House Tax Panel Advances Four Bills Targeting Nonprofits

This week, the House Ways and Means Committee advanced four Republican-sponsored bills affecting the tax-exempt sector along party lines; the actions highlight ongoing congressional scrutiny of nonprofit transparency, foreign funding, fiscal sponsorship and "religious liberty." 

The legislation would impose new reporting requirements on many tax-exempt organizations, including disclosure of foreign contributions on Internal Revenue Service (IRS) Form 990; additional transparency around fiscal sponsorship arrangements and new penalties for certain organizations that receive foreign donations and subsequently make political contributions. A fourth bill would prohibit the IRS from denying or revoking tax-exempt status based on an organization's religious beliefs regarding equal rights afforded to all, including marriage, sexuality or gender identity.

Committee Chairman Jason Smith (R-MO) said the legislation is intended to increase transparency, prevent foreign influence in American politics, strengthen oversight of the tax-exempt sector and protect "religious freedom." During the markup, Smith cited concerns about foreign funding, fiscal sponsorship arrangements and what he described as insufficient public disclosure within portions of the nonprofit sector.

"Too much of the tax-exempt sector operates in darkness, deliberately hiding in the shadows to avoid scrutiny,” Smith remarked. "This committee has uncovered incidents of organizations abusing their generous tax benefits while seeking to divide Americans, sow chaos in our communities and manipulate American politics and public life.” 

The four bills approved by the committee are:

• • H.R. 9772, the Foreign Funding Transparency Act, requiring many tax-exempt organizations to report foreign contributions, including funding from designated "foreign countries of concern," on their annual Form 990.
  • H.R. 9721, the Fiscal Sponsorship Transparency Act of 2026, establishing new disclosure requirements for certain fiscal sponsorship arrangements and imposing excise taxes and other penalties on organizations that fail to exercise sufficient discretion and control over sponsored funds.
  • H.R. 9771, the Stopping Foreign Influence in Elections Act of 2026, creating new tax penalties for certain tax-exempt organizations that receive foreign contributions and subsequently make contributions to political committees or 501(c)(4) organizations.
  • H.R. 9722, the Fair Treatment of Religious Organizations Act of 2026, prohibiting the IRS from denying or revoking tax-exempt status based on specified religious beliefs and expanding statutory protections for religious organizations.

The bills now await consideration by the full House. ASAE, the Community Impact Coalition, of which OSAP President & CEO Jarrod A. Clabaugh, CAE, serves on the steering committee, and OSAP will continue monitoring the legislation and evaluating its potential implications for the association community.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.