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[House Report 114-71]
[From the U.S. Government Publishing Office]

114th Congress       }                              {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session         }                              {       114-71
======================================================================
 
            IRS BUREAUCRACY REDUCTION AND JUDICIAL REVIEW ACT

                                _______
                                

 April 13, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted 
                             the following
                             

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 1295]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1295) to amend the Internal Revenue Code of 1986 to 
improve the process for making determinations with respect to 
whether organizations are exempt from taxation under section 
501(c)(4) of such Code, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................3
          A. Purpose and Summary.................................     3
          B. Background and Need for Legislation.................     4
          C. Legislative History.................................     4
 II. EXPLANATION OF THE BILL..........................................5
          A. Require Section 501(c)(4) Organizations to Provide 
              Notice of Formation (sec. 2 of the bill, secs. 6033 
              and 6652 of the Code, and new sec. 506 of the Code)     5
          B. Declaratory Judgments for Section 501(c)(4) 
              Organizations (sec. 3 of the bill and sec. 7428 of 
              the Code)..........................................    10
III. VOTES OF THE COMMITTEE..........................................11
 IV. BUDGET EFFECTS OF THE BILL......................................12
          A. Committee Estimate of Budgetary Effects.............    12
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    13
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    13
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......15
          A. Committee Oversight Findings and Recommendations....    15
          B. Statement of General Performance Goals and 
              Objectives.........................................    15
          C. Information Relating to Unfunded Mandates...........    15
          D. Applicability of House Rule XXI 5(b)................    15
          E. Tax Complexity Analysis.............................    15
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    16
          G. Duplication of Federal Programs.....................    16
          H. Disclosure of Directed Rule Makings.................    16
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........16
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................    16
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................    33
VII. ADDITIONAL VIEWS................................................52

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``IRS Bureaucracy Reduction and Judicial 
Review Act''.

SEC. 2. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY OF INTENT TO OPERATE 
                    AS 501(C)(4).

  (a) In General.--Part I of subchapter F of chapter 1 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
section:

``SEC. 506. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY OF INTENT TO 
                    OPERATE AS 501(C)(4).

  ``(a) In General.--An organization described in section 501(c)(4) 
shall, not later than 60 days after the organization is established, 
notify the Secretary (in such manner as the Secretary shall by 
regulation prescribe) that it is operating as such.
  ``(b) Contents of Notice.--The notice required under subsection (a) 
shall include the following information:
          ``(1) The name, address, and taxpayer identification number 
        of the organization.
          ``(2) The date on which, and the State under the laws of 
        which, the organization was organized.
          ``(3) A statement of the purpose of the organization.
  ``(c) Acknowledgment of Receipt.--Not later than 60 days after 
receipt of such a notice, the Secretary shall send to the organization 
an acknowledgment of such receipt.
  ``(d) Extension for Reasonable Cause.--The Secretary may, for 
reasonable cause, extend the 60-day period described in subsection (a).
  ``(e) User Fee.--The Secretary shall impose a reasonable user fee for 
submission of the notice under subsection (a).
  ``(f) Request for Determination.--Upon request by an organization to 
be treated as an organization described in section 501(c)(4), the 
Secretary may issue a determination with respect to such treatment. 
Such request shall be treated for purposes of section 6104 as an 
application for exemption from taxation under section 501(a).''.
  (b) Supporting Information With First Return.--Section 6033(f) of 
such Code is amended--
          (1) by striking the period at the end and inserting ``, 
        and'',
          (2) by striking ``include on the return required under 
        subsection (a) the information'' and inserting the following: 
        ``include on the return required under subsection (a)--
          ``(1) the information'', and
          (3) by adding at the end the following new paragraph:
          ``(2) in the case of the first such return filed by such an 
        organization after submitting a notice to the Secretary under 
        section 506(a), such information as the Secretary shall by 
        regulation require in support of the organization's treatment 
        as an organization described in section 501(c)(4).''.
  (c) Failure To File Initial Notification.--Section 6652(c) of such 
Code is amended by redesignating paragraphs (4), (5), and (6) as 
paragraphs (5), (6), and (7), respectively, and by inserting after 
paragraph (3) the following new paragraph:
          ``(4) Notices under section 506.--
                  ``(A) Penalty on organization.--In the case of a 
                failure to submit a notice required under section 
                506(a) (relating to organizations required to notify 
                Secretary of intent to operate as 501(c)(4)) on the 
                date and in the manner prescribed therefor, there shall 
                be paid by the organization failing to so submit $20 
                for each day during which such failure continues, but 
                the total amount imposed under this subparagraph on any 
                organization for failure to submit any one notice shall 
                not exceed $5,000.
                  ``(B) Managers.--The Secretary may make written 
                demand on an organization subject to penalty under 
                subparagraph (A) specifying in such demand a reasonable 
                future date by which the notice shall be submitted for 
                purposes of this subparagraph. If such notice is not 
                submitted on or before such date, there shall be paid 
                by the person failing to so submit $20 for each day 
                after the expiration of the time specified in the 
                written demand during which such failure continues, but 
                the total amount imposed under this subparagraph on all 
                persons for failure to submit any one notice shall not 
                exceed $5,000.''.
  (d) Clerical Amendment.--The table of sections for part I of 
subchapter F of chapter 1 of such Code is amended by adding at the end 
the following new item:

``Sec. 506. Organizations required to notify Secretary of intent to 
operate as 501(c)(4).''.

  (e) Limitation.--Notwithstanding any other provision of law, any fees 
collected pursuant to section 506(e) of the Internal Revenue Code of 
1986, as added by subsection (a), shall not be expended by the 
Secretary of the Treasury or the Secretary's delegate unless provided 
by an appropriations Act.
  (f) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        apply to organizations which are described in section 501(c)(4) 
        of the Internal Revenue Code of 1986 and organized after the 
        date of the enactment of this Act.
          (2) Certain existing organizations.--In the case of any other 
        organization described in section 501(c)(4) of such Code, the 
        amendments made by this section shall apply to such 
        organization only if, on or before the date of the enactment of 
        this Act--
                  (A) such organization has not applied for a written 
                determination of recognition as an organization 
                described in section 501(c)(4) of such Code, and
                  (B) such organization has not filed at least one 
                annual return or notice required under subsection 
                (a)(1) or (i) (as the case may be) of section 6033 of 
                such Code.
        In the case of any organization to which the amendments made by 
        this section apply by reason of the preceding sentence, such 
        organization shall submit the notice required by section 506(a) 
        of such Code, as added by this Act, not later than 180 days 
        after the date of the enactment of this Act.

SEC. 3. DECLARATORY JUDGMENTS FOR 501(C)(4) ORGANIZATIONS.

  (a) In General.--Section 7428(a)(1) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of subparagraph (C) and 
by inserting after subparagraph (D) the following new subparagraph:
                  ``(E) with respect to the initial classification or 
                continuing classification of an organization described 
                in section 501(c)(4) which is exempt from tax under 
                section 501(a), or''.
  (b) Effective Date.--The amendments made by this section shall apply 
to pleadings filed after the date of the enactment of this Act.

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    H.R. 1295, reported by the Committee on Ways and Means, 
provides for a streamlined recognition process for 
organizations claiming tax exemption under section 501(c)(4) of 
the Internal Revenue Code (the ``Code''). The new process would 
require an organization to notify the Internal Revenue Service 
(``IRS'') within 60 days of formation that it has begun 
operations as a tax-exempt organization under section 
501(c)(4). The IRS would be required to provide an 
acknowledgement to the new organization within 60 days of 
receiving the notification. New exempt organizations would be 
expected to provide information supporting the exemption with 
their first annual information return (Form 990). An 
organization that nonetheless wished to have an affirmative 
determination of its exempt status may request such a ruling, 
subject to an appropriate fee. The new recognition process 
generally would be effective for organizations seeking 
exemption under section 501(c)(4) after the date of enactment. 
The bill also permits organizations claiming exemption under 
section 501(c)(4) to seek Federal judicial review in cases in 
which the IRS challenges the organization's initial or 
continuing exemption.

                 B. Background and Need for Legislation

    Organizations seeking exemption under section 501(c)(3)--
typically public charities and private foundations--generally 
are required to seek formal recognition of their tax-exempt 
status by submitting an application to the IRS. Organizations 
seeking exemption under other Code sections (e.g., social 
welfare organizations claiming exemption under section 
501(c)(4)) may submit a formal application for exemption, but 
are not required to do so. Through its investigation of the IRS 
targeting of certain social welfare organizations, the 
Committee learned that the IRS spends approximately 10,000 
hours a year processing entirely voluntary section 501(c)(4) 
applications. This is the same process that allowed the IRS to 
subject applicants to extraordinary delays and inappropriate 
questions, including demands for donor lists. The bill 
streamlines the recognition process for section 501(c)(4) 
organizations, while preserving the option for an organization 
to seek a formal determination. In addition, under current law 
and practice, if the IRS determines at any time--during the 
application process or later under exam--that an organization 
does not qualify under section 501(c)(4), the organization has 
limited recourse. The bill provides the opportunity for 
judicial review of adverse IRS determinations, which has long 
been available to section 501(c)(3) organizations.

                         C. Legislative History

Background

    H.R. 1295 was introduced on March 4, 2015, and was referred 
to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 1295, the 
``IRS Bureaucracy Reduction and Judicial Review Act,'' on March 
25, 2015, and ordered the bill, as amended, favorably reported 
(with a quorum being present).

Committee hearings

    The need for reform of the recognition process for 
organizations seeking exemption under section 501(c)(4) was 
discussed during multiple Committee hearings during the 113th 
Congress:
     Full Committee Hearing on IRS Targeting 
Conservative Groups (May 17, 2013).
     Full Committee Hearing Organizations Targeted by 
Internal Revenue Service for Their Personal Beliefs (June 4, 
2013).
     Full Committee Hearing on the Status of Internal 
Revenue Service's Review of Taxpayer Targeting Practices (June 
27, 2013).
     Oversight Subcommittee Hearing on the IRS Exempt 
Organizations Division Post-U.S. Treasury Inspector General for 
Tax Administration Audit Report (September 18, 2013).
     Oversight Subcommittee Hearing with IRS 
Commissioner Koskinen (February 5, 2014).
     Oversight Subcommittee Hearing on the IRS 
Operations and the 2014 Tax Return Filing Season (May 7, 2014).
     Full Committee Hearing with IRS Commissioner 
Koskinen (June 20, 2014).

                      II. EXPLANATION OF THE BILL

    A. Require Section 501(c)(4) Organizations To Provide Notice of 
Formation (sec. 2 of the bill, secs. 6033 and 6652 of the Code, and new 
                         sec. 506 of the Code)

                              PRESENT LAW

Section 501(c)(4) organizations

    Section 501(c)(4) provides tax exemption for civic leagues 
or organizations not organized for profit but operated 
exclusively for the promotion of social welfare, or certain 
local associations of employees, provided that no part of the 
net earnings of the entity inures to the benefit of any private 
shareholder or individual. An organization is operated 
exclusively for the promotion of social welfare if it is 
engaged primarily in promoting in some way the common good and 
general welfare of the people of a community.\1\ The promotion 
of social welfare does not include direct or indirect 
participation or intervention in political campaigns on behalf 
of or in opposition to any candidate for public office; 
however, social welfare organizations are permitted to engage 
in political activity so long as the organization remains 
engaged primarily in activities that promote social welfare. 
The lobbying activities of a social welfare organization 
generally are not limited. An organization is not operated 
primarily for the promotion of social welfare if its primary 
activity is operating a social club for the benefit, pleasure, 
or recreation of its members, or is carrying on a business with 
the general public in a manner similar to organizations that 
are operated for profit.
---------------------------------------------------------------------------
    \1\Treas. Reg. sec. 1.501(c)(4)-1(a)(2).
---------------------------------------------------------------------------

Application for tax exemption

            Section 501(c)(3) organizations
    Section 501(c)(3) organizations (with certain exceptions) 
are required to seek formal recognition of tax-exempt status by 
filing an application with the IRS (Form 1023).\2\ In response 
to the application, the IRS issues a determination letter or 
ruling either recognizing the applicant as tax-exempt or not. 
Certain organizations are not required to apply for recognition 
of tax-exempt status in order to qualify as tax-exempt under 
section 501(c)(3) but may do so. These organizations include 
churches, certain church-related organizations, organizations 
(other than private foundations) the gross receipts of which in 
each taxable year are normally not more than $5,000, and 
organizations (other than private foundations) subordinate to 
another tax-exempt organization that are covered by a group 
exemption letter.
---------------------------------------------------------------------------
    \2\See sec. 508(a). Unless otherwise stated all section references 
are to the Internal Revenue Service Code of 1986, as amended (the 
``Code'').
---------------------------------------------------------------------------
    A favorable determination by the IRS on an application for 
recognition of tax-exempt status will be retroactive to the 
date that the section 501(c)(3) organization was created if it 
files a completed Form 1023 within 15 months of the end of the 
month in which it was formed.\3\ If the organization does not 
file Form 1023 or files a late application, it will not be 
treated as tax-exempt under section 501(c)(3) for any period 
prior to the filing of an application for recognition of tax 
exemption.\4\ Contributions to section 501(c)(3) organizations 
that are subject to the requirement that the organization apply 
for recognition of tax-exempt status generally are not 
deductible from income, gift, or estate tax until the 
organization receives a determination letter from the IRS.\5\
---------------------------------------------------------------------------
    \3\Pursuant to Treas. Reg. sec. 301.9100-2(a)(2)(iv), organizations 
are allowed an automatic 12-month extension as long as the application 
for recognition of tax exemption is filed within the extended, i.e., 
27-month, period. The IRS also may grant an extension beyond the 27-
month period if the organization is able to establish that it acted 
reasonably and in good faith and that granting relief will not 
prejudice the interests of the government. Treas. Reg. secs. 301.9100-1 
and 301.9100-3.
    \4\Treas. Reg. sec. 1.508-1(a)(1).
    \5\Sec. 508(d)(2)(B). Contributions made prior to receipt of a 
favorable determination letter may be deductible prior to the 
organization's receipt of such favorable determination letter if the 
organization has timely filed its application to be recognized as tax-
exempt. Treas. Reg. secs. 1.508-1(a) and 1.508-2(b)(1)(i)(b).
---------------------------------------------------------------------------
    Information required on Form 1023 includes, but is not 
limited to: (1) a detailed statement of actual and proposed 
activities; (2) compensation and financial information 
regarding officers, directors, trustees, employees, and 
independent contractors; (3) a statement of revenues and 
expenses for the current year and the three preceding years (or 
for the years of the organization's existence, if less than 
four years); (4) a balance sheet for the current year; (5) a 
description of anticipated receipts and contemplated 
expenditures; (6) a copy of the articles of incorporation, 
trust document, or other organizational or enabling document; 
(7) organization bylaws (if any); and (8) information about 
previously filed Federal income tax and exempt organization 
returns, if applicable.
    A favorable determination letter issued by the IRS will 
state that the application for recognition of tax exemption and 
supporting documents establish that the organization submitting 
the application meets the requirements of section 501(c)(3) and 
will classify (as either an adverse or definitive ruling) the 
organization as either a public charity or a private 
foundation.
    Organizations that are classified as public charities (or 
as private operating foundations) and not as private 
nonoperating foundations may cease to satisfy the conditions 
that entitled the organization to such status. The IRS makes an 
initial determination of public charity or private foundation 
status (either a definitive ruling, or an advance ruling 
generally effective for five years and then reviewed again by 
the IRS) that is subsequently monitored by the IRS through 
annual return filings. The IRS periodically announces in the 
Internal Revenue Bulletin a list of organizations that have 
failed to establish, or have been unable to maintain, their 
status as public charities or as private operating foundations, 
and that become private nonoperating foundations.
    If the IRS denies an organization's application for 
recognition of exemption under section 501(c)(3), the 
organization may seek a declaratory judgment regarding its tax 
status.\6\ Prior to utilizing the declaratory judgment 
procedure, the organization must have exhausted all 
administrative remedies available to it within the IRS.
---------------------------------------------------------------------------
    \6\Sec. 7428.
---------------------------------------------------------------------------
            Other section 501(c) organizations
    Most section 501(c) organizations--including organizations 
described within sections 501(c)(4) (social welfare 
organizations, etc.), 501(c)(5) (labor organizations, etc.), or 
501(c)(6) (business leagues, etc.)--are not required to provide 
notice to the Secretary that they are requesting recognition of 
exempt status. Rather, organizations are exempt under these 
provisions if they satisfy the requirements applicable to such 
organizations. However, in order to obtain certain benefits 
such as public recognition of tax-exempt status, exemption from 
certain State taxes, and nonprofit mailing privileges, such 
organizations voluntarily may request a formal recognition of 
exempt status by filing a Form 1024.
    If such an organization voluntarily requests a 
determination letter by filing Form 1024 within 27 months of 
the end of the month in which it was formed, its determination 
of exempt status, once provided, generally will be effective as 
of the organization's date of formation.\7\ If, however, the 
organization files Form 1024 after the 27-month deadline has 
passed, its exempt status will be formally recognized only as 
of the date the organization filed Form 1024.
---------------------------------------------------------------------------
    \7\Rev. Proc. 2013-9, 2013-2 I.R.B. 255. Prior to the issuance of 
Revenue Procedure 2013-9 in early 2013, an organization that filed an 
application for exemption on Form 2014 generally could obtain a 
determination that it was exempt as of its date of formation, 
regardless of when it filed Form 1024.
---------------------------------------------------------------------------
    The declaratory judgment process available to organizations 
seeking exemption under section 501(c)(3) is not available to 
organizations seeking exemption under other subsections of the 
Code, including sections 501(c)(4), 501(c)(5), and 501(c)(6).

