SECTION 1. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES 
              FROM NOTIFICATION REQUIREMENTS.

    (a) Exemption From Notification Requirements.--Paragraph (5) of 
section 527(i) of the Internal Revenue Code of 1986 (relating to 
organizations must notify Secretary that they are section 527 
organizations) is amended by striking ``or'' at the end of subparagraph 
(A), by striking the period at the end of subparagraph (B) and 
inserting ``, or'', and by adding at the end the following:
                    ``(C) which is a political committee of a State or 
                local candidate or which is a State or local committee 
                of a political party.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the amendments made by Public Law 106-
230.

SEC. 2. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES FROM 
              REPORTING AND ANNUAL RETURN REQUIREMENTS.

    (a) In General.--Section 527(j)(5) of the Internal Revenue Code of 
1986 (relating to coordination with other requirements) is amended by 
striking ``or'' at the end of subparagraph (D), by redesignating 
subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F), 
respectively, and by inserting after subparagraph (B) the following new 
subparagraph:
                    ``(C) to any organization which is an exempt State 
                or local political organization,''.
    (b) Exempt State or Local Political Organization.--Subsection (e) 
of section 527 of the Internal Revenue Code of 1986 (relating to other 
definitions) is amended by adding at the end the following new 
paragraph:
            ``(5) Exempt state or local political organization.--
                    ``(A) In general.--The term `exempt State or local 
                political organization' means a political organization 
                which--
                            ``(i) does not engage in any exempt 
                        function other than solely for the purposes of 
                        influencing or attempting to influence the 
                        selection, nomination, election, or appointment 
                        of any individual to any State or local public 
                        office or office in a State or local political 
                        organization,
                            ``(ii) is subject to State requirements to 
                        report (and it so reports)--
                                    ``(I) information regarding each 
                                separate expenditure from and 
                                contribution to, such organization, and
                                    ``(II) information regarding the 
                                person who makes such contribution or 
                                receives such expenditure,
                        which would otherwise be required to be 
                        reported under this section, and
                            ``(iii) with respect to which the reports 
                        referred to in clause (ii) are made public by 
                        the agency with which such reports are filed 
                        and are publicly available for inspection in a 
                        manner similar to that required by section 
                        6104(d)(1).
                    ``(B) Certain failures disregarded.--An 
                organization shall not be treated as failing to meet 
                the requirements of subparagraph (A)(ii) solely by 
                reason of 1 or more of the following:
                            ``(i) The minimum amount of any expenditure 
                        or contribution required to be reported under 
                        State law is not more than $300 greater than 
                        the minimum amount required to be reported 
                        under subsection (j).
                            ``(ii) The State law does not require the 
                        organization to identify 1 or more of the 
                        following:
                                    ``(I) The employer of any person 
                                who makes contributions to the 
                                organization.
                                    ``(II) The occupation of any person 
                                who makes contributions to the 
                                organization.
                                    ``(III) The employer of any person 
                                who receives expenditures from the 
                                organization.
                                    ``(IV) The occupation of any person 
                                who receives expenditures from the 
                                organization.
                                    ``(V) The purpose of any 
                                expenditure of the organization.
                            ``(iii) The organization makes de minimis 
                        errors in complying with State law requirements 
                        as long as the organization corrects the errors 
                        within a reasonable period after being notified 
                        of such errors.
                    ``(C) Participation of federal candidate or office 
                holder.--The term `exempt State or local political 
                organization' shall not include any organization 
                otherwise described in subparagraph (A) if a candidate 
                for nomination or election to Federal public office or 
                an individual who holds such office--
                            ``(i) controls or materially participates 
                        in the direction of the organization,
                            ``(ii) solicits contributions to the 
                        organization, or
                            ``(iii) directs, in whole or in part, 
                        disbursements by the organization.''.
    (c) Annual Return Requirements.--
            (1) Income tax returns required only for political 
        organization taxable income.--Paragraph (6) of section 6012(a) 
        of the Internal Revenue Code of 1986 (relating to persons 
        required to make returns of income) is amended by striking ``or 
        which has'' and all that follows through ``section)''.
            (2) Information returns.--Subsection (g) of section 6033 of 
        such Code (relating to returns required by political 
        organizations) is amended--
                    (A) by striking ``political organization required 
                to file a return under section 6012(a)(6)'' and 
                inserting ``political organization (with the meaning of 
                section 527, other than a political committee of a 
                State or local candidate) which has gross receipts of 
                $25,000 or more for the taxable year'', and
                    (B) by adding at the end the following new 
                sentence:
    ``In the case of an exempt State or local political organization 
(as defined in section 527(e)(5)), the preceding sentence shall be 
applied by substituting `$100,000' for `$25,000'.''.
            (3) Authorization to modify information returns.--The 
        Secretary shall review for possible modification the annual 
        return required under section 6033(g) of the Internal Revenue 
        Code of 1986.
    (d) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by Public Law 106-230.

SEC. 3. NOTIFICATION OF INTERACTION OF REPORTING REQUIREMENTS.

