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[107th Congress Public Law 276]
[From the U.S. Government Printing Office]

[DOCID: f:publ276.107]

[[Page 116 STAT. 1929]]

Public Law 107-276
107th Congress

                                 An Act

 
 To amend section 527 of the Internal Revenue Code of 1986 to eliminate 
     notification and return requirements for State and local party 
  committees and candidate committees and avoid duplicate reporting by 
certain State and local political committees of information required to 
 be reported and made publicly available under State law, and for other 
            purposes. <<NOTE: Nov. 2, 2002 -  [H.R. 5596]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

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

    (a) Exemption From Notification Requirements.--Paragraph (5) of 
section 527(i) <<NOTE: 26 USC 527.>> of the Internal Revenue Code of 
1986 (relating to organizations must notify Secretary that they are 
section 527 organizations) is amended by striking ``or'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, or'', and by adding at the end the following:
                    ``(C) which is a political committee of a State or 
                local candidate or which is a State or local committee 
                of a political party.''.

    (b) Effective Date.--The <<NOTE: 26 USC 527 note.>> amendments made 
by subsection (a) shall take effect as if included in the amendments 
made by Public Law 106-230.

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

    (a) In General.--Section 527(j)(5) of the Internal Revenue Code of 
1986 (relating to coordination with other requirements) is amended by 
redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), (E), 
and (F), respectively, and by inserting after subparagraph (B) the 
following new subparagraph:
                    ``(C) to any organization which is a qualified State 
                or local political organization,''.

    (b) Qualified State or Local Political Organization.--Subsection (e) 
of section 527 of the Internal Revenue Code of 1986 (relating to other 
definitions) is amended by adding at the end the following new 
paragraph:
            ``(5) Qualified state or local political organization.--
                    ``(A) In general.--The term `qualified State or 
                local political organization' means a political 
                organization--
                          ``(i) all the exempt functions of which are 
                      solely for the purposes of influencing or 
                      attempting to influence the selection, nomination, 
                      election, or appointment

[[Page 116 STAT. 1930]]

                      of any individual to any State or local public 
                      office or office in a State or local political 
                      organization,
                          ``(ii) which is subject to State law that 
                      requires the organization to report (and it so 
                      reports)--
                                    ``(I) information regarding each 
                                separate expenditure from and 
                                contribution to such organization, and
                                    ``(II) information regarding the 
                                person who makes such contribution or 
                                receives such expenditure,
                      which would otherwise be required to be reported 
                      under this section, and
                          ``(iii) with respect to which the reports 
                      referred to in clause (ii) are (I) made public by 
                      the agency with which such reports are filed, and 
                      (II) made publicly available for inspection by the 
                      organization in the manner described in section 
                      6104(d).
                    ``(B) Certain state law differences disregarded.--An 
                organization shall not be treated as failing to meet the 
                requirements of subparagraph (A)(ii) solely by reason of 
                1 or more of the following:
                          ``(i) The minimum amount of any expenditure or 
                      contribution required to be reported under State 
                      law is not more than $300 greater than the minimum 
                      amount required to be reported under subsection 
                      (j).
                          ``(ii) The State law does not require the 
                      organization to identify 1 or more of the 
                      following:
                                    ``(I) The employer of any person who 
                                makes contributions to the organization.
                                    ``(II) The occupation of any person 
                                who makes contributions to the 
                                organization.
                                    ``(III) The employer of any person 
                                who receives expenditures from the 
                                organization.
                                    ``(IV) The occupation of any person 
                                who receives expenditures from the 
                                organization.
                                    ``(V) The purpose of any expenditure 
                                of the organization.
                                    ``(VI) The date any contribution was 
                                made to the organization.
                                    ``(VII) The date of any expenditure 
                                of the organization.
                    ``(C) De minimis errors.--An organization shall not 
                fail to be treated as a qualified State or local 
                political organization solely because such organization 
                makes de minimis errors in complying with the State 
                reporting requirements and the public inspection 
                requirements described in subparagraph (A) as long as 
                the organization corrects such errors within a 
                reasonable period after the organization becomes aware 
                of such errors.
                    ``(D) Participation of federal candidate or office 
                holder.--The term `qualified State or local political 
                organization' shall not include any organization 
                otherwise described in subparagraph (A) if a candidate 
                for nomination or election to Federal elective public 
                office or an individual who holds such office--
                          ``(i) controls or materially participates in 
                      the direction of the organization,