Revocation (and suspension) of exempt status

    An organization that has received a favorable tax-exemption 
determination from the IRS generally may continue to rely on 
the determination as long as ``there are no substantial changes 
in the organization's character, purposes, or methods of 
operation.''\8\ A ruling or determination letter concluding 
that an organization is exempt from tax may, however, be 
revoked or modified: (1) by notice from the IRS to the 
organization to which the ruling or determination letter was 
originally issued; (2) by enactment of legislation or 
ratification of a tax treaty; (3) by a decision of the United 
States Supreme Court; (4) by issuance of temporary or final 
Regulations by the Treasury Department; (5) by issuance of a 
revenue ruling, a revenue procedure, or other statement in the 
Internal Revenue Bulletin; or (6) automatically, in the event 
the organization fails to file a required annual return or 
notice for three consecutive years.\9\ A revocation or 
modification of a determination letter or ruling may be 
retroactive if, for example, there has been a change in the 
applicable law, the organization omitted or misstated a 
material fact, or the organization has operated in a manner 
materially different from that originally represented.\10\
---------------------------------------------------------------------------
    \8\Treas. Reg. sec. 1.501(a)-1(a)(2).
    \9\Rev. Proc. 2013-9, 2013-2 I.R.B. 255.
    \10\Ibid.
---------------------------------------------------------------------------
    The IRS generally issues a letter revoking recognition of 
an organization's tax-exempt status only after: (1) conducting 
an examination of the organization; (2) issuing a letter to the 
organization proposing revocation; and (3) allowing the 
organization to exhaust the administrative appeal rights that 
follow the issuance of the proposed revocation letter. In the 
case of a section 501(c)(3) organization, the revocation letter 
immediately is subject to judicial review under the declaratory 
judgment procedures of section 7428. To sustain a revocation of 
tax-exempt status under section 7428, the IRS must demonstrate 
that the organization no longer is entitled to exemption.
    Upon revocation of tax-exemption or change in the 
classification of an organization (e.g., from public charity to 
private foundation status), the IRS publishes an announcement 
of such revocation or change in the Internal Revenue Bulletin. 
Contributions made to organizations by donors who are unaware 
of the revocation or change in status ordinarily will be 
deductible if made on or before the date of publication of the 
announcement.
    The IRS may suspend the tax-exempt status of an 
organization for any period during which an organization is 
designated or identified by U.S. authorities as a terrorist 
organization or supporter of terrorism.\11\ Such an 
organization also is ineligible to apply for tax exemption. The 
period of suspension runs from the date the organization is 
first designated or identified to the date when all 
designations or identifications with respect to the 
organization have been rescinded pursuant to the law or 
Executive Order under which the designation or identification 
was made. During the period of suspension, no deduction is 
allowed for any contribution to a terrorist organization.
---------------------------------------------------------------------------
    \11\Sec. 501(p) (enacted by Pub. L. No. 108-121, sec. 108(a), 
effective for designations made before, on, or after November 11, 
2003).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    In recent years, section 501(c)(4) organizations that file 
an application for recognition of exempt status have faced 
considerable delays in obtaining a determination from the 
IRS.\12\ The Committee found that the IRS was spending 
thousands of hours each year developing such 501(c)(4) 
applications, which are voluntarily filed, while thousands of 
section 501(c)(3) applications, for which a determination is 
required, were not being expeditiously processed. The Committee 
further found that still other groups simply organized under 
section 501(c)(4) without providing notice to the IRS, a 
practice that is currently permitted under the Code. The 
Committee therefore believes it is desirable to eliminate the 
need for a section 501(c)(4) that desires written IRS 
acknowledgment of its exempt status to apply for a formal IRS 
determination by requiring all organizations organizing under 
the section to provide the IRS with notice of existence and 
requiring the IRS to provide timely acknowledgment of that 
notice.
---------------------------------------------------------------------------
    \12\See Treasury Inspector General for Tax Administration, 
``Inappropriate Criteria Were Used to Identify Tax-Exempt Applications 
for Review'' (May 14, 2013), Reference Number: 2013-10-053.
---------------------------------------------------------------------------

                        EXPLANATION OF PROVISION

    Under the provision, an organization described in section 
501(c)(4) must provide to the Secretary notice of its formation 
and intent to operate as such an organization, in such manner 
as the Secretary may prescribe. The notice, together with a 
reasonable user fee in an amount to be established by the 
Secretary, must be provided no later than 60 days following the 
organization's establishment and must include the following 
information: (1) the name, address, and taxpayer identification 
number of the organization; (2) the date on which, and the 
State under the laws of which, the organization was organized; 
and (3) a statement of the purpose of the organization. The 
Secretary may extend the 60-day deadline for reasonable cause. 
Any such fees collected may not be expended by the Secretary 
unless provided by an appropriations Act. Within 60 days of 
receipt of a notice of an organization's formation and intent 
to operate as an organization described in section 501(c)(4), 
the Secretary shall issue to the organization an acknowledgment 
of the notice. The notice and receipt are subject to the 
disclosure requirements of section 6104.
    The provision amends section 6652(c) (which provides for 
penalties in the event of certain failures to file an exempt 
organization return or disclosure) to impose penalties for 
failure to file the notice required under the proposal. An 
organization that fails to file a notice within 60 days of its 
formation (or, if an extension is granted for reasonable cause, 
by the deadline established by the Secretary) is subject to a 
penalty equal to $20 for each day during which the failure 
occurs, up to a maximum of $5,000. In the event such a penalty 
is imposed, the Secretary may make a written demand on the 
organization specifying a date by which the notice must be 
provided. If any person fails to comply with such a demand on 
or before the date specified in the demand, a penalty of $20 is 
imposed for each day the failure continues, up to a maximum of 
$5,000.
    With its first annual information return (Form 990, Form 
990-EZ, or Form 990-N) filed after providing the notice 
described above, a section 501(c)(4) organization must provide 
such information as the Secretary may require, and in the form 
prescribed by the Secretary, to support its qualification as an 
organization described in section 501(c)(4). The Secretary is 
not required to issue a determination letter following the 
organization's filing of the expanded first annual information 
return.
    A section 501(c)(4) organization that desires additional 
certainty regarding its qualification as an organization 
described in section 501(c)(4) may file a request for a 
determination, together with the required user fee, with the 
Secretary. Such a request is in addition to, not in lieu of, 
filing the required notice described above. It is intended that 
such a request for a determination be submitted on a new form 
(separate from Form 1024, which may continue to be used by 
certain other organizations) that clearly states that filing 
such a request is optional. The request for a determination is 
treated as an application subject to public inspection and 
disclosure under sections 6104(a) and (d).

                             EFFECTIVE DATE

    The provision generally is effective for organizations 
organized after the date of enactment.
    Organizations organized on or before the date of enactment, 
that have not filed an application for exemption (Form 1024) or 
annual information return on or before the date of enactment 
must provide the notice required under the provision within 180 
days of the date of enactment.

B. Declaratory Judgments for Section 501(c)(4) Organizations (sec. 3 of 
                  the bill and sec. 7428 of the Code)

                              PRESENT LAW

    In order for an organization to be granted tax exemption as 
a charitable entity described in section 501(c)(3), it must 
file an application for recognition of exemption with the IRS 
and receive a favorable determination of its status.\13\ For 
most section 501(c)(3) organizations, eligibility to receive 
tax-deductible contributions similarly is dependent upon its 
receipt of a favorable determination from the IRS. In general, 
a section 501(c)(3) organization can rely on a determination 
letter or ruling from the IRS regarding its tax-exempt status, 
unless there is a material change in its character, purposes, 
or methods of operation. In cases where an organization 
violates one or more of the requirements for tax exemption 
under section 501(c)(3), the IRS generally may revoke an 
organization's tax exemption, notwithstanding an earlier 
favorable determination.
---------------------------------------------------------------------------
    \13\Sec. 508(a).
---------------------------------------------------------------------------
    Present law authorizes an organization to seek a 
declaratory judgment regarding its tax-exempt status as a 
remedy if the IRS denies its application for recognition of 
exemption under section 501(c)(3), fails to act on such an 
application, or informs a section 501(c)(3) organization that 
it is considering revoking or adversely modifying its tax-
exempt status.\14\ The right to seek a declaratory judgment 
arises in the case of a dispute involving a determination by 
the IRS with respect to: (1) the initial qualification or 
continuing qualification of an organization as a charitable 
organization for tax exemption purposes or for charitable 
contribution deduction purposes; (2) the initial classification 
or continuing classification of an organization as a private 
foundation; (3) the initial classification or continuing 
classification of an organization as a private operating 
foundation; or (4) the failure of the IRS to make a 
determination with respect to (1), (2), or (3).\15\ A 
``determination'' in this context generally means a final 
decision by the IRS affecting the tax qualification of a 
charitable organization. Section 7428 vests jurisdiction over 
controversies involving such a determination in the U.S. 
District Court for the District of Columbia, the U.S. Court of 
Federal Claims, and the U.S. Tax Court.\16\
---------------------------------------------------------------------------
    \14\Sec. 7428.
    \15\Sec. 7428(a)(1).
    \16\Sec. 7428(a)(2).
---------------------------------------------------------------------------
    Prior to utilizing the declaratory judgment procedure, an 
organization must have exhausted all administrative remedies 
available to it within the IRS.\17\ For the first 270 days 
after a request for a determination is made and before the IRS 
informs the organization of its decision, an organization is 
deemed not to have exhausted its administrative remedies. If no 
determination is made during the 270-day period, the 
organization may initiate an action for declaratory judgment 
after the period has elapsed. If, however, the IRS makes an 
adverse determination during the 270-day period, an 
organization may immediately seek declaratory relief. The 270-
day period does not begin with respect to applications for 
recognition of tax-exempt status until the date a substantially 
completed application is submitted.
---------------------------------------------------------------------------
    \17\Sec. 7428(b)(2).
---------------------------------------------------------------------------
    Under present law, a non-charity (i.e., an organization not 
described in section 501(c)(3)) may not seek a declaratory 
judgment with respect to an IRS determination regarding its 
tax-exempt status. In general, such an organization must 
petition the U.S. Tax Court for relief following the issuance 
of a notice of deficiency or pay any tax owed and file a refund 
action in Federal district court or the U.S. Court of Federal 
Claims.

                           REASONS FOR CHANGE

    The Committee found that section 501(c)(4) organizations 
that receive an adverse determination or upon examination have 
their exempt status revoked have limited recourse. The 
Committee therefore believes it is desirable to allow a section 
501(c)(4) organization to seek a declaratory judgment regarding 
its tax-exempt status from a court of law in the event it has 
exhausted its administrative remedies, using the same 
procedures that are already available to section 501(c)(3) 
charitable organizations.

                        EXPLANATION OF PROVISION

    The provision extends the section 7428 declaratory judgment 
procedure to the initial determination or continuing 
classification of an organization as tax-exempt under section 
501(a) as an organization described in section 501(c)(4) (i.e., 
social welfare and certain other organizations).

                             EFFECTIVE DATE

    The provision is effective for pleadings filed after the 
date of enactment.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 1295, the ``IRS Bureaucracy Reduction and 
Judicial Review Act,'' on March 25, 2015.
    The Chairman's amendment in the nature of a substitute was 
adopted by a voice vote (with a quorum being present).
    An amendment by Mr. Holding to the amendment in the nature 
of a substitute, requiring any fees collected pursuant to the 
bill be subject to appropriations, was adopted by a voice vote 
(with a quorum being present).
    An amendment by Mr. McDermott to the amendment in the 
nature of a substitute, requiring 501(c)(4) organizations to 
indicate whether they plan to engage in certain political 
activity, was not agreed to by a roll-call vote of 20 nays to 
11 yeas (with a quorum being present).

