials.

Proponents' View#

No publicly available information on supporters' official statements or claims is included in the provided materials.

Opponents' View#

No publicly available information on opponents' official statements or objections is included in the provided materials.