To amend the Internal Revenue Code of 1986 to impose penalties for the failure of 527 organizations to comply with disclosure requirements.

Summary: 527 Transparency Act of 2005 - Amends the Internal Revenue Code to revise disclosure requirements for tax-exempt political organizations (527 organizations) to require monthly reporting of contributions and expenditures. Imposes a penalty tax on political organizations that fail to meet disclosure requirements. Denies a gift tax exclusion for donations to political organizations that fail to meet disclosure requirements.

Requires political organizations to file disclosure reports simultaneously with the Secretary of the Treasury and the Federal Election Commission (FEC).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``527 Transparency Act of 2005''.

SEC. 2. MANDATORY MONTHLY REPORTING.

    (a) In General.--Section 527(j)(2) of the Internal Revenue Code of 
1986 (relating to required disclosure) is amended to read as follows:
            ``(2) Required disclosure.--A political organization which 
        accepts a contribution, or makes an expenditure, for an exempt 
        function during any calendar year shall file with the Secretary 
        monthly reports for each such year which shall be filed not 
        later than the 20th day after the last day of the month and 
        shall be complete as of the last day of the month, except that, 
        in lieu of filing the reports otherwise due in November and 
        December of any year in which a regularly scheduled general 
        election is held, the organization shall file--
                    ``(A) a pre-election report, which shall be filed 
                no later than the 12th day before (or posted by 
                registered or certified mail no later than the 15th day 
                before) any election with respect to which the 
                organization accepts a contribution or makes an 
                expenditure, and which shall be complete as of the 20th 
                day before the election;
                    ``(B) a post-general election report, which shall 
                be filed no later than the 30th day after the general 
                election and which shall be complete as of the 20th day 
                after such general election; and
                    ``(C) a year-end report which shall be filed no 
                later than January 31 of the following calendar 
                year.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2005.

SEC. 3. FAILURE OF 527 ORGANIZATION TO COMPLY WITH DISCLOSURE 
              REQUIREMENTS.

    (a) Excise Tax on Managers.--
            (1) In general.--Subchapter C of chapter 42 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new section:

``SEC. 4956. TAX ON FAILURE OF POLITICAL ORGANIZATIONS TO MEET 
              DISCLOSURE REQUIREMENTS.

    ``(a) Tax Imposed.--In the case of a failure of a political 
organization to meet the disclosure requirements of section 527(j) with 
respect to any contribution to or expenditure from the political 
organization, there is hereby imposed on the political organization, in 
addition to any other tax or penalty provided in this title, a tax for 
each such failure.
    ``(b) Amount of Tax.--The tax imposed by subsection (a) shall be 30 
percent of the total amount of the contribution or expenditure with 
respect to which such failure occurred.
    ``(c) Liability for Tax.--
            ``(1) In general.--Except as provided by paragraph (2), the 
        tax imposed by subsection (a) shall be paid by the political 
        organization.
            ``(2) Joint and several liability of organization 
        managers.--Each organization manager of the political 
        organization shall be jointly and severally liable for any tax 
        imposed under subsection (a).
    ``(d) Organization Manager.--For purposes of this section, the term 
`organization manager' means any officer, director, or trustee of the 
political organization (or individual having powers or responsibilities 
similar to those of an officer, director, or trustee).
    ``(e) Political Organization.--The term `political organization' 
shall have the meaning given such term by section 527(e)(1).''.
            (2) Conforming amendments.--
                    (A) The heading for subchapter C of chapter 42 of 
                such Code is amended by adding at the end the 
                following: ``; Failure of Political Organizations to 
                Meet Reporting Requirements''.
                    (B) The table of sections for such subchapter C is 
                amended by adding at the end the following:

``Sec. 4956. Tax on failure of political organizations to meet 
                            disclosure requirements.''.
                    (C) The item in the table of subchapters of such 
                chapter 42 relating to subchapter C is amended to read 
                as follows:
      ``subchapter c. political expenditures of section 501(c)(3) 
  organizations; failure of political organizations to meet reporting 
                            requirements''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2005.
    (b) Denial of Gift Tax Exclusion.--
            (1) In general.--Paragraph (4) of section 2501(a) of the 
        Internal Revenue Code of 1986 (relating to taxable transfers) 
        is amended to read as follows:
            ``(4) Transfers to political organizations.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                the transfer of money or other property to a political 
                organization (within the meaning of section 527(e)(1)) 
                for the use of such organization.
                    ``(B) Exception for failure of organization to meet 
                disclosure requirements.--Subparagraph (A) shall not 
                apply to any transfer in a calendar year for which the 
                political organization fails to make the disclosures 
                required by section 527(j).''.
            (2) Notice to contributors of denial of gift tax exception 
        for failure to disclose.--Section 527(j) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(8) Notice to contributors of denial of gift tax 
        exception for failure to disclose.--In the case of a final 
        determination by the Secretary that a failure described in 
        paragraph (1)(A) with respect to an organization occurred, the 
        organization shall, not later than 90 days after the date of 
        such determination, provide written notice of such failure to 
        each contributor to the organization for the calendar year in 
        which such failure occurred. Such notice shall include a 
        statement that the exception under section 2501(a)(4)(A) does 
        not apply to any contribution to the organization in such 
        calendar year.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to transfers made after December 31, 2005.

SEC. 4. SIMULTANEOUS TRANSMISSION OF REPORTS TO FEDERAL ELECTION 
              COMMISSION.

    (a) In General.--Section 304 of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 434) is amended by adding at the end the following 
new subsection:
    ``(i) Reports of Political Organizations Under Internal Revenue 
Code of 1986.--
            ``(1) Simultaneous filing of treasury reports with 
        commission.--At the time a political organization described in 
        section 527 of the Internal Revenue Code of 1986 files a report 
        with the Secretary of the Treasury under section 527(j) of such 
        Code, the organization shall file a copy of the report with the 
        Commission.
            ``(2) Treatment as report filed with commission.--For 
        purposes of this Act, the copy filed under this subsection of a 
        report filed with the Secretary of the Treasury shall be 
        treated as a report or statement filed with the Commission 
        under this section.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect January 1, 2006.