----------------------------------------------------------------------------------------------------------------
         Representative              Yea       Nay     Present    Representative       Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Ryan........................  ........        X   ........  Mr. Levin.........  ........  ........  ........
Mr. Johnson.....................  ........        X   ........  Mr. Rangel........  ........  ........  ........
Mr. Brady.......................  ........        X   ........  Mr. McDermott.....        X   ........  ........
Mr. Nunes.......................  ........  ........  ........  Mr. Lewis.........        X   ........  ........
Mr. Tiberi......................  ........        X   ........  Mr. Neal..........        X   ........  ........
Mr. Reichert....................  ........        X   ........  Mr. Becerra.......        X   ........  ........
Mr. Boustany....................  ........        X   ........  Mr. Doggett.......        X   ........  ........
Mr. Roskam......................  ........        X   ........  Mr. Thompson......        X   ........  ........
Mr. Price.......................  ........  ........  ........  Mr. Larson........        X   ........  ........
Mr. Buchanan....................  ........        X   ........  Mr. Blumenauer....  ........  ........  ........
Mr. Smith (NE)..................  ........        X   ........  Mr. Kind..........        X   ........  ........
Ms. Jenkins.....................  ........        X   ........  Mr. Pascrell......        X   ........  ........
Mr. Paulsen.....................  ........        X   ........  Mr. Crowley.......  ........  ........  ........
Mr. Marchant....................  ........        X   ........  Mr. Davis.........        X   ........  ........
Ms. Black.......................  ........  ........  ........  Ms. Sanchez.......        X   ........  ........
Mr. Reed........................  ........        X   ........
Mr. Young.......................  ........        X   ........
Mr. Kelly.......................  ........        X   ........
Mr. Renacci.....................  ........        X   ........
Mr. Meehan......................  ........        X   ........
Ms. Noem........................  ........        X   ........
Mr. Holding.....................  ........        X   ........
Mr. Smith (MO)..................  ........        X   ........
----------------------------------------------------------------------------------------------------------------

    The bill, H.R. 1295, as amended, was ordered favorably 
reported to the House of Representatives by a voice vote (with 
a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 1295, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2015-2025:

                                                                      FISCAL YEARS
                                                                [Millions of dollars]\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2015        2016        2017        2018        2019        2020        2021        2022       2023       2024       2025      2015-20      2015-25
--------------------------------------------------------------------------------------------------------------------------------------------------------
   (\2\)           1           1           1           1           1           2          2          2          2          2            5           16
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Estimate includes an increase in user fees of $15 million over the budget window, as provided by the Congressional Budget Office.
\2\Increase of less than $500,000.

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: the gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that there are no new or increased tax 
expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 3, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1295, the IRS 
Bureaucracy Reduction and Judicial Review Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 1295--IRS Bureaucracy Reduction and Judicial Review Act

    Summary: H.R. 1295 would amend federal law concerning 
certain nonprofit and tax exempt civic leagues or organizations 
operated for the promotion of social welfare--known as 
501(c)(4) organizations. Specifically, the bill would:
           Require each such organization to notify the 
        Department of the Treasury of its formation and to pay 
        a fee;
           Require the Treasury to acknowledge receipt 
        of such notifications within 60 days; and
           Establish new monetary penalties for 
        organizations that do not provide timely notification 
        to the Treasury.
    CBO and the staff of the Joint Committee on Taxation (JCT) 
estimate that enacting H.R. 1295 would increase fee and penalty 
collections (which are recorded in the budget as revenues) by 
$16 million over the 2016-2025 period. Because enacting the 
bill would affect revenues, pay-as-you-go procedures apply. 
Enacting the bill would not affect direct spending. In 
addition, CBO estimates that implementing H.R. 1295 would cost 
$5 million over the 2016-2020, assuming appropriation of the 
necessary amounts.
    CBO and JCT have determined that H.R. 1295 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would not increase the 
budgets of state, local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effects of H.R. 1295 are shown in the following 
table. The effects of this legislation fall within budget 
function 800 (general government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES
 
Estimated Revenues................................       1       1       1       1       1       2       2       2       2       2         5         16
 
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level.....................       1       1       1       1       1       2       2       2       2       2         5         15
Estimated Outlays.................................       1       1       1       1       1       2       2       2       2       2         5         15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: CBO and the staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted before the end of fiscal year 2015.

Revenues

    H.R. 1295 would require each entity that forms as a 
501(c)(4) organization after the bill's enactment to provide 
notice to the Treasury of its formation and to pay a fee. Based 
on information from the Internal Revenue Service (IRS) 
regarding the number of 501(c)(4) formed in recent years (about 
3,000 per year), CBO estimates that this provision would 
increase revenue collections by $15 million over the 2016-2025 
period. In addition, JCT estimates that the bill would increase 
revenues by $1 million over the 2016-2025 period from penalties 
imposed for violations of the provisions in H.R. 1295.

Spending subject to appropriation

    H.R. 1295 would authorize IRS to spend amounts collected 
from entities applying to become 501(c)(4) organizations. CBO 
estimates that implementing this provision would cost $15 
million over the 2016-2025 period, assuming appropriation of 
the necessary amounts.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The changes in revenues that are subject to those 
pay-as-you-go procedures are shown in the following table.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1295, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MARCH 25, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2015   2016   2017   2018   2019   2020   2021   2022   2023   2024   2025  2015-2020  2015-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET DECREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.......................      0     -1     -1     -1     -1     -1     -2     -2     -2     -2     -2         -5        -16
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: CBO and JCT 
have determined that H.R. 1295 contains no intergovernmental or 
private-sector mandates as defined in UMRA and would not affect 
the budgets of state, local, or tribal governments.
    Estimate prepared by: Federal spending: Matthew Pickford; 
Federal revenues: Staff of the Joint Committee on Taxation; 
Intergovernmental and private-sector mandates: Staff of the 
Joint Committee on Taxation, Jon Sperl, and Paige Piper/Bach.
    Estimate approved by: Theresa Gullo, Assistant Director for 
Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 1295 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4). The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    The following statement is made pursuant to clause 3(h)(1) 
of rule XIII of the Rules of the House of Representatives. 
Section 4022(b) of the Internal Revenue Service Restructuring 
and Reform Act of 1998 requires the staff of the Joint 
Committee on Taxation (in consultation with the Internal 
Revenue Service and the Treasury Department) to provide a tax 
complexity analysis. The complexity analysis is required for 
all legislation reported by the Senate Committee on Finance, 
the House Committee on Ways and Means, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Internal Revenue 
Code and that have ``widespread applicability'' to individuals 
or small businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

   Text of Existing Law Amended or Repealed by the Bill, as Reported

  In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *

CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *

Subchapter A--Returns and Records

           *       *       *       *       *       *       *

PART III--INFORMATION RETURNS

           *       *       *       *       *       *       *

Subpart A--Information Concerning Persons Subject to Special Provisions

           *       *       *       *       *       *       *

SEC. 6033. RETURNS BY EXEMPT ORGANIZATIONS.

