Sens. Cruz, Budd, Rep. Moran Introduce Bill to Hold Sponsors of Violent Protests Accountable

Washington, D.C. -U.S. Sens. Ted Cruz (R-Texas) and Ted Budd (R-N.C.) introduced the Stop Proxy Organizations Nurturing Subversive Operations and Riots (SPONSOR) Act. The bill closes loopholes in the Internal Revenue Code (IRC) that allows organizations to funnel tax-exempt funds without transparency or accountability, including for political violence.

Sen. Cruz said, "Loopholes in the Internal Revenue Code allow radical groups to use tax-exempt funds to bankroll violent, anti-American activity opaquely and therefore with impunity. The violence that has spread in recent years in our cities and on our college campuses is not organic. It is enabled by funding from well-resourced organizations that exploit such loopholes, including and especially through fiscal sponsorships. My legislation closes these loopholes, and I urge my colleagues to advance it with the necessary expediency."

Companion legislation was introduced in the House of Representatives by Rep. Nathaniel Moran (R-TX-1).

Rep. Moran said, "Congress has a duty to safeguard the integrity of our nonprofit system and ensure our tax laws are not exploited by extremist or radical groups operating in the shadows. When fiscal sponsorship arrangements allow lawlessness to fester without accountability, we are failing the taxpayer and undermining the public's trust in legitimate charities. I'm proud to stand with Senator Cruz on this bicameral legislation so sponsors are held responsible for the projects they fund and the rule of law is restored."

This legislation is supported by the America First Policy Institute.

America First Policy Institute Homeland Security and Immigration Chair Chad Wolf said, "Over the past several years, we have watched American communities increasingly fall victim to violent protests, fueled by financial networks that seek to undermine government institutions and incite lawlessness. The SPONSOR Act will help keep Americans safe by closing the legal loopholes that allow proxy organizations to finance violent activity and by cutting off resources to domestic extremist groups that continue to carry out destructive, anti-American campaigns."

Click here to read the full bill text.

BACKGROUND:

The SPONSOR Act amends the Internal Revenue Code (IRC) to clarify the scope of liability incurred by a 501(c)(3) that opts to become a fiscal sponsor by adding a provision to Section 501(c)(3) that explicitly states that tax-exempt sponsors can be held criminally and, in some cases, civilly liable for violations of the law by their sponsored entities.

In July of last year, Sen. Cruz introduced the Stop FUNDERs Act to add rioting, as defined by the federal anti-riot statute, to the list of RICO predicate offenses, allowing the Department of Justice to use the full suite of RICO tools against entities that fund or coordinate violent interstate riots.