[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1684 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 1684
To require audits of institutions with respect to disclosures of
foreign gifts, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 8, 2025
Mr. Cruz introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To require audits of institutions with respect to disclosures of
foreign gifts, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. AUDITS OF INSTITUTIONS WITH RESPECT TO DISCLOSURES OF
FOREIGN GIFTS.
Section 117 of the Higher Education Act of 1965 (20 U.S.C. 1011f)
is amended--
(1) by redesignating subsections (g) and (h) as subsections
(h) and (i), respectively; and
(2) by inserting after subsection (f) the following:
``(g) Audit.--
``(1) In general.--Beginning not later than 60 days after
the date of enactment of this subsection, and every 2 years
thereafter, the Secretary shall conduct an audit of no fewer
than 30 institutions to assess compliance with the reporting
requirements under this section.
``(2) Determination of institutions to audit.--In
determining which institutions to audit under this subsection,
the Secretary shall prioritize audits for institutions that
meet 1 or more of the following criteria:
``(A) Institutions that are in the top 1 percent
when the endowments of all institutions are ranked from
largest to smallest.
``(B) Institutions with a previous history of
receiving a substantial gift from, or entering into a
substantial contract with, a foreign source.
``(C) Institutions that have previously been
noncompliant with the requirements of this section.
``(D) Institutions that publicly report receiving
contributions from a foreign entity of concern (as
defined in section 10612(a) of the Research and
Development, Competition, and Innovation Act (42 U.S.C.
19221(a))).
``(E) Institutions that have a formal agreement,
including a memorandum of understanding, with a Federal
agency.
``(3) Contents of audit.--As part of each audit conducted
under this subsection, the Secretary shall determine--
``(A) if the institution was in compliance with
requirements of this section for the 2 reporting years
prior to the year in which the audit is conducted; and
``(B) in the case of noncompliance, the gifts from,
or contracts with, foreign sources whose amounts the
institution under reported or over reported in the
prior 2 reporting years, along with the following
information for each of these gifts or contracts:
``(i) The amount under reported or over
reported.
``(ii) The foreign source.
``(iii) The country of origin.
``(iv) The receipt date or contract start
and end dates.
``(4) Report.--Not later than 30 days after the date on
which the audit under this subsection is completed, the
Secretary shall--
``(A) submit to Congress a report on the results of
the audit; and
``(B) make the report described in subparagraph
(A)--
``(i) available to the Speaker of the
House, the majority and minority leaders of the
House of Representatives, the majority and
minority leaders of the Senate, the Chair and
Ranking Member of the committee and each
subcommittee of jurisdiction in the House of
Representatives and the Senate, and any other
Member of Congress who requests the report; and
``(ii) publicly available on the Department
of Education website.''.
SEC. 2. EXCISE TAXES ON CERTAIN CONTRIBUTIONS BY FOREIGN ENTITIES.
(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
sections:
``SEC. 4969. EXCISE TAX ON CONTRIBUTIONS TO COLLEGES AND UNIVERSITIES
BY FOREIGN COUNTRIES OF CONCERN.
``(a) Tax Imposed.--There is hereby imposed on each applicable
institution for the taxable year a tax equal to 300 percent of the
income of such institution received from any foreign country of concern
during the taxable year.
``(b) Applicable Institution.--For purposes of this section, the
term `applicable institution' means an eligible educational institution
(as defined in section 25A(f)(2))--
``(1) which had at least 500 tuition-paying students during
the preceding taxable year, and
``(2) more than 50 percent of the tuition-paying students
of which are located in the United States,
determined according to the rules of section 4968(b)(2).
``(c) Foreign Country of Concern.--For purposes of this section,
the term `foreign country of concern' has the meaning given such term
by section 10612(a) of the Research and Development, Competition, and
Innovation Act.
``(d) Related Organizations.--Rules similar to the rules of section
4968(d) shall apply in determining income of an applicable institution
for purposes of this section.
``SEC. 4970. EXCISE TAX ON FAILURE TO REPORT CONTRIBUTIONS BY FOREIGN
ENTITIES.
``(a) Tax Imposed.--There is hereby imposed on each institution for
the taxable year a tax equal to 110 percent of the unreported foreign
funding received by such institution during the taxable year.
``(b) Unreported Foreign Funding.--For purposes of this section,
the term `unreported foreign funding' means an amount equal to the
value of any gift or contract, or any amount received pursuant to a
change in ownership or control, required to be reported under section
117 of the Higher Education Act of 1965 which is determined not to have
been so reported by an audit under subsection (g) of such section.
``(c) Timing of Tax.--The tax imposed by subsection (a) shall be
due not later than 180 days after the institution is notified of the
results of the audit under section 117(g) of the Higher Education Act
of 1965.
``(d) Coordination With Section 4969.--In the case of any
unreported foreign funding which is received from a foreign country of
concern (as defined in section 4969(c)), the tax imposed by subsection
(a) shall be in addition to any tax imposed by section 4969 on such
funding.
``(e) Institution; Other Terms.--For purposes of this section, the
term `institution', and any other term used in this section which is
used in section 117 of the Higher Education Act of 1965, has the same
meaning as when used in such section.''.
(b) Clerical Amendments.--
(1) The table of sections for subchapter H of chapter 42 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new items:
``Sec. 4969. Excise tax on contributions to colleges and universities
by foreign countries of concern.
``Sec. 4970. Excise tax on failure to report contributions by foreign
entities.''.
(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 of'' and inserting ``Taxes
on''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date which is 60 days after
the date of the enactment of this Act.
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