This Act may be cited as the Fair Play Enforcement Act.

(a) In general Chapter 42 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter: I Colleges and universities allowing specified individuals to participate in intercollegiate athletics Sec. 4969. Imposition of tax. 4969. Imposition of tax (a) In general There is hereby imposed on any eligible educational institution which commits an athletic participation violation during any taxable year a tax equal to the applicable percentage of the gross athletic receipts of such institution for such taxable year. (b) Applicable percentage For purposes of subsection (a), the applicable percentage with respect to any eligible educational institution which commits an athletic participation violation during any taxable year is determined under the following table with respect to the aggregate number of separate athletic participation violations committed by such institution during such taxable year and the preceding 5 taxable years (referred to in such table as the applicable period): If the number of violations during the applicable period is: The applicable percentage is: 1 5 percent 2 10 percent In excess of 2 20 percent (c) Definitions For purposes of this section— (1) Eligible educational institution The term eligible educational institution has the meaning given such term in section 25A(f)(2). (2) Athletic participation violation (A) In general The term athletic participation violation means, with respect to any eligible educational institution, any instance in which such institution knowingly allows the active participation of a specified individual in any intercollegiate athletic event or competition. (B) Exceptions Such term shall not include any instance in which a specified individual— (i) actively participates in a practice session for any intercollegiate athletic event or competition, (ii) appears on a roster for, but does not actively participate in, any intercollegiate athletic event or competition, or (iii) actively participates in any intercollegiate athletic event or competition pursuant to a court order. (C) Aggregation rule All athletic participation violations committed by an eligible educational institution with respect to individuals described in paragraph (3)(A) shall be treated as one such violation to the extent such violations are determined by the Secretary to be derived from the same set of facts and circumstances. (3) Specified individual The term specified individual means, with respect to any intercollegiate athletic event or competition, any individual— (A) who has placed any wager (without regard to the manner in which placed) with respect to any intercollegiate athletic event or competition, or (B) who has been employed as an athlete by, and appeared on a roster for, a professional sports franchise with respect to a similar athletic event or competition. (4) Gross athletic receipts The term gross athletic receipts means, with respect to any eligible educational institution for any taxable year, the gross receipts of such institution for such taxable year which are attributable to, or derived in connection with, any intercollegiate athletic program of such institution. (d) Regulations The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.. (b) Clerical amendment The table of subchapters for chapter 42 of such Code is amended by adding at the end the following new item: Subchapter I—Colleges and universities allowing specified individuals to participate in intercollegiate athletics.. (c) Effective date The amendments made by this section shall apply with respect to taxable years ending after the date of the enactment of this Act.