  (a) Organizations Required to File.--
          (1) In general.--Except as provided in paragraph (3), 
        every organization exempt from taxation under section 
        501(a) shall file an annual return, stating 
        specifically the items of gross income, receipts, and 
        disbursements, and such other information for the 
        purpose of carrying out the internal revenue laws as 
        the Secretary may by forms or regulations prescribe, 
        and shall keep such records, render under oath such 
        statements, make such other returns, and comply with 
        such rules and regulations as the Secretary may from 
        time to time prescribe; except that, in the discretion 
        of the Secretary, any organization described in section 
        401(a) may be relieved from stating in its return any 
        information which is reported in returns filed by the 
        employer which established such organization.
          (2) Being a party to certain reportable 
        transactions.--Every tax-exempt entity described in 
        section 4965(c) shall file (in such form and manner and 
        at such time as determined by the Secretary) a 
        disclosure of--
                  (A) such entity's being a party to any 
                prohibited tax shelter transaction (as defined 
                in section 4965(e)), and
                  (B) the identity of any other party to such 
                transaction which is known by such tax-exempt 
                entity.
          (3) Exceptions from filing.--
                  (A) Mandatory exceptions.--Paragraph (1) 
                shall not apply to--
                          (i) churches, their integrated 
                        auxiliaries, and conventions or 
                        associations of churches,
                          (ii) any organization (other than a 
                        private foundation, as defined in 
                        section 509(a)) described in 
                        subparagraph (C), the gross receipts of 
                        which in each taxable year are normally 
                        not more than $5,000, or
                          (iii) the exclusively religious 
                        activities of any religious order.
                  (B) Discretionary exceptions.--The Secretary 
                may relieve any organization required under 
                paragraph (1) (other than an organization 
                described in section 509(a)(3)) to file an 
                information return from filing such a return 
                where he determines that such filing is not 
                necessary to the efficient administration of 
                the internal revenue laws.
                  (C) Certain organizations.--The organizations 
                referred to in subparagraph (A)(ii) are--
                          (i) a religious organization 
                        described in section 501(c)(3);
                          (ii) an educational organization 
                        described in section 170(b)(1)(A)(ii);
                          (iii) a charitable organization, or 
                        an organization for the prevention of 
                        cruelty to children or animals, 
                        described in section 501(c)(3), if such 
                        organization is supported, in whole or 
                        in part, by funds contributed by the 
                        United States or any State or political 
                        subdivision thereof, or is primarily 
                        supported by contributions of the 
                        general public;
                          (iv) an organization described in 
                        section 501(c)(3), if such organization 
                        is operated, supervised, or controlled 
                        by or in connection with a religious 
                        organization described in clause (i);
                          (v) an organization described in 
                        section 501(c)(8); and
                          (vi) an organization described in 
                        section 501(c)(1), if such organization 
                        is a corporation wholly owned by the 
                        United States or any agency or 
                        instrumentality thereof, or a wholly-
                        owned subsidiary of such a corporation.
  (b) Certain Organizations Described in Section 501(C)(3).--
Every organization described in section 501(c)(3) which is 
subject to the requirements of subsection (a) shall furnish 
annually information, at such time and in such manner as the 
Secretary may by forms or regulations prescribe, setting 
forth--
          (1) its gross income for the year,
          (2) its expenses attributable to such income and 
        incurred within the year,
          (3) its disbursements within the year for the 
        purposes for which it is exempt,
          (4) a balance sheet showing its assets, liabilities, 
        and net worth as of the beginning of such year,
          (5) the total of the contributions and gifts received 
        by it during the year, and the names and addresses of 
        all substantial contributors,
          (6) the names and addresses of its foundation 
        managers (within the meaning of section 4946(b)(1)) and 
        highly compensated employees,
          (7) the compensation and other payments made during 
        the year to each individual described in paragraph (6),
          (8) in the case of an organization with respect to 
        which an election under section 501(h) is effective for 
        the taxable year, the following amounts for such 
        organization for such taxable year:
                  (A) the lobbying expenditures (as defined in 
                section 4911(c)(1)),
                  (B) the lobbying nontaxable amount (as 
                defined in section 4911(c)(2)),
                  (C) the grass roots expenditures (as defined 
                in section 4911(c)(3)), and
                  (D) the grass roots nontaxable amount (as 
                defined in section 4911(c)(4)),
          (9) such other information with respect to direct or 
        indirect transfers to, and other direct or indirect 
        transactions and relationships with, other 
        organizations described in section 501(c) (other than 
        paragraph (3) thereof) or section 527 as the Secretary 
        may require to prevent--
                  (A) diversion of funds from the 
                organization's exempt purpose, or
                  (B) misallocation of revenues or expenses,
          (10) the respective amounts (if any) of the taxes 
        imposed on the organization, or any organization 
        manager of the organization, during the taxable year 
        under any of the following provisions (and the 
        respective amounts (if any) of reimbursements paid by 
        the organization during the taxable year with respect 
        to taxes imposed on any such organization manager under 
        any of such provisions):
                  (A) section 4911 (relating to tax on excess 
                expenditures to influence legislation),
                  (B) section 4912 (relating to tax on 
                disqualifying lobbying expenditures of certain 
                organizations),
                  (C) section 4955 (relating to taxes on 
                political expenditures of section 501(c)(3) 
                organizations), except to the extent that, by 
                reason of section 4962, the taxes imposed under 
                such section are not required to be paid or are 
                credited or refunded, and
                  (D) section 4959 (relating to taxes on 
                failures by hospital organizations),
          (11) the respective amounts (if any) of--
                  (A) the taxes imposed with respect to the 
                organization on any organization manager, or 
                any disqualified person, during the taxable 
                year under section 4958 (relating to taxes on 
                private excess benefit from certain charitable 
                organizations), and
                  (B) reimbursements paid by the organization 
                during the taxable year with respect to taxes 
                imposed under such section, except to the 
                extent that, by reason of section 4962, the 
                taxes imposed under such section are not 
                required to be paid or are credited or 
                refunded,
          (12) such information as the Secretary may require 
        with respect to any excess benefit transaction (as 
        defined in section 4958),
          (13) such information with respect to disqualified 
        persons as the Secretary may prescribe,
          (14) such information as the Secretary may require 
        with respect to disaster relief activities, including 
        the amount and use of qualified contributions to which 
        section 1400S(a) applies,
          (15) in the case of an organization to which the 
        requirements of section 501(r) apply for the taxable 
        year--
                  (A) a description of how the organization is 
                addressing the needs identified in each 
                community health needs assessment conducted 
                under section 501(r)(3) and a description of 
                any such needs that are not being addressed 
                together with the reasons why such needs are 
                not being addressed, and
                  (B) the audited financial statements of such 
                organization (or, in the case of an 
                organization the financial statements of which 
                are included in a consolidated financial 
                statement with other organizations, such 
                consolidated financial statement).
          (16) such other information for purposes of carrying 
        out the internal revenue laws as the Secretary may 
        require.
For purposes of paragraph (8), if section 4911(f) applies to 
the organization for the taxable year, such organization shall 
furnish the amounts with respect to the affiliated group as 
well as with respect to such organization.
  (c) Additional Provisions Relating to Private Foundations.--
In the case of an organization which is a private foundation 
(within the meaning of section 509(a))--
          (1) the Secretary shall by regulations provide that 
        the private foundation shall include in its annual 
        return under this section such information (not 
        required to be furnished by subsection (b) or the forms 
        or regulations prescribed thereunder) as would have 
        been required to be furnished under section 6056 
        (relating to annual reports by private foundations) as 
        such section 6056 was in effect on January 1, 1979, and
          (2) the foundation managers shall furnish copies of 
        the annual return under this section to such State 
        officials, at such times, and under such conditions, as 
        the Secretary may by regulations prescribe.
Nothing in paragraph (1) shall require the inclusion of the 
name and address of any recipient (other than a disqualified 
person within the meaning of section 4946) of 1 or more 
charitable gifts or grants made by the foundation to such 
recipient as an indigent or needy person if the aggregate of 
such gifts or grants made by the foundation to such recipient 
during the year does not exceed $1,000.
  (d) Section to Apply to Nonexempt Charitable Trusts and 
Nonexempt Private Foundations.--The following organizations 
shall comply with the requirements of this section in the same 
manner as organizations described in section 501(c)(3) which 
are exempt from tax under section 501(a):
          (1) Nonexempt charitable trusts.--A trust described 
        in section 4947(a)(1) (relating to nonexempt charitable 
        trusts).
          (2) Nonexempt private foundations.--A private 
        foundation which is not exempt from tax under section 
        501(a).
  (e) Special Rules Relating to Lobbying Activities.--
          (1) Reporting requirements.--
                  (A) In general.--If this subsection applies 
                to an organization for any taxable year, such 
                organization--
                          (i) shall include on any return 
                        required to be filed under subsection 
                        (a) for such year information setting 
                        forth the total expenditures of the 
                        organization to which section 162(e)(1) 
                        applies and the total amount of the 
                        dues or other similar amounts paid to 
                        the organization to which such 
                        expenditures are allocable, and
                          (ii) except as provided in paragraphs 
                        (2)(A)(i) and (3), shall, at the time 
                        of assessment or payment of such dues 
                        or other similar amounts, provide 
                        notice to each person making such 
                        payment which contains a reasonable 
                        estimate of the portion of such dues or 
                        other similar amounts to which such 
                        expenditures are so allocable.
                  (B) Organizations to which subsection 
                applies.--
                          (i) In general.--This subsection 
                        shall apply to any organization which 
                        is exempt from taxation under section 
                        501 other than an organization 
                        described in section 501(c)(3).
                          (ii) Special rule for in-house 
                        expenditures.--This subsection shall 
                        not apply to the in-house expenditures 
                        (within the meaning of section 
                        162(e)(5)(B)(ii)) of an organization 
                        for a taxable year if such expenditures 
                        do not exceed $2,000. In determining 
                        whether a taxpayer exceeds the $2,000 
                        limit under this clause, there shall 
                        not be taken into account overhead 
                        costs otherwise allocable to activities 
                        described in subparagraphs (A) and (D) 
                        of section 162(e)(1).
                          (iii) Coordination with section 
                        527(f).--This subsection shall not 
                        apply to any amount on which tax is 
                        imposed by reason of section 527(f).
                  (C) Allocation.--For purposes of this 
                paragraph--
                          (i) In general.--Expenditures to 
                        which section 162(e)(1) applies shall 
                        be treated as paid out of dues or other 
                        similar amounts to the extent thereof.
                          (ii) Carryover of lobbying 
                        expenditures in excess of dues.--If 
                        expenditures to which section 162(e)(1) 
                        applies exceed the dues or other 
                        similar amounts for any taxable year, 
                        such excess shall be treated as 
                        expenditures to which section 162(e)(1) 
                        applies which are paid or incurred by 
                        the organization during the following 
                        taxable year.
          (2) Tax imposed where organization does not notify.--
                  (A) In general.--If an organization--
                          (i) elects not to provide the notices 
                        described in paragraph (1)(A) for any 
                        taxable year, or
                          (ii) fails to include in such notices 
                        the amount allocable to expenditures to 
                        which section 162(e)(1) applies 
                        (determined on the basis of actual 
                        amounts rather than the reasonable 
                        estimates under paragraph (1)(A)(ii)),
                then there is hereby imposed on such 
                organization for such taxable year a tax in an 
                amount equal to the product of the highest rate 
                of tax imposed by section 11 for the taxable 
                year and the aggregate amount not included in 
                such notices by reason of such election or 
                failure.
                  (B) Waiver where future adjustments made.--
                The Secretary may waive the tax imposed by 
                subparagraph (A)(ii) for any taxable year if 
                the organization agrees to adjust its estimates 
                under paragraph (1)(A)(ii) for the following 
                taxable year to correct any failures.
                  (C) Tax treated as income tax.--For purposes 
                of this title, the tax imposed by subparagraph 
                (A) shall be treated in the same manner as a 
                tax imposed by chapter 1 (relating to income 
                taxes).
          (3) Exception where dues generally nondeductible.--
        Paragraph (1)(A) shall not apply to an organization 
        which establishes to the satisfaction of the Secretary 
        that substantially all of the dues or other similar 
        amounts paid by persons to such organization are not 
        deductible without regard to section 162(e).
  (f) Certain Organizations Described in Section 501(C)(4).--
Every organization described in section 501(c)(4) which is 
subject to the requirements of subsection (a) shall include on 
the return required under subsection (a) the information 
referred to in paragraphs (11), (12) and (13) of subsection (b) 
with respect to such organization.
  (g) Returns Required by Political Organizations.--
          (1) In general.--This section shall apply to a 
        political organization (as defined by section 
        527(e)(1)) which has gross receipts of $25,000 or more 
        for the taxable year. In the case of a political 
        organization which is a qualified 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''.
          (2) Annual returns.--Political organizations 
        described in paragraph (1) shall file an annual 
        return--
                  (A) containing the information required, and 
                complying with the other requirements, under 
                subsection (a)(1) for organizations exempt from 
                taxation under section 501(a), with such 
                modifications as the Secretary considers 
                appropriate to require only information which 
                is necessary for the purposes of carrying out 
                section 527, and
                  (B) containing such other information as the 
                Secretary deems necessary to carry out the 
                provisions of this subsection.
          (3) Mandatory exceptions from filing.--Paragraph (2) 
        shall not apply to an organization--
                  (A) which is a State or local committee of a 
                political party, or political committee of a 
                State or local candidate,
                  (B) which is a caucus or association of State 
                or local officials,
                  (C) which is an authorized committee (as 
                defined in section 301(6) of the Federal 
                Election Campaign Act of 1971) of a candidate 
                for Federal office,
                  (D) which is a national committee (as defined 
                in section 301(14) of the Federal Election 
                Campaign Act of 1971) of a political party,
                  (E) which is a United States House of 
                Representatives or United States Senate 
                campaign committee of a political party 
                committee,
                  (F) which is required to report under the 
                Federal Election Campaign Act of 1971 as a 
                political committee (as defined in section 
                301(4) of such Act), or
                  (G) to which section 527 applies for the 
                taxable year solely by reason of subsection 
                (f)(1) of such section.
          (4) Discretionary exception.--The Secretary may 
        relieve any organization required under paragraph (2) 
        to file an information return from filing such a return 
        if the Secretary determines that such filing is not 
        necessary to the efficient administration of the 
        internal revenue laws.
  (h) Controlling Organizations.--Each controlling organization 
(within the meaning of section 512(b)(13)) which is subject to 
the requirements of subsection (a) shall include on the return 
required under subsection (a)--
          (1) any interest, annuities, royalties, or rents 
        received from each controlled entity (within the 
        meaning of section 512(b)(13)),
          (2) any loans made to each such controlled entity, 
        and
          (3) any transfers of funds between such controlling 
        organization and each such controlled entity.
  (i) Additional Notification Requirements.--Any organization 
the gross receipts of which in any taxable year result in such 
organization being referred to in subsection (a)(3)(A)(ii) or 
(a)(3)(B)--
          (1) shall furnish annually, in electronic form, and 
        at such time and in such manner as the Secretary may by 
        regulations prescribe, information setting forth--
                  (A) the legal name of the organization,
                  (B) any name under which such organization 
                operates or does business,
                  (C) the organization's mailing address and 
                Internet web site address (if any),
                  (D) the organization's taxpayer 
                identification number,
                  (E) the name and address of a principal 
                officer, and
                  (F) evidence of the continuing basis for the 
                organization's exemption from the filing 
                requirements under subsection (a)(1), and
          (2) upon the termination of the existence of the 
        organization, shall furnish notice of such termination.
  (j) Loss of Exempt Status for Failure to File Return or 
Notice.--
          (1) In general.--If an organization described in 
        subsection (a)(1) or (i) fails to file an annual return 
        or notice required under either subsection for 3 
        consecutive years, such organization's status as an 
        organization exempt from tax under section 501(a) shall 
        be considered revoked on and after the date set by the 
        Secretary for the filing of the third annual return or 
        notice. The Secretary shall publish and maintain a list 
        of any organization the status of which is so revoked.
          (2) Application necessary for reinstatement.--Any 
        organization the tax-exempt status of which is revoked 
        under paragraph (1) must apply in order to obtain 
        reinstatement of such status regardless of whether such 
        organization was originally required to make such an 
        application.
          (3) Retroactive reinstatement if reasonable cause 
        shown for failure.--If, upon application for 
        reinstatement of status as an organization exempt from 
        tax under section 501(a), an organization described in 
        paragraph (1) can show to the satisfaction of the 
        Secretary evidence of reasonable cause for the failure 
        described in such paragraph, the organization's exempt 
        status may, in the discretion of the Secretary, be 
        reinstated effective from the date of the revocation 
        under such paragraph.
  (k) Additional Provisions Relating to Sponsoring 
Organizations.--Every organization described in section 
4966(d)(1) shall, on the return required under subsection (a) 
for the taxable year--
          (1) list the total number of donor advised funds (as 
        defined in section 4966(d)(2)) it owns at the end of 
        such taxable year,
          (2) indicate the aggregate value of assets held in 
        such funds at the end of such taxable year, and
          (3) indicate the aggregate contributions to and 
        grants made from such funds during such taxable year.
  (l) Additional Provisions Relating to Supporting 
Organizations.--Every organization described in section 
509(a)(3) shall, on the return required under subsection (a)--
          (1) list the supported organizations (as defined in 
        section 509(f)(3)) with respect to which such 
        organization provides support,
          (2) indicate whether the organization meets the 
        requirements of clause (i), (ii), or (iii) of section 
        509(a)(3)(B), and
          (3) certify that the organization meets the 
        requirements of section 509(a)(3)(C).
  (m) Additional Information Required from Co-Op Insurers.--An 
organization described in section 501(c)(29) shall include on 
the return required under subsection (a) the following 
information:
          (1) The amount of the reserves required by each State 
        in which the organization is licensed to issue 
        qualified health plans.
          (2) The amount of reserves on hand.
  (n) Cross References.--For provisions relating to statements, 
etc., regarding exempt status of organizations, see section 
6001. For reporting requirements as to certain liquidations, 
dissolutions, terminations, and contractions, see section 
6043(b). For provisions relating to penalties for failure to 
file a return required by this section, see section 6652(c).For 
provisions relating to information required in connection with 
certain plans of deferred compensation, see section 6058.

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 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *

Subchapter A--Additions to the Tax and Additional Amounts

           *       *       *       *       *       *       *

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION 
                    STATEMENTS, ETC.

