,i #aaith ,,congress #b;d ,session ,h4 ,r4 #igba ,,in ,,the ,,house ,,of ,,representatives ,july #af1 #bjbf,mr4 ,smucker introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to require reporting by certain charitable organizations relating to fiscal sponsorship arrangements1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,fiscal ,sponsorship ,transparency ,act of #bjbf4 #b4 ,treatment of fiscal sponsorship arrangements 7a7 ,reporting requirements 7#a7 ,in general ,section #fjcc7;b7 of the ,internal ,revenue ,code of #aihf is amended by striking and at the end of paragraph 7#ae77;,b71 by redesignating paragraph 7#af7 as paragraph 7#ag71 and by inserting after paragraph 7#ae7 the following new paragraph3 7#af7 with respect to each fiscal sponsorship arrangement of the organization in effect during the taxable year-- 7,a7 the name of each party 7other than any individuals7 to such arrangement1 7,b7 7i7 in the case of a fiscal sponsorship arrangement described in subsection 7p77#a77;,b77ii71 the aggregate amounts made available during the taxable year under such arrangement for the specifically identified project described in such subsection1 7ii7 in the case of any other fiscal sponsorship arrangement1 the aggregate amounts transferred during the taxable year under such arrangement to the person on whose behalf the organization receives and administers amounts1 and 7iii7 a description of the activities to which the amounts so made available or transferred1 as the case may be1 relate1 7,c7 the name of an individual designated as the principal officer managing such fiscal sponsorship arrangement on behalf of the organization1 and 7,d7 the date on which the arrangement began and1 if applicable1 ended1 and 4 7#b7 ,fiscal sponsorship arrangement ,section #fjcc of such ,code is amended by redesignating subsection 7p7 as subsection 7q7 and by inserting after subsection 7o7 the following new subsection3 7p7 ,fiscal sponsorship arrangement 7#a7 ,in general ,for purposes of this section1 the term fiscal sponsorship arrangement means1 with respect to an applicable organization1 an arrangement-- 7,a7 between the organization and another person that is not exempt from tax under section #eja7;a71 7,b7 under which-- 7i7 the organization agrees for consideration to receive and administer amounts on behalf of such other person1 or 7ii7 7,i7 the organization publicly solicits amounts for carrying on a specifically identified project that is represented as a means to further an exempt purpose of the organization1 7,,ii7 the organization agrees to receive and administer amounts directed to such project and make such amounts available for the organization to carry out the project 7less an amount specified in the arrangement to be used by the organization for other purposes71 and 7,,iii7 either the organization or such other person may terminate the arrangement1 and 7,c7 under which the organization retains discretion and control over such amounts to ensure such amounts are used to further an exempt purpose of the organization4 7#b7 ,special rule for otherwise disregarded entities ,for purposes of paragraph 7#a71 any entity-- 7,a7 which is owned 7directly or indirectly7 by the organization1 and 7,b7 which would 7but for this paragraph7 be disregarded as an entity separate from its owner1 shall be treated as an entity that is separate from its owner and that is not exempt from tax under section #eja7;a74 7#c7 ,applicable organization ,for purposes of this subsection1 the term applicable organization means an organization to which subsection 7b7 applies1 other than-- 7,a7 a private foundation 7as defined in section #eji7;a771 or 7,b7 a donor advised fund 7as defined in section #diff7;d77#b774 4 7b7 ,no deduction allowed for contributions under improper conduit arrangement ,section #agj7;c7 of such ,code is amended by adding at the end the following3 ,the term charitable contribution shall not include any contribution or gift made under an improper conduit arrangement 7as defined in section #difj;,a7d77#b7744 7c7 ,taxes imposed on improper conduit arrangements 7#a7 ,in general ,subchapter ,d of chapter #db of such ,code is amended by adding at the end the following new section3 #difj;,a4 ,taxes on improper conduit arrangements 7a7 ,initial taxes 7#a7 ,on the organization ,in the case of a specified tax-exempt organization1 there is hereby imposed on any amount transferred pursuant to an improper conduit arrangement a tax equal to #bj percent of the amount thereof4 ,the tax imposed by this paragraph