SPONSOR Act
- Bill Number
- S. 3942
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-26: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-03-31T21:23:22Z
AI-Generated Summary
Purpose The legislation aims to hold tax-exempt charitable organizations accountable for funds they manage as fiscal sponsors, particularly when those funds support activities involving terrorism, interference with constitutional rights, or disruption of commerce.
Key Provisions
- Amends Section 501 of the Internal Revenue Code of 1986 by adding a new subsection (s).
- Requires a 501(c)(3) organization to assume criminal liability for any fiscal sponsorship and civil liability for covered activities if it receives donor contributions eligible for tax deductions under Section 170.
- Defines covered activities as:
- Knowingly aiding or conspiring with designated foreign terrorist organizations.
- Using force or credible threats to interfere with constitutional rights.
- Using force or physical obstruction to block interstate or intrastate commerce.
- Defines fiscal sponsorship as an arrangement where a 501(c)(3) organization receives and controls funds for a non-tax-exempt project while ensuring compliance with its charitable purposes.
- Establishes a presumption that the sponsoring organization is responsible for legal compliance of sponsored funds.
- Allows defenses based on due diligence and reasonable oversight.
Significant Changes to Existing Law
- Introduces new liability rules for 501(c)(3) organizations acting as fiscal sponsors, extending responsibility beyond traditional tax-exempt standards.
- Creates direct ties between donor tax deductions and organizational liability for downstream activities.
- Adds specific civil and criminal exposure for activities previously addressed through other statutes, such as anti-terrorism laws or civil rights protections.
Potential Impacts
- On government agencies: Increases enforcement roles for the Internal Revenue Service in monitoring fiscal sponsorships and potential coordination with law enforcement on covered activities.
- On citizens: May affect donors to charitable organizations by heightening scrutiny of how contributions are used, potentially influencing giving patterns.
- On international relations: Strengthens mechanisms to address U.S.-based support for foreign terrorist organizations through charitable channels.
Main Stakeholders Affected
- 501(c)(3) charitable organizations that serve as fiscal sponsors.
- Donors contributing to such organizations with tax deduction expectations.
- Non-exempt projects or groups receiving sponsored funds.
- Federal agencies including the IRS and Department of Justice.
Notable Legal, Constitutional, or Political Implications
- Raises questions about the balance between tax-exempt status protections and accountability for third-party activities.
- May intersect with First Amendment considerations regarding speech, association, and charitable giving.
- Introduces a presumption of responsibility that shifts the burden toward organizations to demonstrate oversight, potentially affecting how fiscal sponsorship arrangements are structured.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2026-02-26: Read twice and referred to the Committee on Finance.
- 2026-02-26: Introduced in Senate
Bill Versions
- Stop Proxy Organizations Nurturing Subversive Operations and Riots Act — issued 2026-02-26 — PDF (4 pages)