  (a) Returns With Respect to Certain Payments Aggregating Less 
Than $10.--In the case of each failure to file a statement of a 
payment to another person required under the authority of--
          (1) section 6042(a)(2) (relating to payments of 
        dividends aggregating less than $10), or
          (2) section 6044(a)(2) (relating to payments of 
        patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any 
extension of time for filing), unless it is shown that such 
failure is due to reasonable cause and not to willful neglect, 
there shall be paid (upon notice and demand by the Secretary 
and in the same manner as tax) by the person failing to so file 
the statement, $1 for each such statement not so filed, but the 
total amount imposed on the delinquent person for all such 
failures during the calendar year shall not exceed $1,000.
  (b) Failure to Report Tips.--In the case of failure by an 
employee to report to his employer on the date and in the 
manner prescribed therefor any amount of tips required to be so 
reported by section 6053(a) which are wages (as defined in 
section 3121(a)) or which are compensation (as defined in 
section 3231(e)), unless it is shown that such failure is due 
to reasonable cause and not due to willful neglect, there shall 
be paid by the employee, in addition to the tax imposed by 
section 3101 or section 3201 (as the case may be) with respect 
to the amount of tips which he so failed to report, an amount 
equal to 50 percent of such tax.
  (c) Returns by Exempt Organizations and by Certain Trusts.--
          (1) Annual returns under section 6033(a)(1) or 
        6012(a)(6).--
                  (A) Penalty on organization.--In the case 
                of--
                          (i) a failure to file a return 
                        required under section 6033(a)(1) 
                        (relating to returns by exempt 
                        organizations) or section 6012(a)(6) 
                        (relating to returns by political 
                        organizations) on the date and in the 
                        manner prescribed therefor (determined 
                        with regard to any extension of time 
                        for filing), or
                          (ii) a failure to include any of the 
                        information required to be shown on a 
                        return filed under section 6033(a)(1) 
                        or section 6012(a)(6) or to show the 
                        correct information,
                there shall be paid by the exempt organization 
                $20 for each day during which such failure 
                continues. The maximum penalty under this 
                subparagraph on failures with respect to any 1 
                return shall not exceed the lesser of $10,000 
                or 5 percent of the gross receipts of the 
                organization for the year. In the case of an 
                organization having gross receipts exceeding 
                $1,000,000 for any year, with respect to the 
                return required under section 6033(a)(1) or 
                section 6012(a)(6) for such year, in applying 
                the first sentence of this subparagraph, the 
                amount of the penalty for each day during which 
                a failure continues shall be $100 in lieu of 
                the amount otherwise specified, and, in lieu of 
                applying the second sentence of this 
                subparagraph, the maximum penalty under this 
                subparagraph shall not exceed $50,000.
                  (B) Managers.--
                          (i) In general.--The Secretary may 
                        make a written demand on any 
                        organization subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        return shall be filed (or the 
                        information furnished) for purposes of 
                        this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any person fails to comply with any 
                        demand under clause (i) on or before 
                        the date specified in such demand, 
                        there shall be paid by the person 
                        failing to so comply $10 for each day 
                        after the expiration of the time 
                        specified in such demand during which 
                        such failure continues. The maximum 
                        penalty imposed under this subparagraph 
                        on all persons for failures with 
                        respect to any 1 return shall not 
                        exceed $5,000.
                  (C) Public inspection of annual returns and 
                reports.--In the case of a failure to comply 
                with the requirements of section 6104(d) with 
                respect to any annual return on the date and in 
                the manner prescribed therefor (determined with 
                regard to any extension of time for filing) or 
                report required under section 527(j), there 
                shall be paid by the person failing to meet 
                such requirements $20 for each day during which 
                such failure continues. The maximum penalty 
                imposed under this subparagraph on all persons 
                for failures with respect to any 1 return or 
                report shall not exceed $10,000.
                  (D) Public inspection of applications for 
                exemption and notice of status.--In the case of 
                a failure to comply with the requirements of 
                section 6104(d) with respect to any exempt 
                status application materials (as defined in 
                such section) or notice materials (as defined 
                in such section) on the date and in the manner 
                prescribed therefor, there shall be paid by the 
                person failing to meet such requirements $20 
                for each day during which such failure 
                continues.
                  (E) No penalty for certain annual notices.--
                This paragraph shall not apply with respect to 
                any notice required under section 6033(i).
          (2) Returns under section 6034 or 6043(b).--
                  (A) Penalty on organization or trust.--In the 
                case of a failure to file a return required 
                under section 6034 (relating to returns by 
                certain trusts) or section 6043(b) (relating to 
                terminations, etc., of exempt organizations), 
                on the date and in the manner prescribed 
                therefor (determined with regard to any 
                extension of time for filing), there shall be 
                paid by the exempt organization or trust 
                failing so to file $10 for each day during 
                which such failure continues, but the total 
                amount imposed under this subparagraph on any 
                organization or trust for failure to file any 1 
                return shall not exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization or trust failing to 
                file under subparagraph (A) specifying therein 
                a reasonable future date by which such filing 
                shall be made for purposes of this 
                subparagraph. If such filing is not made on or 
                before such date, there shall be paid by the 
                person failing so to file $10 for each day 
                after the expiration of the time specified in 
                the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                file any 1 return shall not exceed $5,000.
                  (C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under 
                section 6034(a), subparagraphs (A) and (B) of 
                this paragraph shall not apply and paragraph 
                (1) shall apply in the same manner as if such 
                return were required under section 6033, except 
                that--
                          (i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) 
                        shall not apply,
                          (ii) in the case of any trust with 
                        gross income in excess of $250,000, in 
                        applying the first sentence of 
                        paragraph (1)(A), the amount of the 
                        penalty for each day during which a 
                        failure continues shall be $100 in lieu 
                        of the amount otherwise specified, and 
                        in lieu of applying the second sentence 
                        of paragraph (1)(A), the maximum 
                        penalty under paragraph (1)(A) shall 
                        not exceed $50,000, and
                          (iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person 
                required to file such return knowingly fails to 
                file the return, such penalty shall also be 
                imposed on such person who shall be personally 
                liable for such penalty.
          (3) Disclosure under section 6033(a)(2).--
                  (A) Penalty on entities.--In the case of a 
                failure to file a disclosure required under 
                section 6033(a)(2), there shall be paid by the 
                tax-exempt entity (the entity manager in the 
                case of a tax-exempt entity described in 
                paragraph (4), (5), (6), or (7) of section 
                4965(c)) $100 for each day during which such 
                failure continues. The maximum penalty under 
                this subparagraph on failures with respect to 
                any 1 disclosure shall not exceed $50,000.
                  (B) Written demand.--
                          (i) In general.--The Secretary may 
                        make a written demand on any entity or 
                        manager subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        disclosure shall be filed for purposes 
                        of this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any entity or manager fails to 
                        comply with any demand under clause (i) 
                        on or before the date specified in such 
                        demand, there shall be paid by such 
                        entity or manager failing to so comply 
                        $100 for each day after the expiration 
                        of the time specified in such demand 
                        during which such failure continues. 
                        The maximum penalty imposed under this 
                        subparagraph on all entities and 
                        managers for failures with respect to 
                        any 1 disclosure shall not exceed 
                        $10,000.
                  (C) Definitions.--Any term used in this 
                section which is also used in section 4965 
                shall have the meaning given such term under 
                section 4965.
          (4) Reasonable cause exception.--No penalty shall be 
        imposed under this subsection with respect to any 
        failure if it is shown that such failure is due to 
        reasonable cause.
          (5) Other special rules.--
                  (A) Treatment as tax.--Any penalty imposed 
                under this subsection shall be paid on notice 
                and demand of the Secretary and in the same 
                manner as tax.
                  (B) Joint and several liability.--If more 
                than 1 person is liable under this subsection 
                for any penalty with respect to any failure, 
                all such persons shall be jointly and severally 
                liable with respect to such failure.
                  (C) Person.--For purposes of this subsection, 
                the term ``person'' means any officer, 
                director, trustee, employee, or other 
                individual who is under a duty to perform the 
                act in respect of which the violation occurs.
          (6) Adjustment for inflation.--
                  (A) In general.--In the case of any failure 
                relating to a return required to be filed in a 
                calendar year beginning after 2014, each of the 
                dollar amounts under paragraphs (1), (2), and 
                (3) shall be increased by such dollar amount 
                multiplied by the cost-of-living adjustment 
                determined under section 1(f)(3) determined by 
                substituting ``calendar year 2013'' for 
                ``calendar year 1992'' in subparagraph (B) 
                thereof.
                  (B) Rounding.--If any amount adjusted under 
                subparagraph (A)--
                          (i) is not less than $5,000 and is 
                        not a multiple of $500, such amount 
                        shall be rounded to the next lowest 
                        multiple of $500, and
                          (ii) is not described in clause (i) 
                        and is not a multiple of $5, such 
                        amount shall be rounded to the next 
                        lowest multiple of $5.
  (d) Annual Registration and Other Notification by Pension 
Plan.--
          (1) Registration.--In the case of any failure to file 
        a registration statement required under section 6057(a) 
        (relating to annual registration of certain plans) 
        which includes all participants required to be included 
        in such statement, on the date prescribed therefor 
        (determined without regard to any extension of time for 
        filing), unless it is shown that such failure is due to 
        reasonable cause, there shall be paid (on notice and 
        demand by the Secretary and in the same manner as tax) 
        by the person failing so to file, an amount equal to $1 
        for each participant with respect to whom there is a 
        failure to file, multiplied by the number of days 
        during which such failure continues, but the total 
        amount imposed under this paragraph on any person for 
        any failure to file with respect to any plan year shall 
        not exceed $5,000.
          (2) Notification of change of status.--In the case of 
        failure to file a notification required under section 
        6057(b) (relating to notification of change of status) 
        on the date prescribed therefor (determined without 
        regard to any extension of time for filing), unless it 
        is shown that such failure is due to reasonable cause, 
        there shall be paid (on notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing so to file, $1 for each day during which such 
        failure continues, but the total amounts imposed under 
        this paragraph on any person for failure to file any 
        notification shall not exceed $1,000.
  (e) Information Required in Connection With Certain Plans of 
Deferred Compensation, Etc..--In the case of failure to file a 
return or statement required under section 6058 (relating to 
information required in connection with certain plans of 
deferred compensation), 6047 (relating to information relating 
to certain trusts and annuity and bond purchase plans), or 
6039D (relating to returns and records with respect to certain 
fringe benefit plans) on the date and in the manner prescribed 
therefor (determined with regard to any extension of time for 
filing), unless it is shown that such failure is due to 
reasonable cause, there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing so to file, $25 for each day during which such failure 
continues, but the total amount imposed under this subsection 
on any person for failure to file any return shall not exceed 
$15,000. This subsection shall not apply to any return or 
statement which is an information return described in section 
6724(d)(1)(C)(ii) or a payee statement described in section 
6724(d)(2)(Y).
  (f) Returns Required Under Section 6039C.--
          (1) In general.--In the case of each failure to make 
        a return required by section 6039C which contains the 
        information required by such section on the date 
        prescribed therefor (determined with regard to any 
        extension of time for filing), unless it is shown that 
        such failure is due to reasonable cause and not to 
        willful neglect, the amount determined under paragraph 
        (2) shall be paid (upon notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing to make such return.
          (2) Amount of penalty.--For purposes of paragraph 
        (1), the amount determined under this paragraph with 
        respect to any failure shall be $25 for each day during 
        which such failure continues.
          (3) Limitation.--The amount determined under 
        paragraph (2) with respect to any person for failing to 
        meet the requirements of section 6039C for any calendar 
        year shall not exceed the lesser of--
                  (A) $25,000, or
                  (B) 5 percent of the aggregate of the fair 
                market value of the United States real property 
                interests owned by such person at any time 
                during such year.
        For purposes of the preceding sentence, fair market 
        value shall be determined as of the end of the calendar 
        year (or, in the case of any property disposed of 
        during the calendar year, as of the date of such 
        disposition).
  (h) Failure to Give Notice to Recipients of Certain Pension, 
Etc., Distributions.--In the case of each failure to provide 
notice as required by section 3405(e)(10)(B), at the time 
prescribed therefor, unless it is shown that such failure is 
due to reasonable cause and not to willful neglect, there shall 
be paid, on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such notice, an 
amount equal to $10 for each such failure, but the total amount 
imposed on such person for all such failures during any 
calendar year shall not exceed $5,000.
  (i) Failure to Give Written Explanation to Recipients of 
Certain Qualifying Rollover Distributions.--In the case of each 
failure to provide a written explanation as required by section 
402(f), at the time prescribed therefor, unless it is shown 
that such failure is due to reasonable cause and not to willful 
neglect, there shall be paid, on notice and demand of the 
Secretary and in the same manner as tax, by the person failing 
to provide such written explanation, an amount equal to $100 
for each such failure, but the total amount imposed on such 
person for all such failures during any calendar year shall not 
exceed $50,000.
  (j) Failure to File Certification With Respect to Certain 
Residential Rental Projects.--In the case of each failure to 
provide a certification as required by section 142(d)(7) at the 
time prescribed therefor, unless it is shown that such failure 
is due to reasonable cause and not to willful neglect, there 
shall be paid, on notice and demand of the Secretary and in the 
same manner as tax, by the person failing to provide such 
certification, an amount equal to $100 for each such failure.
  (k)  Failure to Make Reports Required Under Section 1202.--
   In the case of a failure to make a report required under 
section 1202(d)(1)(C) which contains the information required 
by such section on the date prescribed therefor (determined 
with regard to any extension of time for filing), there shall 
be paid (on notice and demand by the Secretary and in the same 
manner as tax) by the person failing to make such report, an 
amount equal to $50 for each report with respect to which there 
was such a failure. In the case of any failure due to 
negligence or intentional disregard, the preceding sentence 
shall be applied by substituting ``$100'' for ``$50''. In the 
case of a report covering periods in 2 or more years, the 
penalty determined under preceding provisions of this 
subsection shall be multiplied by the number of such years. No 
penalty shall be imposed under this subsection on any failure 
which is shown to be due to reasonable cause and not willful 
neglect.
  (l) Failure to File Return With Respect to Certain Corporate 
Transactions.--In the case of any failure to make a return 
required under section 6043(c) containing the information 
required by such section on the date prescribed therefor 
(determined with regard to any extension of time for filing), 
unless it is shown that such failure is due to reasonable 
cause, there shall be paid (on notice and demand by the 
Secretary and in the same manner as tax) by the person failing 
to file such return, an amount equal to $500 for each day 
during which such failure continues, but the total amount 
imposed under this subsection with respect to any return shall 
not exceed $100,000.
  (m) Alcohol and Tobacco Taxes for Penalties for Failure to 
File Certain Information Returns.--with respect to alcohol and 
tobacco taxes, see, generally, subtitle E.
  (n) Failure to Make Reports Required Under Sections 3511, 
6053(C)(8), and 7705.--In the case of a failure to make a 
report required under section 3511, 6053(c)(8), or 7705 which 
contains the information required by such section on the date 
prescribed therefor (determined with regard to any extension of 
time for filing), there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing to make such report, an amount equal to $50 for each 
report with respect to which there was such a failure. In the 
case of any failure due to negligence or intentional disregard 
the preceding sentence shall be applied by substituting 
``$100'' for ``$50''.

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CHAPTER 76--JUDICIAL PROCEEDINGS

           *       *       *       *       *       *       *

Subchapter B--Proceedings by Taxpayers and Third Parties

           *       *       *       *       *       *       *

SEC. 7428. DECLARATORY JUDGMENTS RELATING TO STATUS AND CLASSIFICATION 
                    OF ORGANIZATIONS UNDER SECTION 501(C)(3), ETC.

  (a) Creation of Remedy.--In a case of actual controversy 
involving--
          (1) a determination by the Secretary--
                  (A) with respect to the initial qualification 
                or continuing qualification of an organization 
                as an organization described in section 
                501(c)(3) which is exempt from tax under 
                section 501(a) or as an organization described 
                in section 170(c)(2),
                  (B) with respect to the initial 
                classification or continuing classification of 
                an organization as a private foundation (as 
                defined in section 509(a)),
                  (C) with respect to the initial 
                classification or continuing classification of 
                an organization as a private operating 
                foundation (as defined in section 4942(j)(3)), 
                or
                  (D) with respect to the initial 
                classification or continuing classification of 
                a cooperative as an organization described in 
                section 521(b) which is exempt from tax under 
                section 521(a), or
          (2) a failure by the Secretary to make a 
        determination with respect to an issue referred to in 
        paragraph (1),
upon the filing of an appropriate pleading, the United States 
Tax Court, the United States Court of Federal Claims, or the 
district court of the United States for the District of 
Columbia may make a declaration with respect to such initial 
qualification or continuing qualification or with respect to 
such initial classification or continuing classification. Any 
such declaration shall have the force and effect of a decision 
of the Tax Court or a final judgment or decree of the district 
court or the Court of Federal Claims, as the case may be, and 
shall be reviewable as such. For purposes of this section, a 
determination with respect to a continuing qualification or 
continuing classification includes any revocation of or other 
change in a qualification or classification.
  (b) Limitations.--
          (1) Petitioner.--A pleading may be filed under this 
        section only by the organization the qualification or 
        classification of which is at issue.
          (2) Exhaustion of administrative remedies.--A 
        declaratory judgment or decree under this section shall 
        not be issued in any proceeding unless the Tax Court, 
        the Court of Federal Claims, or the district court of 
        the United States for the District of Columbia 
        determines that the organization involved has exhausted 
        administrative remedies available to it within the 
        Internal Revenue Service. An organization requesting 
        the determination of an issue referred to in subsection 
        (a)(1) shall be deemed to have exhausted its 
        administrative remedies with respect to a failure by 
        the Secretary to make a determination with respect to 
        such issue at the expiration of 270 days after the date 
        on which the request for such determination was made if 
        the organization has taken, in a timely manner, all 
        reasonable steps to secure such determination.
          (3) Time for bringing action.--If the Secretary sends 
        by certified or registered mail notice of his 
        determination with respect to an issue referred to in 
        subsection (a)(1) to the organization referred to in 
        paragraph (1), no proceeding may be initiated under 
        this section by such organization unless the pleading 
        is filed before the 91st day after the date of such 
        mailing.
          (4) Nonapplication for certain revocations.--No 
        action may be brought under this section with respect 
        to any revocation of status described in section 
        6033(j)(1).
  (c) Validation of Certain Contributions Made During Pendency 
of Proceedings.--
          (1) In general.--If--
                  (A) the issue referred to in subsection 
                (a)(1) involves the revocation of a 
                determination that the organization is 
                described in section 170(c)(2),
                  (B) a proceeding under this section is 
                initiated within the time provided by 
                subsection (b)(3), and
                  (C) either--
                          (i) a decision of the Tax Court has 
                        become final (within the meaning of 
                        section 7481), or
                          (ii) a judgment of the district court 
                        of the United States for the District 
                        of Columbia has been entered, or
                          (iii) a judgment of the Court of 
                        Federal Claims, has been entered,
                and such decision or judgment, as the case may 
                be, determines that the organization was not 
                described in section 170(c)(2),
        then, notwithstanding such decision or judgment, such 
        organization shall be treated as having been described 
        in section 170(c)(2) for purposes of section 170 for 
        the period beginning on the date on which the notice of 
        the revocation was published and ending on the date on 
        which the court first determined in such proceeding 
        that the organization was not described in section 
        170(c)(2).
          (2) Limitation.--Paragraph (1) shall apply only--
                  (A) with respect to individuals, and only to 
                the extent that the aggregate of the 
                contributions made by any individual to or for 
                the use of the organization during the period 
                specified in paragraph (1) does not exceed 
                $1,000 (for this purpose treating a husband and 
                wife as one contributor), and
                  (B) with respect to organizations described 
                in section 170(c)(2) which are exempt from tax 
                under section 501(a) (for this purpose 
                excluding any such organization with respect to 
                which there is pending a proceeding to revoke 
                the determination under section 170(c)(2)).
          (3) Exception.--This subsection shall not apply to 
        any individual who was responsible, in whole or in 
        part, for the activities (or failures to act) on the 
        part of the organization which were the basis for the 
        revocation.
  (d) Subpoena Power for District Court for District of 
Columbia.--In any action brought under this section in the 
district court of the United States for the District of 
Columbia, a subpoena requiring the attendance of a witness at a 
trial or hearing may be served at any place in the United 
States.

