Penalties and Tax Status Review for Universities Violating Civil Rights.
This law imposes significant financial penalties on tax-exempt universities and colleges if a federal court determines they have violated civil rights (Title VI of the Civil Rights Act of 1964). Upon a third violation, the institution automatically faces a mandatory review by the IRS, which could result in the loss of its tax-exempt status. This aims to increase institutional accountability for maintaining non-discriminatory environments for students and staff.
Key points
Universities must pay a penalty of at least $100,000 (or 5% of administrative compensation) for each civil rights violation confirmed by a federal court judgment.
After the third confirmed civil rights violation, the IRS must review whether the institution should retain its valuable tax-exempt status.
New reporting requirements mandate that institutions disclose all court judgments related to civil rights violations on their annual tax returns.
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