Putting Trust in Transparency Act

Bill Number

H.R. 2841

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-04-10: Referred to the House Committee on Ways and Means.

Last Updated

2025-05-24T08:05:49Z

AI-Generated Summary

Purpose of the Legislation

The "Putting Trust in Transparency Act" (H.R. 2841) aims to increase transparency in how nonprofit organizations classified as 501(c) under the tax code—such as charities and advocacy groups—use federal funding. It requires public disclosure of major donors to these organizations if they receive any federal money, allowing lawmakers and the public to better oversee the influence of private contributions on federally supported activities.

Key Provisions

• Findings and Sense of Congress:
• Recognizes that nonprofits (called nongovernmental organizations or NGOs) help distribute federal resources domestically and internationally.
• Notes a 2025 executive memorandum requiring review of federal funding to NGOs but not their private funding sources.
• Highlights that private donations are already reported to the IRS via Form 990 Schedule B (a tax form listing contributors giving $5,000 or more), but this information is not widely shared.
• Asserts Congress's constitutional authority (under Article I, Section 8) to regulate taxpayer dollars and oversee NGOs.
• States that NGOs receiving federal funds should face the same fiscal oversight as government agencies, as they effectively act on behalf of the U.S. government.
• Public Disclosure Requirement:
• The IRS must publicly release Schedule B of Form 990 for any 501(c) organization that receives federal funding in a tax year.
• Disclosure occurs within 60 days of processing the form and includes unredacted (unmasked) names, ZIP codes, and total contribution amounts of donors.
• Penalties for Non-Compliance:
• If a qualifying organization fails to file Schedule B by the tax return due date, the IRS sends a notice warning of potential revocation of tax-exempt status.
• Failure to file within 60 days of the notice results in automatic revocation of the organization's tax-exempt status.
• The IRS must publish and maintain a public list of revoked organizations.
• Reinstatement Process:
• Affected organizations can apply for reinstatement.
• Retroactive reinstatement (restoring status as if the revocation never happened) is allowed if the organization shows good cause for the delay.
• Effective Date:
• Applies to tax returns filed for years beginning after the bill's enactment.

Significant Changes to Existing Law

• Amendments to Internal Revenue Code (1986):
• Modifies Section 6104 to require public disclosure of donor information on Schedule B for federally funded 501(c) organizations, overriding current rules that keep donor names and addresses private to protect anonymity.
• Adds to Section 6033(j) a new revocation process specifically for failing to file Schedule B, building on existing penalties for incomplete tax filings but targeting this form directly.
• These changes shift from confidentiality of donor lists (a long-standing protection for nonprofits) to mandatory transparency for organizations tied to federal funds, while expanding revocation consequences to include loss of tax-exempt status without prior automatic grace periods for this specific filing.

Potential Impacts

• On Government Agencies: Enhances congressional and executive oversight of federal spending by revealing private influences on NGOs, potentially leading to more informed funding decisions and reduced risks of misuse of taxpayer dollars.
• On Citizens: Provides public access to donor information, promoting accountability and allowing taxpayers to see who funds organizations that receive government support, which could build trust but also raise privacy concerns for donors.
• On International Relations: May affect U.S.-funded NGOs operating abroad by exposing their private backers, potentially influencing diplomatic efforts if donors have international ties or if disclosure deters contributions to sensitive programs.
• Overall, it could discourage some private donations to federally involved nonprofits due to publicity risks, while encouraging more rigorous internal tracking of funds.

Main Stakeholders Affected

• 501(c) Nonprofits/NGOs: Directly impacted, as those receiving any federal funding must disclose donors and risk losing tax-exempt status for non-compliance; independent NGOs without federal ties remain unaffected.
• Donors to These Organizations: Face exposure of their names, ZIP codes, and contribution amounts, which could affect their privacy and willingness to give.
• Internal Revenue Service (IRS): Gains new responsibilities for processing, disclosing, notifying, revoking statuses, and maintaining public lists, increasing administrative workload.
• Congress and Taxpayers: Benefit from greater transparency to oversee federal spending and NGO activities.
• Executive Agencies: Indirectly affected through better visibility into NGO funding during grant reviews.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Introduces stricter enforcement on tax-exempt organizations by tying disclosure and filing requirements to federal funding receipt, potentially leading to more IRS audits or litigation over what constitutes "federal funding." The reinstatement provision offers some flexibility but could result in disputes over "good cause."
• Constitutional Implications: Balances Congress's power to regulate taxation and spending (Article I, Section 8) against potential First Amendment protections for freedom of association, as public donor disclosure might chill anonymous contributions. However, the bill limits this to federally funded entities, framing it as a condition of receiving public money rather than a broad restriction.
• Political Implications: Promotes fiscal accountability for NGOs, which could appeal to efforts to curb perceived undue influence in policy or aid distribution, but may spark debates over donor privacy rights and the scope of government oversight into private giving. As introduced by Republican representatives, it reflects priorities on transparency in federal expenditures without altering core tax-exempt rules for non-federally funded groups.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Gosar, Paul A. [R-AZ-9]

Cosponsors (10)

Rep. Biggs, Andy [R-AZ-5], Rep. Brecheen, Josh [R-OK-2], Rep. Burchett, Tim [R-TN-2], Rep. Crane, Elijah [R-AZ-2], Rep. Nehls, Troy E. [R-TX-22], Rep. Norman, Ralph [R-SC-5], Rep. Weber, Randy K. Sr. [R-TX-14], Rep. Gill, Brandon [R-TX-26], Rep. Boebert, Lauren [R-CO-4], Rep. Luna, Anna Paulina [R-FL-13]

Recent Actions

• 2025-04-10: Referred to the House Committee on Ways and Means.
• 2025-04-10: Introduced in House
• 2025-04-10: Introduced in House

Bill Versions

• Putting Trust in Transparency Act — issued 2025-04-10 — PDF (5 pages)