[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5234 Introduced in Senate (IS)]
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118th CONGRESS
2d Session
S. 5234
To amend the Internal Revenue Code of 1986 to impose an excise tax on
certain investments of private colleges and universities.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 25, 2024
Mr. Ricketts (for himself, Mr. Cotton, and Mrs. Fischer) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to impose an excise tax on
certain investments of private colleges and universities.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Endowments from Our
Adversaries Act''.
SEC. 2. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND
UNIVERSITIES.
(a) In General.--Subchapter H of chapter 42 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 4969. EXCISE TAX ON CERTAIN INVESTMENTS OF PRIVATE COLLEGES AND
UNIVERSITIES.
``(a) Tax on Acquisition of Listed Investments.--In the case of any
specified educational institution which acquires (directly or
indirectly through any chain of ownership) one or more listed
investments during any taxable year, there is hereby imposed for such
taxable year a tax equal to 50 percent of the fair market values of
such investments determined as of the dates of such acquisitions.
``(b) Tax on Net Income From 1-Year Listed Investments.--
``(1) In general.--There is hereby imposed on each
specified educational institution for the taxable year a tax
equal to 100 percent of the excess (if any) of--
``(A) the sum of--
``(i) all income received with respect to
any 1-year listed investment during such
taxable year, plus
``(ii) all gains recognized with respect to
the sale or other disposition of any 1-year
listed investments during such taxable year,
over
``(B) the sum of--
``(i) all deductions properly allocable to
income described in subparagraph (A)(i), plus
``(ii) all losses recognized with respect
to the sale or other disposition of any 1-year
listed investments during such taxable year.
``(2) 1-year listed investment.--For purposes of this
section, with respect to any income received or gain or loss
recognized, the term `1-year listed investment' means any
listed investment which was such a listed investment at all
times during the 1-year period ending on the date such income
was received or such gain or loss was recognized.
``(c) Listed Investment.--For purposes of this section--
``(1) In general.--The term `listed investment' means any
specified interest with respect to any person listed on one or
more of--
``(A) the Entity List maintained by the Secretary
of Commerce,
``(B) the Military End User (MEU) List maintained
by the Secretary of Commerce,
``(C) the Unverified List maintained by the
Secretary of Commerce, or
``(D) the list maintained by the Federal
Communications Commission of equipment and services
covered by section 2 of the Secure and Trusted
Communications Networks Act of 2019 (commonly referred
to as the FCC Covered List).
``(2) Listed persons list.--The Secretary shall establish
(not later than 60 days after the date of the enactment of this
section), update, and maintain a list of the persons which are
listed on one or more of the lists described in paragraph (1).
``(3) Specified interest.--The term `specified interest'
means, with respect to any person--
``(A) stock or any other equity or profits interest
of such person,
``(B) debt issued by such person, or
``(C) any contract or derivative with respect to
any interest described in subparagraph (A) or (B).
``(4) Inclusion of certain pooled funds.--
``(A) In general.--Any specified interest acquired
through a regulated investment company, exchange traded
fund, or any other pooled investment shall not fail to
be treated as acquired through a chain of ownership
described in subsection (a).
``(B) Certifications of pooled funds.--The
Secretary shall establish procedures under which
regulated investment companies, exchange traded funds,
and other pooled investments may be certified by the
Secretary as not holding any listed investments.
``(d) Specified Educational Institution.--For purposes of this
section--
``(1) In general.--The term `specified educational
institution' means, with respect to any taxable year, any
eligible educational institution (as defined in section
25A(f)(2))--
``(A) which is not described in the first sentence
of section 511(a)(2)(B) (relating to State colleges and
universities), and
``(B) the aggregate fair market value of the assets
of which at the end of the preceding taxable year
(other than those assets which are used directly in
carrying out the institution's exempt purpose) is in
excess of $1,000,000,000.
``(2) Treatment of related organizations.--For purposes of
subsections (a) and (b), assets held by any related
organization (as defined in section 4968(d)(2)) with respect to
an educational institution shall be treated as held by such
educational institution, except that--
``(A) such assets shall not be taken into account
with respect to more than 1 educational institution,
and
``(B) unless such organization is controlled by
such institution or is described in section 509(a)(3)
with respect to such institution, assets which are not
intended or available for the use or benefit of such
educational institution shall not be taken into
account.
``(e) Valuation of Debt.--For purposes of subsection (a), the fair
market value of any debt shall be treated as being the principal amount
of such debt.
``(f) Regulations.--The Secretary may issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance
providing for the proper application of this section with respect to
institutionally related foundations and pooled investments.''.
(b) Clerical Amendments.--
(1) The table of sections for subchapter H of chapter 42 of
such Code is amended by adding at the end the following new
item:
``Sec. 4969. Excise tax on certain investments of private colleges and
universities.''.
(2) The heading of subchapter H of chapter 42 of such Code
(and the item relating to such subchapter in the table of
subchapters for such chapter) are each amended by striking
``Tax Based on Investment Income'' and inserting ``Taxes Based
on Investments''.
(c) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years ending after the earlier of--
(A) the end of the first calendar year beginning
after the date of the enactment of this Act, or
(B) the end of the 1-year period beginning on the
date on which the Secretary of the Treasury (or the
Secretary's delegate) establishes the listed persons
list under section 4969(c)(2) of the Internal Revenue
Code of 1986 (as added by this section).
(2) Certain prior acquisitions.--Section 4969(a) of the
Internal Revenue Code of 1986 (as added by this section) shall
not apply to investments acquired before the end of the
calendar year referred to in paragraph (1)(A).
(3) Certain prior income and gains.--Section 4969(b) of the
Internal Revenue Code of 1986 (as added by this section) shall
not apply to income received, or gains or losses recognized,
before the end of the 1-year period referred to in paragraph
(1)(B).
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