shall be paid by the organization4 7#b7 ,on the management ,in any case in which a tax is imposed by paragraph 7#a7 with respect to a transfer pursuant to an improper conduit arrangement1 there is hereby imposed on the agreement of any organization manager to the making of such transfer1 knowing such arrangement is an improper conduit arrangement1 a tax equal to #e percent of the amount thereof1 unless such agreement is not willful and is due to reasonable cause4 ,the tax imposed by this paragraph shall be paid by the organization manager who agreed to the transfer4 7b7 ,additional taxes 7#a7 ,on the organization ,in any case in which an initial tax is imposed by subsection 7a77#a7 with respect to a transfer pursuant to an improper conduit arrangement and such transfer is not corrected within the taxable period1 there is hereby imposed a tax equal to #ajj percent of the amount of the transfer4 ,the tax imposed by this paragraph shall be paid by the organization4 7#b7 ,on the management ,in any case in which an additional tax is imposed by paragraph 7#a71 if an organization manager refused to agree to part or all of the correction1 there is hereby imposed a tax equal to #ej percent of the amount of the transfer4 ,the tax imposed by this paragraph shall be paid by any organization manager who refused to agree to part or all of the correction4 7c7 ,special rules ,for purposes of this section-- 7#a7 ,joint and several liability ,if more than one person is liable under subsection 7a77#b7 or 7b77#b7 with respect to a transfer1 all such persons shall be jointly and severally liable under such paragraph with respect to such transfer4 7#b7 ,limit for management ,with respect to any improper conduit arrangement1 the maximum amount of the tax imposed by subsection 7a77#b7 shall not exceed #aj1jjj1 and the maximum amount of the tax imposed by subsection 7b77#b7 shall not exceed #bj1jjj4 7d7 ,definitions ,for purposes of this section-- 7#a7 ,specified tax-exempt organization ,the term specified tax-exempt organization means-- 7,a7 an organization that is exempt from tax under section #eja7;a7 and is described in section #eja7;c77#c71 or 7,b7 any organization which was described in clause 7i7 at any time during the #e-year period ending on the date of the transfer pursuant to an improper conduit arrangement4 7#b7 ,improper conduit arrangement ,the term improper conduit arrangement means1 with respect to a specified tax-exempt organization1 an arrangement 7express or implied7 with another person under which-- 7,a7 contributions are solicited or received to be transferred to a specifically identified person not exempt from tax under section #eja7;a71 and 7,b7 the organization fails to exercise discretion and control over the use of the funds4 7#c7 ,correction ,the terms correction and correct mean1 with respect to any transfer to which this section applies1 recovering part or all of the transfer to the extent recovery is possible1 and where full recovery is not possible such additional corrective action as is prescribed by the ,secretary by regulations4 7#d7 ,taxable period ,the term taxable period means1 with respect to any transfer under an improper conduit arrangement1 the period beginning with the date on which the transfer occurs and ending on the earlier of-- 7,a7 the date of mailing of a notice of deficiency with respect to the tax imposed by subsection 7a77#a7 under section #fbab1 or 7,b7 the date on which tax imposed by subsection 7a77#a7 is assessed4 7#e7 ,organization manager ,the term organization manager means1 with respect to any specified tax-exempt organization1 any officer1 director1 or trustee of such organization 7or any individual having powers or responsibilities similar to those of officers1 directors1 or trustees of the organization74 4 7#b7 ,clerical amendment ,the table of sections for subchapter ,d of chapter #db of such ,code is amended by adding at the end the following new item3 ,sec4 #difj;,a4 ,taxes on improper conduit arrangements4 4 7d7 ,regulations ,the ,secretary of the ,treasury shall prescribe such regulations as may be necessary or appropriate to clarify-- 7#a7 arrangements to which section #fjcc7p77#a7 of the ,internal ,revenue ,code of #aihf 7as added by this ,act7 applies1 and 7#b7 what constitutes discretion and control for purposes of sections #fjcc7p77#a77;,c77i7 and #difj;,a7d77#b77;,b7 of such ,code 7as added by this ,act74 7e7 ,effective date ,the amendments made by this subsection shall apply to taxable years beginning after ,december #ca1 #bjbg4