           *       *       *       *       *       *       *

      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, and existing law in 
which no change is proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

Subtitle A--Income Taxes

           *       *       *       *       *       *       *

CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *

Subchapter F--Exempt Organizations

           *       *       *       *       *       *       *

                          PART I--GENERAL RULE

     * * * * * * *
Sec. 506. Organizations required to notify Secretary of intent to 
          operate as 501(c)(4).

           *       *       *       *       *       *       *

SEC. 506. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY OF INTENT TO 
                    OPERATE AS 501(C)(4).

  (a) In General.--An organization described in section 
501(c)(4) shall, not later than 60 days after the organization 
is established, notify the Secretary (in such manner as the 
Secretary shall by regulation prescribe) that it is operating 
as such.
  (b) Contents of Notice.--The notice required under subsection 
(a) shall include the following information:
          (1) The name, address, and taxpayer identification 
        number of the organization.
          (2) The date on which, and the State under the laws 
        of which, the organization was organized.
          (3) A statement of the purpose of the organization.
  (c) Acknowledgment of Receipt.--Not later than 60 days after 
receipt of such a notice, the Secretary shall send to the 
organization an acknowledgment of such receipt.
  (d) Extension for Reasonable Cause.--The Secretary may, for 
reasonable cause, extend the 60-day period described in 
subsection (a).
  (e) User Fee.--The Secretary shall impose a reasonable user 
fee for submission of the notice under subsection (a).
  (f) Request for Determination.--Upon request by an 
organization to be treated as an organization described in 
section 501(c)(4), the Secretary may issue a determination with 
respect to such treatment. Such request shall be treated for 
purposes of section 6104 as an application for exemption from 
taxation under section 501(a).

           *       *       *       *       *       *       *

Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *

CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *

Subchapter A--Returns and Records

           *       *       *       *       *       *       *

PART III--INFORMATION RETURNS

           *       *       *       *       *       *       *

Subpart A--Information Concerning Persons Subject to Special Provisions

           *       *       *       *       *       *       *

SEC. 6033. RETURNS BY EXEMPT ORGANIZATIONS.

  (a) Organizations Required to File.--
          (1) In general.--Except as provided in paragraph (3), 
        every organization exempt from taxation under section 
        501(a) shall file an annual return, stating 
        specifically the items of gross income, receipts, and 
        disbursements, and such other information for the 
        purpose of carrying out the internal revenue laws as 
        the Secretary may by forms or regulations prescribe, 
        and shall keep such records, render under oath such 
        statements, make such other returns, and comply with 
        such rules and regulations as the Secretary may from 
        time to time prescribe; except that, in the discretion 
        of the Secretary, any organization described in section 
        401(a) may be relieved from stating in its return any 
        information which is reported in returns filed by the 
        employer which established such organization.
          (2) Being a party to certain reportable 
        transactions.--Every tax-exempt entity described in 
        section 4965(c) shall file (in such form and manner and 
        at such time as determined by the Secretary) a 
        disclosure of--
                  (A) such entity's being a party to any 
                prohibited tax shelter transaction (as defined 
                in section 4965(e)), and
                  (B) the identity of any other party to such 
                transaction which is known by such tax-exempt 
                entity.
          (3) Exceptions from filing.--
                  (A) Mandatory exceptions.--Paragraph (1) 
                shall not apply to--
                          (i) churches, their integrated 
                        auxiliaries, and conventions or 
                        associations of churches,
                          (ii) any organization (other than a 
                        private foundation, as defined in 
                        section 509(a)) described in 
                        subparagraph (C), the gross receipts of 
                        which in each taxable year are normally 
                        not more than $5,000, or
                          (iii) the exclusively religious 
                        activities of any religious order.
                  (B) Discretionary exceptions.--The Secretary 
                may relieve any organization required under 
                paragraph (1) (other than an organization 
                described in section 509(a)(3)) to file an 
                information return from filing such a return 
                where he determines that such filing is not 
                necessary to the efficient administration of 
                the internal revenue laws.
                  (C) Certain organizations.--The organizations 
                referred to in subparagraph (A)(ii) are--
                          (i) a religious organization 
                        described in section 501(c)(3);
                          (ii) an educational organization 
                        described in section 170(b)(1)(A)(ii);
                          (iii) a charitable organization, or 
                        an organization for the prevention of 
                        cruelty to children or animals, 
                        described in section 501(c)(3), if such 
                        organization is supported, in whole or 
                        in part, by funds contributed by the 
                        United States or any State or political 
                        subdivision thereof, or is primarily 
                        supported by contributions of the 
                        general public;
                          (iv) an organization described in 
                        section 501(c)(3), if such organization 
                        is operated, supervised, or controlled 
                        by or in connection with a religious 
                        organization described in clause (i);
                          (v) an organization described in 
                        section 501(c)(8); and
                          (vi) an organization described in 
                        section 501(c)(1), if such organization 
                        is a corporation wholly owned by the 
                        United States or any agency or 
                        instrumentality thereof, or a wholly-
                        owned subsidiary of such a corporation.
  (b) Certain Organizations Described in Section 501(C)(3).--
Every organization described in section 501(c)(3) which is 
subject to the requirements of subsection (a) shall furnish 
annually information, at such time and in such manner as the 
Secretary may by forms or regulations prescribe, setting 
forth--
          (1) its gross income for the year,
          (2) its expenses attributable to such income and 
        incurred within the year,
          (3) its disbursements within the year for the 
        purposes for which it is exempt,
          (4) a balance sheet showing its assets, liabilities, 
        and net worth as of the beginning of such year,
          (5) the total of the contributions and gifts received 
        by it during the year, and the names and addresses of 
        all substantial contributors,
          (6) the names and addresses of its foundation 
        managers (within the meaning of section 4946(b)(1)) and 
        highly compensated employees,
          (7) the compensation and other payments made during 
        the year to each individual described in paragraph (6),
          (8) in the case of an organization with respect to 
        which an election under section 501(h) is effective for 
        the taxable year, the following amounts for such 
        organization for such taxable year:
                  (A) the lobbying expenditures (as defined in 
                section 4911(c)(1)),
                  (B) the lobbying nontaxable amount (as 
                defined in section 4911(c)(2)),
                  (C) the grass roots expenditures (as defined 
                in section 4911(c)(3)), and
                  (D) the grass roots nontaxable amount (as 
                defined in section 4911(c)(4)),
          (9) such other information with respect to direct or 
        indirect transfers to, and other direct or indirect 
        transactions and relationships with, other 
        organizations described in section 501(c) (other than 
        paragraph (3) thereof) or section 527 as the Secretary 
        may require to prevent--
                  (A) diversion of funds from the 
                organization's exempt purpose, or
                  (B) misallocation of revenues or expenses,
          (10) the respective amounts (if any) of the taxes 
        imposed on the organization, or any organization 
        manager of the organization, during the taxable year 
        under any of the following provisions (and the 
        respective amounts (if any) of reimbursements paid by 
        the organization during the taxable year with respect 
        to taxes imposed on any such organization manager under 
        any of such provisions):
                  (A) section 4911 (relating to tax on excess 
                expenditures to influence legislation),
                  (B) section 4912 (relating to tax on 
                disqualifying lobbying expenditures of certain 
                organizations),
                  (C) section 4955 (relating to taxes on 
                political expenditures of section 501(c)(3) 
                organizations), except to the extent that, by 
                reason of section 4962, the taxes imposed under 
                such section are not required to be paid or are 
                credited or refunded, and
                  (D) section 4959 (relating to taxes on 
                failures by hospital organizations),
          (11) the respective amounts (if any) of--
                  (A) the taxes imposed with respect to the 
                organization on any organization manager, or 
                any disqualified person, during the taxable 
                year under section 4958 (relating to taxes on 
                private excess benefit from certain charitable 
                organizations), and
                  (B) reimbursements paid by the organization 
                during the taxable year with respect to taxes 
                imposed under such section, except to the 
                extent that, by reason of section 4962, the 
                taxes imposed under such section are not 
                required to be paid or are credited or 
                refunded,
          (12) such information as the Secretary may require 
        with respect to any excess benefit transaction (as 
        defined in section 4958),
          (13) such information with respect to disqualified 
        persons as the Secretary may prescribe,
          (14) such information as the Secretary may require 
        with respect to disaster relief activities, including 
        the amount and use of qualified contributions to which 
        section 1400S(a) applies,
          (15) in the case of an organization to which the 
        requirements of section 501(r) apply for the taxable 
        year--
                  (A) a description of how the organization is 
                addressing the needs identified in each 
                community health needs assessment conducted 
                under section 501(r)(3) and a description of 
                any such needs that are not being addressed 
                together with the reasons why such needs are 
                not being addressed, and
                  (B) the audited financial statements of such 
                organization (or, in the case of an 
                organization the financial statements of which 
                are included in a consolidated financial 
                statement with other organizations, such 
                consolidated financial statement).
          (16) such other information for purposes of carrying 
        out the internal revenue laws as the Secretary may 
        require.
For purposes of paragraph (8), if section 4911(f) applies to 
the organization for the taxable year, such organization shall 
furnish the amounts with respect to the affiliated group as 
well as with respect to such organization.
  (c) Additional Provisions Relating to Private Foundations.--
In the case of an organization which is a private foundation 
(within the meaning of section 509(a))--
          (1) the Secretary shall by regulations provide that 
        the private foundation shall include in its annual 
        return under this section such information (not 
        required to be furnished by subsection (b) or the forms 
        or regulations prescribed thereunder) as would have 
        been required to be furnished under section 6056 
        (relating to annual reports by private foundations) as 
        such section 6056 was in effect on January 1, 1979, and
          (2) the foundation managers shall furnish copies of 
        the annual return under this section to such State 
        officials, at such times, and under such conditions, as 
        the Secretary may by regulations prescribe.
Nothing in paragraph (1) shall require the inclusion of the 
name and address of any recipient (other than a disqualified 
person within the meaning of section 4946) of 1 or more 
charitable gifts or grants made by the foundation to such 
recipient as an indigent or needy person if the aggregate of 
such gifts or grants made by the foundation to such recipient 
during the year does not exceed $1,000.
  (d) Section to Apply to Nonexempt Charitable Trusts and 
Nonexempt Private Foundations.--The following organizations 
shall comply with the requirements of this section in the same 
manner as organizations described in section 501(c)(3) which 
are exempt from tax under section 501(a):
          (1) Nonexempt charitable trusts.--A trust described 
        in section 4947(a)(1) (relating to nonexempt charitable 
        trusts).
          (2) Nonexempt private foundations.--A private 
        foundation which is not exempt from tax under section 
        501(a).
  (e) Special Rules Relating to Lobbying Activities.--
          (1) Reporting requirements.--
                  (A) In general.--If this subsection applies 
                to an organization for any taxable year, such 
                organization--
                          (i) shall include on any return 
                        required to be filed under subsection 
                        (a) for such year information setting 
                        forth the total expenditures of the 
                        organization to which section 162(e)(1) 
                        applies and the total amount of the 
                        dues or other similar amounts paid to 
                        the organization to which such 
                        expenditures are allocable, and
                          (ii) except as provided in paragraphs 
                        (2)(A)(i) and (3), shall, at the time 
                        of assessment or payment of such dues 
                        or other similar amounts, provide 
                        notice to each person making such 
                        payment which contains a reasonable 
                        estimate of the portion of such dues or 
                        other similar amounts to which such 
                        expenditures are so allocable.
                  (B) Organizations to which subsection 
                applies.--
                          (i) In general.--This subsection 
                        shall apply to any organization which 
                        is exempt from taxation under section 
                        501 other than an organization 
                        described in section 501(c)(3).
                          (ii) Special rule for in-house 
                        expenditures.--This subsection shall 
                        not apply to the in-house expenditures 
                        (within the meaning of section 
                        162(e)(5)(B)(ii)) of an organization 
                        for a taxable year if such expenditures 
                        do not exceed $2,000. In determining 
                        whether a taxpayer exceeds the $2,000 
                        limit under this clause, there shall 
                        not be taken into account overhead 
                        costs otherwise allocable to activities 
                        described in subparagraphs (A) and (D) 
                        of section 162(e)(1).
                          (iii) Coordination with section 
                        527(f).--This subsection shall not 
                        apply to any amount on which tax is 
                        imposed by reason of section 527(f).
                  (C) Allocation.--For purposes of this 
                paragraph--
                          (i) In general.--Expenditures to 
                        which section 162(e)(1) applies shall 
                        be treated as paid out of dues or other 
                        similar amounts to the extent thereof.
                          (ii) Carryover of lobbying 
                        expenditures in excess of dues.--If 
                        expenditures to which section 162(e)(1) 
                        applies exceed the dues or other 
                        similar amounts for any taxable year, 
                        such excess shall be treated as 
                        expenditures to which section 162(e)(1) 
                        applies which are paid or incurred by 
                        the organization during the following 
                        taxable year.
          (2) Tax imposed where organization does not notify.--
                  (A) In general.--If an organization--
                          (i) elects not to provide the notices 
                        described in paragraph (1)(A) for any 
                        taxable year, or
                          (ii) fails to include in such notices 
                        the amount allocable to expenditures to 
                        which section 162(e)(1) applies 
                        (determined on the basis of actual 
                        amounts rather than the reasonable 
                        estimates under paragraph (1)(A)(ii)),
                then there is hereby imposed on such 
                organization for such taxable year a tax in an 
                amount equal to the product of the highest rate 
                of tax imposed by section 11 for the taxable 
                year and the aggregate amount not included in 
                such notices by reason of such election or 
                failure.
                  (B) Waiver where future adjustments made.--
                The Secretary may waive the tax imposed by 
                subparagraph (A)(ii) for any taxable year if 
                the organization agrees to adjust its estimates 
                under paragraph (1)(A)(ii) for the following 
                taxable year to correct any failures.
                  (C) Tax treated as income tax.--For purposes 
                of this title, the tax imposed by subparagraph 
                (A) shall be treated in the same manner as a 
                tax imposed by chapter 1 (relating to income 
                taxes).
          (3) Exception where dues generally nondeductible.--
        Paragraph (1)(A) shall not apply to an organization 
        which establishes to the satisfaction of the Secretary 
        that substantially all of the dues or other similar 
        amounts paid by persons to such organization are not 
        deductible without regard to section 162(e).
  (f) Certain Organizations Described in Section 501(C)(4).--
Every organization described in section 501(c)(4) which is 
subject to the requirements of subsection (a) shall [include on 
the return required under subsection (a) the information] 
include on the return required under subsection (a)--
          (1) the information referred to in paragraphs (11), 
        (12) and (13) of subsection (b) with respect to such 
        organization[.], and
          (2) in the case of the first such return filed by 
        such an organization after submitting a notice to the 
        Secretary under section 506(a), such information as the 
        Secretary shall by regulation require in support of the 
        organization's treatment as an organization described 
        in section 501(c)(4).
  (g) Returns Required by Political Organizations.--
          (1) In general.--This section shall apply to a 
        political organization (as defined by section 
        527(e)(1)) which has gross receipts of $25,000 or more 
        for the taxable year. In the case of a political 
        organization which is a qualified 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''.
          (2) Annual returns.--Political organizations 
        described in paragraph (1) shall file an annual 
        return--
                  (A) containing the information required, and 
                complying with the other requirements, under 
                subsection (a)(1) for organizations exempt from 
                taxation under section 501(a), with such 
                modifications as the Secretary considers 
                appropriate to require only information which 
                is necessary for the purposes of carrying out 
                section 527, and
                  (B) containing such other information as the 
                Secretary deems necessary to carry out the 
                provisions of this subsection.
          (3) Mandatory exceptions from filing.--Paragraph (2) 
        shall not apply to an organization--
                  (A) which is a State or local committee of a 
                political party, or political committee of a 
                State or local candidate,
                  (B) which is a caucus or association of State 
                or local officials,
                  (C) which is an authorized committee (as 
                defined in section 301(6) of the Federal 
                Election Campaign Act of 1971) of a candidate 
                for Federal office,
                  (D) which is a national committee (as defined 
                in section 301(14) of the Federal Election 
                Campaign Act of 1971) of a political party,
                  (E) which is a United States House of 
                Representatives or United States Senate 
                campaign committee of a political party 
                committee,
                  (F) which is required to report under the 
                Federal Election Campaign Act of 1971 as a 
                political committee (as defined in section 
                301(4) of such Act), or
                  (G) to which section 527 applies for the 
                taxable year solely by reason of subsection 
                (f)(1) of such section.
          (4) Discretionary exception.--The Secretary may 
        relieve any organization required under paragraph (2) 
        to file an information return from filing such a return 
        if the Secretary determines that such filing is not 
        necessary to the efficient administration of the 
        internal revenue laws.
  (h) Controlling Organizations.--Each controlling organization 
(within the meaning of section 512(b)(13)) which is subject to 
the requirements of subsection (a) shall include on the return 
required under subsection (a)--
          (1) any interest, annuities, royalties, or rents 
        received from each controlled entity (within the 
        meaning of section 512(b)(13)),
          (2) any loans made to each such controlled entity, 
        and
          (3) any transfers of funds between such controlling 
        organization and each such controlled entity.
  (i) Additional Notification Requirements.--Any organization 
the gross receipts of which in any taxable year result in such 
organization being referred to in subsection (a)(3)(A)(ii) or 
(a)(3)(B)--
          (1) shall furnish annually, in electronic form, and 
        at such time and in such manner as the Secretary may by 
        regulations prescribe, information setting forth--
                  (A) the legal name of the organization,
                  (B) any name under which such organization 
                operates or does business,
                  (C) the organization's mailing address and 
                Internet web site address (if any),
                  (D) the organization's taxpayer 
                identification number,
                  (E) the name and address of a principal 
                officer, and
                  (F) evidence of the continuing basis for the 
                organization's exemption from the filing 
                requirements under subsection (a)(1), and
          (2) upon the termination of the existence of the 
        organization, shall furnish notice of such termination.
  (j) Loss of Exempt Status for Failure to File Return or 
Notice.--
          (1) In general.--If an organization described in 
        subsection (a)(1) or (i) fails to file an annual return 
        or notice required under either subsection for 3 
        consecutive years, such organization's status as an 
        organization exempt from tax under section 501(a) shall 
        be considered revoked on and after the date set by the 
        Secretary for the filing of the third annual return or 
        notice. The Secretary shall publish and maintain a list 
        of any organization the status of which is so revoked.
          (2) Application necessary for reinstatement.--Any 
        organization the tax-exempt status of which is revoked 
        under paragraph (1) must apply in order to obtain 
        reinstatement of such status regardless of whether such 
        organization was originally required to make such an 
        application.
          (3) Retroactive reinstatement if reasonable cause 
        shown for failure.--If, upon application for 
        reinstatement of status as an organization exempt from 
        tax under section 501(a), an organization described in 
        paragraph (1) can show to the satisfaction of the 
        Secretary evidence of reasonable cause for the failure 
        described in such paragraph, the organization's exempt 
        status may, in the discretion of the Secretary, be 
        reinstated effective from the date of the revocation 
        under such paragraph.
  (k) Additional Provisions Relating to Sponsoring 
Organizations.--Every organization described in section 
4966(d)(1) shall, on the return required under subsection (a) 
for the taxable year--
          (1) list the total number of donor advised funds (as 
        defined in section 4966(d)(2)) it owns at the end of 
        such taxable year,
          (2) indicate the aggregate value of assets held in 
        such funds at the end of such taxable year, and
          (3) indicate the aggregate contributions to and 
        grants made from such funds during such taxable year.
  (l) Additional Provisions Relating to Supporting 
Organizations.--Every organization described in section 
509(a)(3) shall, on the return required under subsection (a)--
          (1) list the supported organizations (as defined in 
        section 509(f)(3)) with respect to which such 
        organization provides support,
          (2) indicate whether the organization meets the 
        requirements of clause (i), (ii), or (iii) of section 
        509(a)(3)(B), and
          (3) certify that the organization meets the 
        requirements of section 509(a)(3)(C).
  (m) Additional Information Required from Co-Op Insurers.--An 
organization described in section 501(c)(29) shall include on 
the return required under subsection (a) the following 
information:
          (1) The amount of the reserves required by each State 
        in which the organization is licensed to issue 
        qualified health plans.
          (2) The amount of reserves on hand.
  (n) Cross References.--For provisions relating to statements, 
etc., regarding exempt status of organizations, see section 
6001. For reporting requirements as to certain liquidations, 
dissolutions, terminations, and contractions, see section 
6043(b). For provisions relating to penalties for failure to 
file a return required by this section, see section 6652(c).For 
provisions relating to information required in connection with 
certain plans of deferred compensation, see section 6058.

