119 S3942 IS: Stop Proxy Organizations Nurturing Subversive Operations and Riots Act U.S. Senate 2026-02-26 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

II119th CONGRESS2d SessionS. 3942IN THE SENATE OF THE UNITED STATESFebruary 26, 2026Mr. Cruz (for himself and Mr. Budd) introduced the following bill; which was read twice and referred to the Committee on FinanceA BILLTo amend the Internal Revenue Code of 1986 to provide that 501(c)(3) organizations are liable for the use of funding provided as a fiscal sponsor.

1.

Short title

This Act may be cited as the Stop Proxy Organizations Nurturing Subversive Operations and Riots Act or the SPONSOR Act.

2.

Liability of tax-exempt fiscal sponsors for sponsored activities

Section 501 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:(s)

Liability of fiscal sponsors for sponsored activities

(1)

In general

If—(A)an organization described in subsection (c)(3) expends funds for a fiscal sponsorship, and(B)a deduction under section 170 is allowed to any donor, or such organization represents to any donor that the donor is entitled to a deduction under section 170, with respect to a contribution to the organization for purposes of such fiscal sponsorship,then the organization shall bear any criminal liability related to or arising from such fiscal sponsorship, and any civil liability concerning a covered activity related to or arising from such fiscal sponsorship.(2)

Covered activity

For purposes of this subsection, the term covered activity means—(A)aiding and abetting an act of international terrorism committed, planned, or authorized by an organization that had been designated as a foreign terrorist organization under section 219 of the Immigration and Nationality Act (8 U.S.C. 1189), as of the date on which such act of international terrorism was committed, planned, or authorized, by knowingly providing substantial assistance, or conspiring with the person who committed such an act of international terrorism,(B)by force or a specified and credible threat of force, or by physical obstruction, intentionally injuring, intimidating or interfering with or attempting to injure, intimidate or interfere with any person lawfully exercising or seeking to exercise a constitutional right, or(C)by using force or a specified credible threat of force or by physically blocking the movement of any article or commodity in commerce to intentionally prevent the lawful movement of interstate and intrastate commerce.For purposes of the preceding sentence, the term intimidate means to place an individual in reasonable apprehension of bodily harm to such individual or to another.(3)

Fiscal sponsorship

For purposes of this subsection, the term fiscal sponsorship means a relationship in which an organization described in subsection (c)(3)—(A)agrees to receive and administer funds on behalf of a project or organization that is not exempt from tax under subsection (a), and(B)retains discretion and control over such funds to ensure they are used for the purposes for which such organization was organized and operated.(4)

Presumption of responsibility

An organization to which paragraph (1) applies is presumed to be responsible for ensuring that the manner in which its funds are used under any fiscal sponsorship complies with applicable laws, regulations, and tax obligations.(5)

Defenses

The liability established by this subsection does not bar the organization described in subsection (c)(3) from defenses based on exercise of due diligence and reasonable oversight..