[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10330 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 10330
To amend the Internal Revenue Code of 1986 to impose restrictions on
university tax inquiries and examinations, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 10, 2026
Ms. Adams (for herself, Mr. Raskin, Ms. Wilson of Florida, Ms. Norton,
Ms. Clarke of New York, Mr. Mannion, Mr. Doggett, Mrs. Grijalva, Ms.
Jayapal, Mrs. McBath, Ms. Chu, Mr. Davis of Illinois, Ms. Simon, Ms.
McCollum, Mr. Carter of Louisiana, Mrs. Hayes, Mr. Takano, and Mr.
Carson) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to impose restrictions on
university tax inquiries and examinations, 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. SHORT TITLE.
This Act may be cited as the ``Higher Education Oversight for
Nonprofits Ensuring Standards and Transparency Act''.
SEC. 2. RESTRICTIONS ON UNIVERSITY TAX INQUIRIES AND EXAMINATIONS.
(a) In General.--Subchapter A of chapter 78 of the Internal Revenue
Code of 1986 is amended--
(1) by redesignating section 7613 as section 7614, and
(2) by inserting after section 7612 the following new
section:
``SEC. 7613. RESTRICTIONS ON UNIVERSITY TAX INQUIRIES AND EXAMINATIONS.
``(a) Restrictions on Inquiries.--
``(1) In general.--The Secretary may begin a university tax
inquiry only if the requirements of paragraphs (2) and (3) have
been met.
``(2) Reasonable belief requirement.--The requirement of
this paragraph is met with respect to any university tax
inquiry if--
``(A) in the case of such inquiry serving as a
basis for determining whether any income derived by the
university is excludable from taxation under section
115, an appropriate high-level Treasury official
reasonably believes (on the basis of facts and
circumstances recorded in writing) that any such income
may not be so excluded,
``(B) in the case of such inquiry serving as a
basis for determining whether the university is exempt
from taxation under section 501(a), an appropriate
high-level Treasury official reasonably believes (on
the basis of facts and circumstances recorded in
writing) that such university may not be so exempt, and
``(C) in the case of such inquiry serving as a
basis for determining whether the university is
carrying on an unrelated trade or business (within the
meaning of section 513) or otherwise engaged in
activities which may be subject to taxation under this
title, an appropriate high-level Treasury official
reasonably believes (on the basis of facts and
circumstances recorded in writing) that such university
may be carrying on such an unrelated trade or business
or engaged in such activities.
``(3) Inquiry notice requirement.--
``(A) In general.--The requirement of this
paragraph is met with respect to any university tax
inquiry if, before beginning such inquiry, the
Secretary provides written notice to the university of
the beginning of such inquiry.
``(B) Contents of inquiry notice.--The notice
required by this paragraph shall include--
``(i) an explanation of--
``(I) the concerns which gave rise
to such inquiry, and
``(II) the general subject matter
of such inquiry, and
``(ii) a general explanation of the
applicable--
``(I) administrative and
constitutional provisions with respect
to such inquiry (including the right to
a conference with the Secretary before
any examination of university business
records or university activities), and
``(II) provisions of this title
which authorize such inquiry or which
may be otherwise involved in such
inquiry.
``(b) Restrictions on Examinations.--
``(1) In general.--
``(A) Preconditions.--The Secretary may begin a
university tax examination only--
``(i) following the beginning of a
university tax inquiry under subsection (a)
into the university to be examined,
``(ii) subject to subparagraph (B), and
``(iii) if the requirement of paragraph (2)
has been met.
``(B) Business records and activities.--A
university tax examination may be made only--
``(i) in the case of university business
records, to the extent necessary to determine
the liability for, and the amount of, any
taxation imposed by this title, and
``(ii) in the case of university
activities, to the extent necessary to
determine whether a university claiming--
``(I) any income to be excludable
from taxation under section 115 is so
excludable, or
``(II) to be exempt from taxation
under section 501(a) is so exempt.
``(2) Notice of examination; opportunity for conference.--
The requirement of this paragraph is met with respect to any
university tax examination if--
``(A) at least 15 days before the beginning of such
examination, the Secretary provides the notice
described in paragraph (3) to both the university and
the appropriate Division Counsel of the Internal
Revenue Service, and
``(B) the university has a reasonable time to
participate in a conference described in paragraph
(3)(A)(iii), but only if the university requests such a
conference before the beginning of the examination.
``(3) Contents of examination notice, etc.--
``(A) In general.--The notice described in this
paragraph is a written notice which includes--
``(i) a copy of the university tax inquiry
notice provided to the university under
subsection (a),
``(ii) a description of the university
business records and university activities
which the Secretary seeks to examine,
``(iii) an offer to have a conference
between the university and the Secretary in
order to discuss, and attempt to resolve,
concerns relating to such examination, and
``(iv) a copy of all documents which were
collected or prepared by the Internal Revenue
Service for use in such examination and the
disclosure of which is required by the Freedom
of Information Act.
``(B) Earliest day examination notice may be
provided.--The examination notice described in this
paragraph shall not be provided to the university
before the 15th day after the date on which the
university tax inquiry notice was provided to the
university under subsection (a).
