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Creates new tax-code penalties and a revocation rule for certain tax-exempt organizations that pass money to political committees after receiving funds from foreign nationals. Specified §501(c) organizations with annual gross receipts of at least $200,000 or assets of at least $500,000 face a penalty equal to twice any political contribution made after receiving any foreign national gift during an 8-year testing period, and will lose tax-exempt status if they make a third such contribution. The rule uses Federal Election Campaign Act definitions for foreign nationals and political committees, applies to contributions made on or after January 1, 2026, and limits the lookback to the eight years before the contribution (excluding time before enactment). Organizations previously revoked under the new rule are treated as exempt for applying penalties to their first three qualifying contributions.
The bill strengthens tools to deter foreign influence in U.S. politics by penalizing foreign-sourced contributions tied to political activity, but does so at the cost of greater penalties, compliance burdens, and a likely chilling effect on lawful nonprofit funding and advocacy.
Nonprofits and voters: the bill reduces the risk that foreign-sourced funds are routed to U.S. political committees, lowering foreign influence in U.S. elections.
Tax authorities and the public: tying penalties to tax-exempt status gives IRS/treasury greater enforcement leverage to deter illicit foreign-funded political spending.
Nonprofits (and the programs they fund): organizations that unknowingly receive foreign donations risk large monetary penalties (up to twice the contribution) and potential loss of tax-exempt status after repeated violations, which can materially reduce funds available for charitable work.
Nonprofits and donors: the requirement to screen donor origins over an 8-year lookback increases compliance costs and administrative burden for organizations, diverting staff time and resources to recordkeeping and verification.
Civic organizations, donors, and public debate: fear of penalties may chill lawful political advocacy and discourage international donations for nonpolitical work, narrowing civic space and information flow.
Introduced March 21, 2025 by Nicole Malliotakis · Last progress March 21, 2025