Higher Education Oversight for Nonprofits Ensuring Standards and Transparency Act

Written Notice Requirements: Under Section 2 (adding Internal Revenue Code Section 7613(a)(3)), the Secretary must provide written notice to a university before starting any tax inquiry, explaining the concerns and general subject matter. This ensures transparency so that institutions and the people connected to them understand why the government is asking questions.

• Right to a Conference: Under Section 2 (adding Internal Revenue Code Section 7613(b)(2)), universities are given a reasonable time to participate in a conference with the Secretary to discuss and attempt to resolve concerns before an examination begins. This gives folks at the university a fair chance to talk through issues directly with officials.

• Strict Completion Deadlines: Under Section 2 (adding Internal Revenue Code Section 7613(c)(1)), the Secretary must complete any university tax inquiry or examination within two years of the examination notice date, or within 90 days for inquiries not followed by an examination. This prevents drawn-out, indefinite government investigations that could unfairly burden these institutions.

• Protection from Repeated Investigations: Under Section 2 (adding Internal Revenue Code Section 7613(f)), if a completed inquiry or examination does not result in an adverse tax determination or a request for significant operational changes, no new inquiry or examination can begin for a 5-year period without special approval. This protects universities from being constantly harassed by repetitive government audits.

Limits on Unrelated Business Tax Assessments: Under Section 2 (adding Internal Revenue Code Section 7613(d)(2)(B)), the IRS can only assess taxes on unrelated business income for the six most recent taxable years. If an institution engaged in improper business activities further in the past, this restriction could prevent the government from collecting taxes owed to the public.

• Restricted IRS Oversight: Under Section 2 (adding Internal Revenue Code Section 7613(a)(2)), the Secretary must meet a reasonable belief requirement recorded in writing before beginning an inquiry. Because of these extra procedural hurdles and oversight rules, it might become harder for tax authorities to quickly investigate universities that may be skirting tax laws, potentially reducing accountability for wealthy institutions.