``(C) Opinion of division counsel with respect to
examination.--The Division Counsel of the Internal
Revenue Service who receives an examination notice
under paragraph (2)(A) may, within 15 days after such
notice is provided, submit to the Secretary an advisory
objection to the examination.
``(4) Examination of business records and activities not
specified in notice.--Within the course of a university tax
examination which (at the time the examination begins)
satisfies the preconditions of paragraph (1)(A), the Secretary
may examine any university business records or university
activities which were not specified in the examination notice
to the extent such examination meets the requirement of clause
(i) or (ii) of paragraph (1)(B) (whichever applies).
``(c) Limitation on Period of Inquiries and Examinations.--
``(1) Inquiries and examinations must be completed within 2
years.--
``(A) In general.--The Secretary shall complete any
university tax inquiry or examination (and make a final
determination with respect thereto) not later than the
date which is 2 years after the examination notice
date.
``(B) Inquiries not followed by examinations.--In
the case of a university tax inquiry with respect to
which there is no examination notice under subsection
(b), the Secretary shall complete such inquiry (and
make a final determination with respect thereto) not
later than the date which is 90 days after the inquiry
notice date.
``(2) Suspension of 2-year period.--The running of the 2-
year period described in paragraph (1)(A) and the 90-day period
in paragraph (1)(B) shall be suspended--
``(A) for any period during which--
``(i) a judicial proceeding brought by the
university against the Secretary with respect
to the university tax inquiry or examination is
pending or being appealed,
``(ii) a judicial proceeding brought by the
Secretary against the university (or any
official thereof) to compel compliance with any
reasonable request of the Secretary in a
university tax examination for examination of
university business records or university
activities is pending or being appealed, or
``(iii) the Secretary is unable to take
actions with respect to the university tax
inquiry or examination by reason of an order
issued in any judicial proceeding brought under
section 7609,
``(B) for any period in excess of 20 days (but not
in excess of 6 months) in which the university or its
agents fail to comply with any reasonable request of
the Secretary for university business records or other
information, or
``(C) for any period mutually agreed upon by the
Secretary and the university.
``(d) Limitations on Determinations by Secretary, etc.--
``(1) In general.--The Secretary may--
``(A) determine that--
``(i) any income derived by a university is
not excludable from taxation under section 115,
or
``(ii) a university is not exempt from
taxation under section 501(a),
``(B) send a notice of deficiency of any tax
involved in a university tax examination, or
``(C) in the case of any tax with respect to which
subchapter B of chapter 63 does not apply, assess any
underpayment of such tax involved in a university tax
examination,
only if the appropriate Division Counsel of the Internal
Revenue Service determines in writing that there has been
substantial compliance with the requirements of this section
and approves in writing of such inclusion of income, revocation
of status, notice of deficiency, or assessment.
``(2) Limitations on period of assessment.--
``(A) Inclusion of income and revocation of tax-
exempt status.--
``(i) 3-year statute of limitations
generally.--In the case of any university tax
examination with respect to--
``(I) the inclusion under section
115 of any income previously excluded
from taxation under such section, or
``(II) the revocation of tax-exempt
status under section 501(a),
any tax imposed by chapter 1 (other than
section 511) may be assessed, or a proceeding
in court for collection of such tax may be
begun without assessment, only for the 3 most
recent taxable years ending before the
examination notice date.
``(ii) 6-year statute of limitations in
certain cases.--If the university--
``(I) derives no income which is
excludable from taxation under section
115, and
``(II) is not exempt from taxation
under section 501(a),
for any of the 3 taxable years described in
clause (i), clause (i) shall be applied by
substituting `6 most recent taxable years' for
`3 most recent taxable years'.
``(B) Unrelated business tax.--In the case of any
university tax examination with respect to the tax
imposed by section 511, such tax may be assessed, or a
proceeding in court for the collection of such tax may
be begun without assessment, only with respect to the 6
most recent taxable years ending before the examination
notice date.
``(C) Exception where shorter statute of
limitations otherwise applicable.--Subparagraphs (A)
and (B) shall not be construed to increase the period
otherwise applicable under subchapter A of chapter 66.
``(e) Information Not Collected in Substantial Compliance With
Procedures To Stay Summons Proceeding.--
``(1) In general.--If there has not been substantial
compliance with--
``(A) the notice requirements of subsection (a) or
(b),
``(B) the conference requirement described in
subsection (b)(3)(A)(iii), or
``(C) the approval requirement of subsection (d)(1)
(if applicable),
with respect to any university tax inquiry or examination, any
proceeding to compel compliance with any summons with respect
to such inquiry or examination shall be stayed until the court
finds that all practicable steps to correct the noncompliance
have been taken. The period applicable under paragraph (1) of
subsection (c) shall not be suspended during the period of any
stay under the preceding sentence.
``(2) Remedy to be exclusive.--No suit may be maintained,
and no defense may be raised in any proceeding (other than as
provided in paragraph (1)), by reason of any noncompliance by
the Secretary with the requirements of this section.