[[Page 116 STAT. 1931]]

                          ``(ii) solicits contributions to the 
                      organization (unless the Secretary determines that 
                      such solicitations resulted in de minimis 
                      contributions and were made without the prior 
                      knowledge and consent, whether explicit or 
                      implicit, of the organization or its officers, 
                      directors, agents, or employees), or
                          ``(iii) directs, in whole or in part, 
                      disbursements by the organization.''.

    (c) Effective Date.--The <<NOTE: 26 USC 527 note.>> amendments made 
by this section shall take effect as if included in the amendments made 
by Public Law 106-230.

SEC. 3. EXEMPTION FROM ANNUAL RETURN REQUIREMENTS.

    (a) Income Tax Returns Required Only for Political Organization 
Taxable Income.--Paragraph (6) of section 6012(a) of the Internal 
Revenue Code of 1986 <<NOTE: 26 USC 6012.>> (relating to persons 
required to make returns of income) is amended by striking ``or which 
has'' and all that follows through ``section)''.

    (b) Income Tax Returns Not Subject to Disclosure.--
            (1) Disclosure by the secretary.--Subsection (b) of section 
        6104 of such Code <<NOTE: 26 USC 6104.>> (relating to disclosure 
        by the Secretary of annual information returns) is amended by 
        striking ``6012(a)(6),''.
            (2) Public inspection.--Subsection (d) of section 6104 of 
        such Code (relating to public inspection of certain annual 
        returns) is amended--
                    (A) in paragraph (1)(A)(i) by striking ``or section 
                6012(a)(6) (relating to returns by political 
                organizations)'', and
                    (B) in subparagraph (2) by striking ``or section 
                6012(a)(6)''.

    (c) Information Returns.--Subsection (g) of section 6033 of such 
Code <<NOTE: 26 USC 6033.>> (relating to returns required by political 
organizations) is amended to read as follows:

    ``(g) Returns Required by Political Organizations.--
            ``(1) In general.--This <<NOTE: Applicability.>> 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,

[[Page 116 STAT. 1932]]

                    ``(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.''.

    (d) Effective Date.--The <<NOTE: 26 USC 6012 note.>> amendments made 
by this section shall take effect as if included in the amendments made 
by Public Law 106-230.

SEC. 4. <<NOTE: Public information. 26 USC 527 note.>> NOTIFICATION OF 
            INTERACTION OF REPORTING REQUIREMENTS.

    (a) In General.--The Secretary of the Treasury, in consultation with 
the Federal Election Commission, shall publicize--
            (1) the effect of the amendments made by this Act, and
            (2) the interaction of requirements to file a notification 
        or report under section 527 of the Internal Revenue Code of 1986 
        and reports under the Federal Election Campaign Act of 1971.

    (b) Information.--Information provided under subsection (a) shall be 
included in any appropriate form, instruction, notice, or other guidance 
issued to the public by the Secretary of the Treasury or the Federal 
Election Commission regarding reporting requirements of political 
organizations (as defined in section 527 of the Internal Revenue Code of 
1986) or reporting requirements under the Federal Election Campaign Act 
of 1971.

SEC. 5. WAIVER OF FILING AMOUNTS.

    (a) Waiver of Filing Amounts.--Section 527 of the Internal Revenue 
Code of 1986 <<NOTE: 26 USC 527.>> is amended by adding at the end the 
following:

    ``(k) Authority To Waive.--The Secretary may waive all or any 
portion of the--
            ``(1) tax assessed on an organization by reason of the 
        failure of the organization to comply with the requirements of 
        subsection (i), or
            ``(2) amount imposed under subsection (j) for a failure to 
        comply with the requirements thereof,

on a showing that such failure was due to reasonable cause and not due 
to willful neglect.''.
    (b) Effective Date.--The <<NOTE: 26 USC 527 note.>> amendment made 
by subsection (a) shall apply to any tax assessed or amount imposed 
after June 30, 2000.