    (a) In General.--The Secretary of the Treasury, in consultation 
with the Federal Election Commission, shall publicize--
            (1) the effect of the amendments made by this Act, and
            (2) the interaction of requirements to file a notification 
        or report under section 527 of the Internal Revenue Code of 
        1986 and reports under the Federal Election Campaign Act of 
        1971.
    (b) Information.--Information provided under subsection (a) shall 
be included in any appropriate form, instruction, notice, or other 
guidance issued to the public by the Secretary of the Treasury or the 
Federal Election Commission regarding reporting requirements of 
political organizations (as defined in section 527 of the Internal 
Revenue Code of 1986) or reporting requirements under the Federal 
Election Campaign Act of 1971.

SEC. 4. WAIVER OF PENALTIES.

    (a) Waiver of Filing Penalties.--Section 527 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following:
    ``(k) Authority To Waive.--The Secretary may waive all or any 
portion of the--
            ``(1) tax assessed on an organization by reason of the 
        failure of the organization to give notice under subsection 
        (i), or
            ``(2) penalty imposed under subsection (j) for a failure to 
        file a report,
on a showing that such failure was due to reasonable cause and not due 
to willful neglect.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to any tax assessed or penalty imposed after June 30, 2000.

SEC. 5. TECHNICAL CORRECTIONS TO SECTION 527 ORGANIZATION DISCLOSURE 
              PROVISIONS.

    (a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of section 
527(i) of the Internal Revenue Code of 1986 (relating to failure to 
notify) is amended by adding at the end the following new sentence: 
``For purposes of the preceding sentence, the term `exempt function 
income' means any amount described in a subparagraph of subsection 
(c)(3), whether or not segregated for use for an exempt function.''.
    (b) Procedures for Assessment and Collection of Penalty.--Paragraph 
(1) of section 527(j) of the Internal Revenue Code of 1986 (relating to 
required disclosure of expenditures and contributions) is amended by 
adding at the end the following new sentence: ``For purposes of 
subtitle F, the penalty imposed by this paragraph shall be assessed and 
collected in the same manner as penalties imposed by section 
6652(c).''.
    (c) Duplicate Written Filings Not Required.--
            (1) Subparagraph (A) of section 527(i)(1) of the Internal 
        Revenue Code of 1986 is amended by striking ``, electronically 
        and in writing,'' and inserting ``electronically''.
            (2) Subsection (i) of section 527 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(7) Electronic filing.--The Secretary shall develop 
        procedures for submission in electronic form of notices 
        required to be filed under this subsection and reports required 
        to be filed under subsection (j).''.
    (d) Application of Fraud Penalty.--Section 7207 of the Internal 
Revenue Code of 1986 (relating to fraudulent returns, statements, and 
other documents) is amended by striking ``pursuant to subsection (b) of 
section 6047 or pursuant to subsection (d) of section 6104'' and 
inserting ``pursuant to section 6047(b), section 6104(d), or subsection 
(i) or (j) of section 527''.
    (e) Contents of Report.--Section 527(j)(3) of the Internal Revenue 
Code of 1986 (relating to contents of report) is amended--
            (1) by inserting ``, date, and purpose'' after ``The 
        amount'' in subparagraph (A), and
            (2) by inserting ``and date'' after ``the amount'' in 
        subparagraph (B).
    (f) Contents of Notice.--Section 527(i)(3) of the Internal Revenue 
Code of 1986 (relating to contents of notice) is amended by striking 
``and'' at the end of subparagraph (D), by redesignating subparagraph 
(E) as subparagraph (F), and by inserting after subparagraph (D) the 
following new subparagraph:
                    ``(E) whether the organization intends to claim an 
                exemption from the requirements of subsection (j) or 
                section 6033, and''.
    (g) Timing of Notices.--Section 527(i)(2) of the Internal Revenue 
Code of 1986 (relating to time to give notice) is amended by inserting 
``or, in the case of any material change in the information required 
under paragraph (3), not later than 30 days after such material 
change'' after ``established''.
    (h) Effective Dates.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to failures occurring on or 
        after the date of the enactment of this Act.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall take effect as if included in the amendments made by 
        Public Law 106-230.
            (3) Subsections (d), (e), and (f).--The amendments made by 
        subsections (d), (e), and (f) shall apply to reports or notices 
        filed on or after the date of the enactment of this Act.
            (4) Subsection (g).--The amendments made by subsection (g) 
        shall apply to material changes on or after the date of the 
        enactment of this Act.
Amends the Internal Revenue Code to exempt State and local committees of candidates and of political parties from specified notification requirements. Exempts certain "exempt State or local political organizations" from specified reporting requirements. Defines "exempt State and local political organizations."Modifies characteristics of political organizations obligated to complete an informational return, such that specified political organizations with $25,000 or more in annual gross receipts must file, as well as "exempt state and local political organizations" with annual gross receipts of $100,000 or more. Directs the Secretary of the Treasury to review the components of such returns. Authorizes the Secretary to waive certain penalties for notification and reporting violations.Obligates political organizations to inform the Secretary whether they plan to seek exemptions from financial or informational returns.
A bill to amend section 527 of the Internal Revenue Code of 1986 to eliminate notification and return requirements for State and local political committees and candidate committees and avoid duplicate reporting by certain State and local political committees of information required to be reported and made publicly available under State law, and for other purposes.