H.R. 2686: University Accountability Act

This bill, titled the University Accountability Act, aims to amend the Internal Revenue Code to impose penalties on certain tax-exempt educational institutions found to have committed civil rights violations. The key components of the bill are outlined below:

Imposition of Penalties

Under the proposed legislation, a specific penalty would be applied to tax-exempt educational institutions for each determination of civil rights violations made against them. This would apply when a federal court finds that the institution has violated provisions of Title VI of the Civil Rights Act of 1964.

• The penalty for a civil rights violation is defined as the greater of:
  • $100,000, or
  • 5% of the aggregate administrative compensation for the institution during the taxable year in which the violation occurred (for institutions subject to specific reporting requirements).
• Institutions would only be liable for the penalty from the date of the judicial determination.
• If a determination is overturned, any penalty paid would be refunded.

Mandatory Reviews for Repeated Violations

Institutions that incur multiple civil rights violations would undergo mandatory reviews of their tax-exempt status. After the second determination of a civil rights violation, the Secretary of the Treasury would review whether the institution continues to qualify for tax exemption. This review would not consider any reversed determinations unless they are subsequently reinstated.

Reporting Requirements

Tax-exempt educational institutions would be required to report determinations of civil rights violations on their annual tax returns. This report must include:

• A description of each civil rights violation determination, including the date it occurred.
• The number of prior violations for that institution within the specified timeframe.
• Details on any overturned or reversed determinations.

Institutions categorized under state colleges and universities would also have similar reporting obligations.

Applicable Exceptions

The bill allows for certain exceptions regarding the timing for assessment and refunds related to penalties imposed. Specifically, existing limitations on assessments outlined in other sections of the code would not apply to the penalties established by this bill.

Effective Date

The provisions of this bill would take effect for any civil rights violation determinations made after its enactment.

Relevant Companies

None found