           *       *       *       *       *       *       *

 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *

Subchapter A--Additions to the Tax and Additional Amounts

           *       *       *       *       *       *       *

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION 
                    STATEMENTS, ETC.

  (a) Returns With Respect to Certain Payments Aggregating Less 
Than $10.--In the case of each failure to file a statement of a 
payment to another person required under the authority of--
          (1) section 6042(a)(2) (relating to payments of 
        dividends aggregating less than $10), or
          (2) section 6044(a)(2) (relating to payments of 
        patronage dividends aggregating less than $10),
on the date prescribed therefor (determined with regard to any 
extension of time for filing), unless it is shown that such 
failure is due to reasonable cause and not to willful neglect, 
there shall be paid (upon notice and demand by the Secretary 
and in the same manner as tax) by the person failing to so file 
the statement, $1 for each such statement not so filed, but the 
total amount imposed on the delinquent person for all such 
failures during the calendar year shall not exceed $1,000.
  (b) Failure to Report Tips.--In the case of failure by an 
employee to report to his employer on the date and in the 
manner prescribed therefor any amount of tips required to be so 
reported by section 6053(a) which are wages (as defined in 
section 3121(a)) or which are compensation (as defined in 
section 3231(e)), unless it is shown that such failure is due 
to reasonable cause and not due to willful neglect, there shall 
be paid by the employee, in addition to the tax imposed by 
section 3101 or section 3201 (as the case may be) with respect 
to the amount of tips which he so failed to report, an amount 
equal to 50 percent of such tax.
  (c) Returns by Exempt Organizations and by Certain Trusts.--
          (1) Annual returns under section 6033(a)(1) or 
        6012(a)(6).--
                  (A) Penalty on organization.--In the case 
                of--
                          (i) a failure to file a return 
                        required under section 6033(a)(1) 
                        (relating to returns by exempt 
                        organizations) or section 6012(a)(6) 
                        (relating to returns by political 
                        organizations) on the date and in the 
                        manner prescribed therefor (determined 
                        with regard to any extension of time 
                        for filing), or
                          (ii) a failure to include any of the 
                        information required to be shown on a 
                        return filed under section 6033(a)(1) 
                        or section 6012(a)(6) or to show the 
                        correct information,
                there shall be paid by the exempt organization 
                $20 for each day during which such failure 
                continues. The maximum penalty under this 
                subparagraph on failures with respect to any 1 
                return shall not exceed the lesser of $10,000 
                or 5 percent of the gross receipts of the 
                organization for the year. In the case of an 
                organization having gross receipts exceeding 
                $1,000,000 for any year, with respect to the 
                return required under section 6033(a)(1) or 
                section 6012(a)(6) for such year, in applying 
                the first sentence of this subparagraph, the 
                amount of the penalty for each day during which 
                a failure continues shall be $100 in lieu of 
                the amount otherwise specified, and, in lieu of 
                applying the second sentence of this 
                subparagraph, the maximum penalty under this 
                subparagraph shall not exceed $50,000.
                  (B) Managers.--
                          (i) In general.--The Secretary may 
                        make a written demand on any 
                        organization subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        return shall be filed (or the 
                        information furnished) for purposes of 
                        this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any person fails to comply with any 
                        demand under clause (i) on or before 
                        the date specified in such demand, 
                        there shall be paid by the person 
                        failing to so comply $10 for each day 
                        after the expiration of the time 
                        specified in such demand during which 
                        such failure continues. The maximum 
                        penalty imposed under this subparagraph 
                        on all persons for failures with 
                        respect to any 1 return shall not 
                        exceed $5,000.
                  (C) Public inspection of annual returns and 
                reports.--In the case of a failure to comply 
                with the requirements of section 6104(d) with 
                respect to any annual return on the date and in 
                the manner prescribed therefor (determined with 
                regard to any extension of time for filing) or 
                report required under section 527(j), there 
                shall be paid by the person failing to meet 
                such requirements $20 for each day during which 
                such failure continues. The maximum penalty 
                imposed under this subparagraph on all persons 
                for failures with respect to any 1 return or 
                report shall not exceed $10,000.
                  (D) Public inspection of applications for 
                exemption and notice of status.--In the case of 
                a failure to comply with the requirements of 
                section 6104(d) with respect to any exempt 
                status application materials (as defined in 
                such section) or notice materials (as defined 
                in such section) on the date and in the manner 
                prescribed therefor, there shall be paid by the 
                person failing to meet such requirements $20 
                for each day during which such failure 
                continues.
                  (E) No penalty for certain annual notices.--
                This paragraph shall not apply with respect to 
                any notice required under section 6033(i).
          (2) Returns under section 6034 or 6043(b).--
                  (A) Penalty on organization or trust.--In the 
                case of a failure to file a return required 
                under section 6034 (relating to returns by 
                certain trusts) or section 6043(b) (relating to 
                terminations, etc., of exempt organizations), 
                on the date and in the manner prescribed 
                therefor (determined with regard to any 
                extension of time for filing), there shall be 
                paid by the exempt organization or trust 
                failing so to file $10 for each day during 
                which such failure continues, but the total 
                amount imposed under this subparagraph on any 
                organization or trust for failure to file any 1 
                return shall not exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization or trust failing to 
                file under subparagraph (A) specifying therein 
                a reasonable future date by which such filing 
                shall be made for purposes of this 
                subparagraph. If such filing is not made on or 
                before such date, there shall be paid by the 
                person failing so to file $10 for each day 
                after the expiration of the time specified in 
                the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                file any 1 return shall not exceed $5,000.
                  (C) Split-interest trusts.--In the case of a 
                trust which is required to file a return under 
                section 6034(a), subparagraphs (A) and (B) of 
                this paragraph shall not apply and paragraph 
                (1) shall apply in the same manner as if such 
                return were required under section 6033, except 
                that--
                          (i) the 5 percent limitation in the 
                        second sentence of paragraph (1)(A) 
                        shall not apply,
                          (ii) in the case of any trust with 
                        gross income in excess of $250,000, in 
                        applying the first sentence of 
                        paragraph (1)(A), the amount of the 
                        penalty for each day during which a 
                        failure continues shall be $100 in lieu 
                        of the amount otherwise specified, and 
                        in lieu of applying the second sentence 
                        of paragraph (1)(A), the maximum 
                        penalty under paragraph (1)(A) shall 
                        not exceed $50,000, and
                          (iii) the third sentence of paragraph 
                        (1)(A) shall be disregarded.
                In addition to any penalty imposed on the trust 
                pursuant to this subparagraph, if the person 
                required to file such return knowingly fails to 
                file the return, such penalty shall also be 
                imposed on such person who shall be personally 
                liable for such penalty.
          (3) Disclosure under section 6033(a)(2).--
                  (A) Penalty on entities.--In the case of a 
                failure to file a disclosure required under 
                section 6033(a)(2), there shall be paid by the 
                tax-exempt entity (the entity manager in the 
                case of a tax-exempt entity described in 
                paragraph (4), (5), (6), or (7) of section 
                4965(c)) $100 for each day during which such 
                failure continues. The maximum penalty under 
                this subparagraph on failures with respect to 
                any 1 disclosure shall not exceed $50,000.
                  (B) Written demand.--
                          (i) In general.--The Secretary may 
                        make a written demand on any entity or 
                        manager subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        disclosure shall be filed for purposes 
                        of this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any entity or manager fails to 
                        comply with any demand under clause (i) 
                        on or before the date specified in such 
                        demand, there shall be paid by such 
                        entity or manager failing to so comply 
                        $100 for each day after the expiration 
                        of the time specified in such demand 
                        during which such failure continues. 
                        The maximum penalty imposed under this 
                        subparagraph on all entities and 
                        managers for failures with respect to 
                        any 1 disclosure shall not exceed 
                        $10,000.
                  (C) Definitions.--Any term used in this 
                section which is also used in section 4965 
                shall have the meaning given such term under 
                section 4965.
          (4) Notices under section 506.--
                  (A) Penalty on organization.--In the case of 
                a failure to submit a notice required under 
                section 506(a) (relating to organizations 
                required to notify Secretary of intent to 
                operate as 501(c)(4)) on the date and in the 
                manner prescribed therefor, there shall be paid 
                by the organization failing to so submit $20 
                for each day during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on any organization for 
                failure to submit any one notice shall not 
                exceed $5,000.
                  (B) Managers.--The Secretary may make written 
                demand on an organization subject to penalty 
                under subparagraph (A) specifying in such 
                demand a reasonable future date by which the 
                notice shall be submitted for purposes of this 
                subparagraph. If such notice is not submitted 
                on or before such date, there shall be paid by 
                the person failing to so submit $20 for each 
                day after the expiration of the time specified 
                in the written demand during which such failure 
                continues, but the total amount imposed under 
                this subparagraph on all persons for failure to 
                submit any one notice shall not exceed $5,000.
          [(4)] (5) Reasonable cause exception.--No penalty 
        shall be imposed under this subsection with respect to 
        any failure if it is shown that such failure is due to 
        reasonable cause.
          [(5)] (6) Other special rules.--
                  (A) Treatment as tax.--Any penalty imposed 
                under this subsection shall be paid on notice 
                and demand of the Secretary and in the same 
                manner as tax.
                  (B) Joint and several liability.--If more 
                than 1 person is liable under this subsection 
                for any penalty with respect to any failure, 
                all such persons shall be jointly and severally 
                liable with respect to such failure.
                  (C) Person.--For purposes of this subsection, 
                the term ``person'' means any officer, 
                director, trustee, employee, or other 
                individual who is under a duty to perform the 
                act in respect of which the violation occurs.
          [(6)] (7) Adjustment for inflation.--
                  (A) In general.--In the case of any failure 
                relating to a return required to be filed in a 
                calendar year beginning after 2014, each of the 
                dollar amounts under paragraphs (1), (2), and 
                (3) shall be increased by such dollar amount 
                multiplied by the cost-of-living adjustment 
                determined under section 1(f)(3) determined by 
                substituting ``calendar year 2013'' for 
                ``calendar year 1992'' in subparagraph (B) 
                thereof.
                  (B) Rounding.--If any amount adjusted under 
                subparagraph (A)--
                          (i) is not less than $5,000 and is 
                        not a multiple of $500, such amount 
                        shall be rounded to the next lowest 
                        multiple of $500, and
                          (ii) is not described in clause (i) 
                        and is not a multiple of $5, such 
                        amount shall be rounded to the next 
                        lowest multiple of $5.
  (d) Annual Registration and Other Notification by Pension 
Plan.--
          (1) Registration.--In the case of any failure to file 
        a registration statement required under section 6057(a) 
        (relating to annual registration of certain plans) 
        which includes all participants required to be included 
        in such statement, on the date prescribed therefor 
        (determined without regard to any extension of time for 
        filing), unless it is shown that such failure is due to 
        reasonable cause, there shall be paid (on notice and 
        demand by the Secretary and in the same manner as tax) 
        by the person failing so to file, an amount equal to $1 
        for each participant with respect to whom there is a 
        failure to file, multiplied by the number of days 
        during which such failure continues, but the total 
        amount imposed under this paragraph on any person for 
        any failure to file with respect to any plan year shall 
        not exceed $5,000.
          (2) Notification of change of status.--In the case of 
        failure to file a notification required under section 
        6057(b) (relating to notification of change of status) 
        on the date prescribed therefor (determined without 
        regard to any extension of time for filing), unless it 
        is shown that such failure is due to reasonable cause, 
        there shall be paid (on notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing so to file, $1 for each day during which such 
        failure continues, but the total amounts imposed under 
        this paragraph on any person for failure to file any 
        notification shall not exceed $1,000.
  (e) Information Required in Connection With Certain Plans of 
Deferred Compensation, Etc..--In the case of failure to file a 
return or statement required under section 6058 (relating to 
information required in connection with certain plans of 
deferred compensation), 6047 (relating to information relating 
to certain trusts and annuity and bond purchase plans), or 
6039D (relating to returns and records with respect to certain 
fringe benefit plans) on the date and in the manner prescribed 
therefor (determined with regard to any extension of time for 
filing), unless it is shown that such failure is due to 
reasonable cause, there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing so to file, $25 for each day during which such failure 
continues, but the total amount imposed under this subsection 
on any person for failure to file any return shall not exceed 
$15,000. This subsection shall not apply to any return or 
statement which is an information return described in section 
6724(d)(1)(C)(ii) or a payee statement described in section 
6724(d)(2)(Y).
  (f) Returns Required Under Section 6039C.--
          (1) In general.--In the case of each failure to make 
        a return required by section 6039C which contains the 
        information required by such section on the date 
        prescribed therefor (determined with regard to any 
        extension of time for filing), unless it is shown that 
        such failure is due to reasonable cause and not to 
        willful neglect, the amount determined under paragraph 
        (2) shall be paid (upon notice and demand by the 
        Secretary and in the same manner as tax) by the person 
        failing to make such return.
          (2) Amount of penalty.--For purposes of paragraph 
        (1), the amount determined under this paragraph with 
        respect to any failure shall be $25 for each day during 
        which such failure continues.
          (3) Limitation.--The amount determined under 
        paragraph (2) with respect to any person for failing to 
        meet the requirements of section 6039C for any calendar 
        year shall not exceed the lesser of--
                  (A) $25,000, or
                  (B) 5 percent of the aggregate of the fair 
                market value of the United States real property 
                interests owned by such person at any time 
                during such year.
        For purposes of the preceding sentence, fair market 
        value shall be determined as of the end of the calendar 
        year (or, in the case of any property disposed of 
        during the calendar year, as of the date of such 
        disposition).
  (h) Failure to Give Notice to Recipients of Certain Pension, 
Etc., Distributions.--In the case of each failure to provide 
notice as required by section 3405(e)(10)(B), at the time 
prescribed therefor, unless it is shown that such failure is 
due to reasonable cause and not to willful neglect, there shall 
be paid, on notice and demand of the Secretary and in the same 
manner as tax, by the person failing to provide such notice, an 
amount equal to $10 for each such failure, but the total amount 
imposed on such person for all such failures during any 
calendar year shall not exceed $5,000.
  (i) Failure to Give Written Explanation to Recipients of 
Certain Qualifying Rollover Distributions.--In the case of each 
failure to provide a written explanation as required by section 
402(f), at the time prescribed therefor, unless it is shown 
that such failure is due to reasonable cause and not to willful 
neglect, there shall be paid, on notice and demand of the 
Secretary and in the same manner as tax, by the person failing 
to provide such written explanation, an amount equal to $100 
for each such failure, but the total amount imposed on such 
person for all such failures during any calendar year shall not 
exceed $50,000.
  (j) Failure to File Certification With Respect to Certain 
Residential Rental Projects.--In the case of each failure to 
provide a certification as required by section 142(d)(7) at the 
time prescribed therefor, unless it is shown that such failure 
is due to reasonable cause and not to willful neglect, there 
shall be paid, on notice and demand of the Secretary and in the 
same manner as tax, by the person failing to provide such 
certification, an amount equal to $100 for each such failure.
  (k)  Failure to Make Reports Required Under Section 1202.--
   In the case of a failure to make a report required under 
section 1202(d)(1)(C) which contains the information required 
by such section on the date prescribed therefor (determined 
with regard to any extension of time for filing), there shall 
be paid (on notice and demand by the Secretary and in the same 
manner as tax) by the person failing to make such report, an 
amount equal to $50 for each report with respect to which there 
was such a failure. In the case of any failure due to 
negligence or intentional disregard, the preceding sentence 
shall be applied by substituting ``$100'' for ``$50''. In the 
case of a report covering periods in 2 or more years, the 
penalty determined under preceding provisions of this 
subsection shall be multiplied by the number of such years. No 
penalty shall be imposed under this subsection on any failure 
which is shown to be due to reasonable cause and not willful 
neglect.
  (l) Failure to File Return With Respect to Certain Corporate 
Transactions.--In the case of any failure to make a return 
required under section 6043(c) containing the information 
required by such section on the date prescribed therefor 
(determined with regard to any extension of time for filing), 
unless it is shown that such failure is due to reasonable 
cause, there shall be paid (on notice and demand by the 
Secretary and in the same manner as tax) by the person failing 
to file such return, an amount equal to $500 for each day 
during which such failure continues, but the total amount 
imposed under this subsection with respect to any return shall 
not exceed $100,000.
  (m) Alcohol and Tobacco Taxes for Penalties for Failure to 
File Certain Information Returns.--with respect to alcohol and 
tobacco taxes, see, generally, subtitle E.
  (n) Failure to Make Reports Required Under Sections 3511, 
6053(C)(8), and 7705.--In the case of a failure to make a 
report required under section 3511, 6053(c)(8), or 7705 which 
contains the information required by such section on the date 
prescribed therefor (determined with regard to any extension of 
time for filing), there shall be paid (on notice and demand by 
the Secretary and in the same manner as tax) by the person 
failing to make such report, an amount equal to $50 for each 
report with respect to which there was such a failure. In the 
case of any failure due to negligence or intentional disregard 
the preceding sentence shall be applied by substituting 
``$100'' for ``$50''.

