To require audits of institutions with respect to disclosures of foreign gifts, and for other purposes.
H.R. 3284, introduced May 8, 2025, would impose two main sets of changes aimed at increasing transparency and accountability around foreign gifts to colleges and universities. First, it amends the Higher Education Act to require the Secretary of Education to conduct biannual audits of at least 30 institutions to assess compliance with foreign gift disclosure reporting. The audits would use specific criteria to select institutions, examine compliance for the prior two years, identify under- or over-reported foreign gifts or contracts with foreign sources, and publicly release the audit findings on the Department of Education website within 30 days of completion (along with congressional reporting). Second, it creates two new excise taxes under the Internal Revenue Code aimed at penalizing foreign funding for higher education: a 300% tax on income from foreign countries of concern for eligible institutions, and a 110% tax on unreported foreign funding, with the latter due after audit results are shared. The bill defines “foreign country of concern” by reference to another statute and sets effective date rules, including a 60-day post-enactment start for these provisions. In short, the bill would (1) expand federal audits and public disclosure of foreign gifts to higher education, and (2) impose substantial excise taxes intended to deter and penalize foreign funding that is not properly reported.
Key Points
- 1Mandatory audits: The Secretary must begin audits not later than 60 days after enactment and conduct them every two years, auditing no fewer than 30 institutions.
- 2Selection criteria for audits: Institutions may be prioritized based on endowment size (top 1%), substantial foreign gifts/contracts, prior noncompliance, public reporting of foreign contributions from a “foreign entity of concern,” or formal agreements with a federal agency.
- 3Contents of audits: Each audit must determine whether the institution complied with reporting requirements for the two prior years and—if noncompliant—detail the under- or over-reported gifts or contracts, including amount, source, country of origin, and dates.
- 4Reporting requirements: Audit results must be reported to Congress within 30 days and publicly available on the Department of Education website, with access for Members of Congress who request it.
- 5New excise taxes:
- 6- Sec. 4969 imposes a 300% tax on the income an eligible institution receives from any foreign country of concern.
- 7- Sec. 4970 imposes a 110% tax on unreported foreign funding, due within 180 days of audit results.
- 8- If unreported funding comes from a country of concern, the 110% tax is in addition to the 300% tax.
- 9Definitions and scope: “Foreign country of concern” follows a definition in a related act, and “institution” follows the definitions used in the Higher Education Act. The tax provisions coordinate with the audit findings (e.g., unreported funding tied to audit results).
- 10Effective date: The amendments apply to taxable years beginning 60 days after enactment.