[[Page 116 STAT. 1933]]

SEC. 6. MODIFICATIONS TO SECTION 527 ORGANIZATION DISCLOSURE PROVISIONS.

    (a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of section 
527(i) of the Internal Revenue Code of 1986 <<NOTE: 26 USC 
527.>> (relating to failure to notify) is amended by adding at the end 
the following new sentence: ``For purposes of the preceding sentence, 
the term `exempt function income' means any amount described in a 
subparagraph of subsection (c)(3), whether or not segregated for use for 
an exempt function.''.

    (b) Procedures for Assessment and Collection of Amounts.--Paragraph 
(1) of section 527(j) of the Internal Revenue Code of 1986 (relating to 
required disclosure of expenditures and contributions) is amended by 
adding at the end the following new sentence: ``For purposes of subtitle 
F, the amount imposed by this paragraph shall be assessed and collected 
in the same manner as penalties imposed by section 6652(c).''.
    (c) Duplicate Written Filings Not Required.--Subparagraph (A) of 
section 527(i)(1) of the Internal Revenue Code of 1986 is amended by 
striking ``, electronically and in writing,'' and inserting 
``electronically''.
    (d) Application of Fraud Penalty.--Section 7207 of the Internal 
Revenue Code of 1986 <<NOTE: 26 USC 7207.>> (relating to fraudulent 
returns, statements, and other documents) is amended by striking 
``pursuant to subsection (b) of section 6047 or pursuant to subsection 
(d) of section 6104'' and inserting ``pursuant to section 6047(b), 
section 6104(d), or subsection (i) or (j) of section 527''.

    (e) Contents and Filing of Report.--
            (1) Contents.--Section 527(j)(3) of the Internal Revenue 
        Code of 1986 (relating to contents of report) is amended--
                    (A) by inserting ``, date, and purpose'' after ``The 
                amount'' in subparagraph (A), and
                    (B) by inserting ``and date'' after ``the amount'' 
                in subparagraph (B).
            (2) Electronic filing.--Section 527(j) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(7) Electronic filing.--Any report required under 
        paragraph (2) with respect to any calendar year shall be filed 
        in electronic form if the organization has, or has reason to 
        expect to have, contributions exceeding $50,000 or expenditures 
        exceeding $50,000 in such calendar year.''.
            (3) Electronic filing and access of required disclosures.--
        Section 527 of such Code, as amended by section 5(a), is amended 
        by redesignating subsection (k) as subsection (l) and by 
        inserting after subsection (j) the following new subsection:

    ``(k) Public Availability of Notices and Reports.--
            ``(1) In general.--The <<NOTE: Deadline.>> Secretary shall 
        make any notice described in subsection (i)(1) or report 
        described in subsection (j)(7) available for public inspection 
        on the Internet not later than 48 hours after such notice or 
        report has been filed (in addition to such public availability 
        as may be made under section 6104(d)(7)).
            ``(2) Access.--The Secretary shall make the entire database 
        of notices and reports which are made available to the public 
        under paragraph (1) searchable by the following items (to the 
        extent the items are required to be included in the notices and 
        reports):

[[Page 116 STAT. 1934]]

                    ``(A) Names, States, zip codes, custodians of 
                records, directors, and general purposes of the 
                organizations.
                    ``(B) Entities related to the organizations.
                    ``(C) Contributors to the organizations.
                    ``(D) Employers of such contributors.
                    ``(E) Recipients of expenditures by the 
                organizations.
                    ``(F) Ranges of contributions and expenditures.
                    ``(G) Time periods of the notices and reports.
        Such database shall be downloadable.''.