           *       *       *       *       *       *       *

CHAPTER 76--JUDICIAL PROCEEDINGS

           *       *       *       *       *       *       *

Subchapter B--Proceedings by Taxpayers and Third Parties

           *       *       *       *       *       *       *

SEC. 7428. DECLARATORY JUDGMENTS RELATING TO STATUS AND CLASSIFICATION 
                    OF ORGANIZATIONS UNDER SECTION 501(C)(3), ETC.

  (a) Creation of Remedy.--In a case of actual controversy 
involving--
          (1) a determination by the Secretary--
                  (A) with respect to the initial qualification 
                or continuing qualification of an organization 
                as an organization described in section 
                501(c)(3) which is exempt from tax under 
                section 501(a) or as an organization described 
                in section 170(c)(2),
                  (B) with respect to the initial 
                classification or continuing classification of 
                an organization as a private foundation (as 
                defined in section 509(a)),
                  (C) with respect to the initial 
                classification or continuing classification of 
                an organization as a private operating 
                foundation (as defined in section 4942(j)(3)), 
                [or]
                  (D) with respect to the initial 
                classification or continuing classification of 
                a cooperative as an organization described in 
                section 521(b) which is exempt from tax under 
                section 521(a), or
                  (E) with respect to the initial 
                classification or continuing classification of 
                an organization described in section 501(c)(4) 
                which is exempt from tax under section 501(a), 
                or
          (2) a failure by the Secretary to make a 
        determination with respect to an issue referred to in 
        paragraph (1),
upon the filing of an appropriate pleading, the United States 
Tax Court, the United States Court of Federal Claims, or the 
district court of the United States for the District of 
Columbia may make a declaration with respect to such initial 
qualification or continuing qualification or with respect to 
such initial classification or continuing classification. Any 
such declaration shall have the force and effect of a decision 
of the Tax Court or a final judgment or decree of the district 
court or the Court of Federal Claims, as the case may be, and 
shall be reviewable as such. For purposes of this section, a 
determination with respect to a continuing qualification or 
continuing classification includes any revocation of or other 
change in a qualification or classification.
  (b) Limitations.--
          (1) Petitioner.--A pleading may be filed under this 
        section only by the organization the qualification or 
        classification of which is at issue.
          (2) Exhaustion of administrative remedies.--A 
        declaratory judgment or decree under this section shall 
        not be issued in any proceeding unless the Tax Court, 
        the Court of Federal Claims, or the district court of 
        the United States for the District of Columbia 
        determines that the organization involved has exhausted 
        administrative remedies available to it within the 
        Internal Revenue Service. An organization requesting 
        the determination of an issue referred to in subsection 
        (a)(1) shall be deemed to have exhausted its 
        administrative remedies with respect to a failure by 
        the Secretary to make a determination with respect to 
        such issue at the expiration of 270 days after the date 
        on which the request for such determination was made if 
        the organization has taken, in a timely manner, all 
        reasonable steps to secure such determination.
          (3) Time for bringing action.--If the Secretary sends 
        by certified or registered mail notice of his 
        determination with respect to an issue referred to in 
        subsection (a)(1) to the organization referred to in 
        paragraph (1), no proceeding may be initiated under 
        this section by such organization unless the pleading 
        is filed before the 91st day after the date of such 
        mailing.
          (4) Nonapplication for certain revocations.--No 
        action may be brought under this section with respect 
        to any revocation of status described in section 
        6033(j)(1).
  (c) Validation of Certain Contributions Made During Pendency 
of Proceedings.--
          (1) In general.--If--
                  (A) the issue referred to in subsection 
                (a)(1) involves the revocation of a 
                determination that the organization is 
                described in section 170(c)(2),
                  (B) a proceeding under this section is 
                initiated within the time provided by 
                subsection (b)(3), and
                  (C) either--
                          (i) a decision of the Tax Court has 
                        become final (within the meaning of 
                        section 7481), or
                          (ii) a judgment of the district court 
                        of the United States for the District 
                        of Columbia has been entered, or
                          (iii) a judgment of the Court of 
                        Federal Claims, has been entered,
                and such decision or judgment, as the case may 
                be, determines that the organization was not 
                described in section 170(c)(2),
        then, notwithstanding such decision or judgment, such 
        organization shall be treated as having been described 
        in section 170(c)(2) for purposes of section 170 for 
        the period beginning on the date on which the notice of 
        the revocation was published and ending on the date on 
        which the court first determined in such proceeding 
        that the organization was not described in section 
        170(c)(2).
          (2) Limitation.--Paragraph (1) shall apply only--
                  (A) with respect to individuals, and only to 
                the extent that the aggregate of the 
                contributions made by any individual to or for 
                the use of the organization during the period 
                specified in paragraph (1) does not exceed 
                $1,000 (for this purpose treating a husband and 
                wife as one contributor), and
                  (B) with respect to organizations described 
                in section 170(c)(2) which are exempt from tax 
                under section 501(a) (for this purpose 
                excluding any such organization with respect to 
                which there is pending a proceeding to revoke 
                the determination under section 170(c)(2)).
          (3) Exception.--This subsection shall not apply to 
        any individual who was responsible, in whole or in 
        part, for the activities (or failures to act) on the 
        part of the organization which were the basis for the 
        revocation.
  (d) Subpoena Power for District Court for District of 
Columbia.--In any action brought under this section in the 
district court of the United States for the District of 
Columbia, a subpoena requiring the attendance of a witness at a 
trial or hearing may be served at any place in the United 
States.

           *       *       *       *       *       *       *

                         VII. ADDITIONAL VIEWS

    We support the improvements made by H.R. 1295 for section 
501(c)(4) organizations applying to the Internal Revenue 
Service for tax exemption. However, we believe the bill can do 
more.
    Currently, section 501(c)(4) organizations are permitted to 
engage in political campaign activities. However, an 
organization's primary activity cannot be engaging in political 
campaigning. We are concerned that the information that would 
be provided in the newly required notice and first annual 
information return of the organization may not be sufficient to 
identify in all cases organizations engaging in an 
impermissible amount of political activity.
    According to the Center for Responsive Politics, section 
501(c)(4) organizations spent more than $250 million during the 
2012 election cycle, up from $92 million in 2010 and just $1 
million in 2006. Given the increase in spending by section 
501(c)(4) organizations, Democrats on the Committee offered an 
amendment that would require these organizations to include 
statements in their notice and first information return 
indicating whether they engaged, or plan to engage, in 
political activity or filed, or plan to file, reports with the 
Federal Election Commission. The Republicans voted against this 
amendment.
            Sincerely,
                                           Sander M. Levin,
                                                    Ranking Member.

                                 [all]
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