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To 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.
Summary
The bill amends tax law to make tax-exempt 501(c)(3) organizations liable for criminal and civil matters arising from fiscal sponsorship activities. Under the bill, organizations that receive and administer funds on behalf of non-exempt projects would be responsible for activities involving terrorism support, violence, intimidation, or obstruction of interstate commerce. Organizations are presumed responsible for ensuring funds are used legally but can defend themselves by demonstrating they exercised due diligence and reasonable oversight of the sponsored activities.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
- Sen. Cruz, Ted [R-TX] (R-TX)
1 cosponsor
- Sen. Budd, Ted [R-NC] (R-NC)
Money behind the sponsor
Top reported contributors to Ted Cruz’s campaign committee (2024 cycle) — who funds the bill’s sponsor, not a claim about this bill. Data from FEC.
- NULL $4,424,745
- ENTREPRENEUR $458,096
- RDV CORPORATION $39,600
- AMERICAN AIRLINES $29,632
- BLACKSTONE $27,400
Organizations whose employees gave the most — itemized individual contributions grouped by the donor’s reported employer (FEC Schedule A). Full finance for Ted Cruz → · Outside spending →
Actions (2)
- Feb 26, 2026 Read twice and referred to the Committee on Finance. · senate
- Feb 26, 2026 Introduced in Senate
Similar bills (6)
Bills with similar text or summary — includes reintroductions across Congresses. Ranked by semantic similarity of the bill text (computed locally); a neutral discovery aid, not a claim the bills are duplicates.
Full text
IN THE SENATE OF THE UNITED STATES
February 26, 2026
Mr. Cruz (for himself and Mr. Budd) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To 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.
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 “Stop Proxy Organizations Nurturing Subversive Operations and Riots Act” or the “SPONSOR Act”.
SEC. 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.”. <all>
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