    (f) Contents of Notice.--Section 527(i)(3) of the Internal Revenue 
Code of 1986 <<NOTE: 26 USC 527.>> (relating to contents of notice) is 
amended by striking ``and'' at the end of subparagraph (D), by 
redesignating subparagraph (E) as subparagraph (F), and by inserting 
after subparagraph (D) the following new subparagraph:
                    ``(E) whether the organization intends to claim an 
                exemption from the requirements of subsection (j) or 
                section 6033, and''.

    (g) Timing of Notice in Case of Material Change.--
            (1) In general.--Subparagraph (B) of section 527(i)(1) of 
        the Internal Revenue Code of 1986 (relating to general 
        notification requirement) is amended by inserting ``or, in the 
        case of any material change in the information required under 
        paragraph (3), for the period beginning on the date on which the 
        material change occurs and ending on the date on which such 
        notice is given'' after ``given''.
            (2) Time to give notice.--
        Section <<NOTE: Deadline.>> 527(i)(2) of the Internal Revenue 
        Code of 1986 (relating to time to give notice) is amended by 
        inserting ``or, in the case of any material change in the 
        information required under paragraph (3), not later than 30 days 
        after such material change'' after ``established''.
            (3) Effect of failure.--Paragraph (4) of section 527(i) of 
        the Internal Revenue Code of 1986 (relating to effect of 
        failure) is amended by inserting before the period at the end 
        the following: ``or, in the case of a failure relating to a 
        material change, by taking into account such income and 
        deductions only during the period beginning on the date on which 
        the material change occurs and ending on the date on which 
        notice is given under this subsection''.

    (h) Effective <<NOTE: Applicability.>> Dates.--
            (1) Subsections (a) and (b).--The <<NOTE: 26 USC 527 
        note.>> amendments made by subsections (a) and (b) shall apply 
        to failures occurring on or after the date of the enactment of 
        this Act.
            (2) Subsection (c).--The <<NOTE: 26 USC 527 
        note.>> amendments made by subsection (c) shall take effect as 
        if included in the amendments made by Public Law 106-230.
            (3) Subsection (d).--The <<NOTE: 26 USC 7207 
        note.>> amendment made by subsection (d) shall apply to reports 
        and notices required to be filed on or after the date of the 
        enactment of this Act.
            (4) Subsections (e)(1) and (f).--The <<NOTE: 26 USC 527 
        note.>> amendments made by subsections (e)(1) and (f) shall 
        apply to reports and notices required to be filed more than 30 
        days after the date of the enactment of this Act.
            (5) Subsections (e)(2) and (e)(3).--The <<NOTE: 26 USC 527 
        note.>> amendments made by subsections (e)(2) and (e)(3) shall 
        apply to reports required to be filed on or after June 30, 2003.
            (6) Subsection (g).--

[[Page 116 STAT. 1935]]

                    (A) In general.--The amendments made by subsection 
                (g) shall apply to material changes on or after the date 
                of the enactment of this Act.
                    (B) Transition rule.--In the case of a material 
                change occurring during the 30-day period beginning on 
                the date of the enactment of this Act, a notice under 
                section 527(i) of the Internal Revenue Code of 1986 (as 
                amended by this Act) shall not be required to be filed 
                under such section before the later of--
                          (i) 30 days after the date of such material 
                      change, or
                          (ii) 45 days after the date of the enactment 
                      of this Act.

SEC. 7. <<NOTE: 26 USC 6104 note.>> EFFECT OF AMENDMENTS ON EXISTING 
            DISCLOSURES.

    Notices, reports, or returns that were required to be filed with the 
Secretary of the Treasury before the date of the enactment of the 
amendments made by this Act and that were disclosed by the Secretary of 
the Treasury consistent with the law in effect at the time of disclosure 
shall remain subject on and after such date to the disclosure provisions 
of section 6104 of the Internal Revenue Code of 1986.

    Approved November 2, 2002.

LEGISLATIVE HISTORY--H.R. 5596:
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CONGRESSIONAL RECORD, Vol. 148 (2002):
            Oct. 16, considered and passed House.
            Oct. 17, considered and passed Senate.

                                  <all>
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