Summary

Imposes monetary penalties and new reporting and IRS review requirements on certain tax-exempt colleges and universities that are the subject of federal court judgments finding violations of Title VI of the Civil Rights Act. Penalties equal the greater of $100,000 or 5% of aggregate administrative compensation for institutions required to file Form 990; penalties are assessed on the judgment date and refunded if the judgment is later vacated. Requires the IRS to review exempt status for institutions with more than two post-enactment Title VI judgments and requires affected institutions to disclose detailed information about any such judgments on their annual returns; state colleges and universities described in the tax code must also file returns reporting these determinations. Changes apply to determinations made after enactment.

Key Points

• Creates a new IRC penalty for tax-exempt colleges/universities found by federal courts to have violated Title VI.
• Penalty equals the greater of $100,000 or 5% of aggregate administrative compensation for filers required under section 6033(a).
• Penalty liability arises on the date of the court judgment and must be refunded if the judgment is later vacated or reversed.
• IRS must review an institution's tax-exempt status after more than two post-enactment Title VI judgments.
• Affected institutions must report detailed information about Title VI judgments on their annual information returns.
• State colleges and universities specified in the Code must file returns reporting any such determinations for years with a judgment.
• Assessment and refund timing rules in sections 6501 and 6511 do not apply to these penalties or refunds.
• Treasury may combine multiple judgments from the same facts into a single determination for penalty purposes.
• Provisions apply only to determinations made after enactment; short-title and clerical updates are included.

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