``(f) Limitations on Additional Inquiries and Examinations.--
``(1) In general.--If any university tax inquiry or
examination with respect to any university is completed and
does not result in--
``(A) an inclusion of income, revocation of status,
notice of deficiency, or assessment described in
subsection (d)(1), or
``(B) a request by the Secretary for any
significant change in the operational practices of the
university (including the adequacy of accounting
practices),
no other university tax inquiry or examination may begin with
respect to such university during the applicable 5-year period
unless such inquiry or examination is approved in writing by
the Secretary or does not involve the same or similar issues
involved in the preceding inquiry or examination. For purposes
of the preceding sentence, an inquiry or examination shall be
treated as completed not later than the expiration of the
applicable period under paragraph (1) of subsection (c).
``(2) Applicable 5-year period.--For purposes of paragraph
(1), the term `applicable 5-year period' means the 5-year
period beginning on the date the notice taken into account for
purposes of subsection (c)(1) was provided. For purposes of the
preceding sentence, the rules of subsection (c)(2) shall apply.
``(g) Treatment of Final Report of Revenue Agent.--Any final report
of an agent of the Internal Revenue Service shall be treated as a
determination of the Secretary under paragraph (1) of section 7428(a),
and any university receiving such a report shall be treated for
purposes of sections 7428 and 7430 as having exhausted the
administrative remedies available to it.
``(h) Reporting Requirement.--Not later than 60 days after the
beginning of any university tax inquiry or examination, the Secretary
shall transmit to the appropriate congressional committees a
confidential report that includes--
``(1) the identity of the university subject to the tax
inquiry or examination,
``(2) an attestation that the requirements of subsection
(a)(1) or (b)(1)(A) (whichever applies) have been met,
``(3) a copy of the university tax inquiry notice or the
university tax examination notice provided to the university
under subsection (a) or (b), respectively (whichever applies),
and
``(4) a copy of all finalized and officially proposed
regulations relating to the interpretation and implementation
of this section.
``(i) Definitions.--For purposes of this section--
``(1) University.--The term `university' means--
``(A) any institution of higher education (as
defined under section 102 of the Higher Education Act
of 1965), and
``(B) any related organization (as defined under
section 4968(g)(2)) of such an institution.
``(2) University tax inquiry.--The term `university tax
inquiry' means any inquiry into a university (other than an
examination) to serve as a basis for determining whether--
``(A) any income derived by the university is
excludable from taxation under section 115,
``(B) the university is exempt from taxation under
section 501(a), or
``(C) the university is carrying on an unrelated
trade or business (within the meaning of section 513)
or otherwise engaged in activities which may be subject
to taxation under this title.
``(3) University tax examination.--The term `university tax
examination' means, for purposes of making a determination
described in paragraph (2), any examination of--
``(A) university business records at the request of
the Internal Revenue Service, or
``(B) university activities.
``(4) University business records.--
``(A) In general.--The term `university business
records' means all corporate and financial records
regularly kept by a university.
``(B) Exception.--Such term shall not include
records acquired--
``(i) pursuant to a summons to which
section 7609 applies, or
``(ii) from any governmental agency.
``(5) University activities.--The term `university
activities'--
``(A) means any activities relating to the academic
or bureaucratic operation of the university,
including--
``(i) any affiliations or ideological
positions of, or advocacy by, the university,
and
``(ii) the curricular or scholastic content
that the university provides to its students,
but
``(B) does not include university business records.
``(6) Inquiry notice date.--The term `inquiry notice date'
means the date the notice with respect to a university tax
inquiry is provided under subsection (a) to the university.
``(7) Examination notice date.--The term `examination
notice date' means the date the notice with respect to a
university tax examination is provided under subsection (b) to
the university.
``(8) Appropriate high-level treasury official.--The term
`appropriate high-level Treasury official' means the Secretary
of the Treasury or any delegate of the Secretary whose rank is
no lower than that of a principal Internal Revenue officer for
an internal revenue district.
``(9) Appropriate congressional committees.--The term
`appropriate congressional committees' means--
``(A) the Committee on Ways and Means of the House
of Representatives, and
``(B) the Committee on Finance of the Senate.
``(j) Section Not To Apply to Criminal Investigations, etc.--This
section shall not apply to--
``(1) any criminal investigation,
``(2) any inquiry or examination relating to the tax
liability of any person other than a university,
``(3) any assessment under section 6851, 6852, or 6861,
``(4) any willful attempt to defeat or evade any tax
imposed by this title, or
``(5) any knowing failure to file a return of tax imposed
by this title.''.
(b) Conforming Amendments.--
(1) The table of sections for subchapter A of chapter 78 of
such Code is amended by striking the item relating to section
7613 and inserting the following new items:
``Sec. 7613. Restrictions on university tax inquiries and examinations.
``Sec. 7614. Cross references.''.
(2) Section 7605(c) of such Code is amended to read as
follows:
``(c) Cross References.--
``(1) Restrictions on church tax inquiries and
examinations.--For provisions restricting church tax inquiries
and examinations, see section 7611.
``(2) Restrictions on university tax inquiries and
examinations.--For provisions restricting university tax
inquiries and examinations, see section 7613.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to inquiries and examinations beginning after the
date of the enactment of this Act.
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