I

106TH CONGRESS

2D SESSION H. R. 4762

To amend the Internal Revenue Code of 1986 to require 527 organizations

to disclose their political activities.

IN THE HOUSE OF REPRESENTATIVES

JUNE 27, 2000

Mr. HOUGHTON introduced the following bill; which was referred to the

Committee on Ways and Means

JUNE 27, 2000

Committee on Ways and Means discharged; considered under suspension of

the rules and passed

A BILL

To amend the Internal Revenue Code of 1986 to require

527 organizations to disclose their political activities.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. REQUIRED NOTIFICATION OF SECTION 527 STA4 TUS.

5 (a) IN GENERAL.—Section 527 of the Internal Rev6 enue Code of 1986 (relating to political organizations) is

7 amended by adding at the end the following new sub8 section:
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1 ‘‘(i) ORGANIZATIONS MUST NOTIFY SECRETARY

2 THAT THEY ARE SECTION 527 ORGANIZATIONS.—

3 ‘‘(1) IN GENERAL.—Except as provided in para4 graph (5), an organization shall not be treated as an

5 organization described in this section—

6 ‘‘(A) unless it has given notice to the Sec7 retary, electronically and in writing, that it is to

8 be so treated, or

9 ‘‘(B) if the notice is given after the time

10 required under paragraph (2), the organization

11 shall not be so treated for any period before

12 such notice is given.

13 ‘‘(2) TIME TO GIVE NOTICE.—The notice re14 quired under paragraph (1) shall be transmitted not

15 later than 24 hours after the date on which the or16 ganization is established.

17 ‘‘(3) CONTENTS OF NOTICE.—The notice re18 quired under paragraph (1) shall include informa19 tion regarding—

20 ‘‘(A) the name and address of the organi21 zation (including any business address, if dif22 ferent) and its electronic mailing address,

23 ‘‘(B) the purpose of the organization,

24 ‘‘(C) the names and addresses of its offi25 cers, highly compensated employees, contact
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1 person, custodian of records, and members of

2 its Board of Directors,

3 ‘‘(D) the name and address of, and rela4 tionship to, any related entities (within the

5 meaning of section 168(h)(4)), and

6 ‘‘(E) such other information as the Sec7 retary may require to carry out the internal

8 revenue laws.

9 ‘‘(4) EFFECT OF FAILURE.—In the case of an

10 organization failing to meet the requirements of

11 paragraph (1) for any period, the taxable income of

12 such organization shall be computed by taking into

13 account any exempt function income (and any de14 ductions directly connected with the production of

15 such income).

16 ‘‘(5) EXCEPTIONS.—This subsection shall not

17 apply to any organization—

18 ‘‘(A) to which this section applies solely by

19 reason of subsection (f)(1), or

20 ‘‘(B) which reasonably anticipates that it

21 will not have gross receipts of $25,000 or more

22 for any taxable year.

23 ‘‘(6) COORDINATION WITH OTHER REQUIRE24 MENTS.—This subsection shall not apply to any per25 son required (without regard to this subsection) to
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1 report under the Federal Election Campaign Act of

2 1971 (2 U.S.C. 431 et seq.) as a political com3 mittee.’’.

4 (b) DISCLOSURE REQUIREMENTS.—

5 (1) INSPECTION AT INTERNAL REVENUE SERV6 ICE OFFICES.—

7 (A) IN GENERAL.—Section 6104(a)(1)(A)

8 of the Internal Revenue Code of 1986 (relating

9 to public inspection of applications) is

10 amended—

11 (i) by inserting ‘‘or a political organi12 zation is exempt from taxation under sec13 tion 527 for any taxable year’’ after ‘‘tax14 able year’’,

15 (ii) by inserting ‘‘or notice of status

16 filed by the organization under section

17 527(i)’’ before ‘‘, together’’,

18 (iii) by inserting ‘‘or notice’’ after

19 ‘‘such application’’ each place it appears,

20 (iv) by inserting ‘‘or notice’’ after

21 ‘‘any application’’,

22 (v) by inserting ‘‘for exemption from

23 taxation under section 501(a)’’ after ‘‘any

24 organization’’ in the last sentence, and
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1 (vi) by inserting ‘‘OR 527’’ after ‘‘SEC2 TION 501’’ in the heading.

3 (B) CONFORMING AMENDMENT.—The

4 heading for section 6104(a) of such Code is

5 amended by inserting ‘‘OR NOTICE OF STATUS’’

6 before the period.

7 (2) INSPECTION OF NOTICE ON INTERNET AND

8 IN PERSON.—Section 6104(a) of such Code is

9 amended by adding at the end the following new

10 paragraph:

11 ‘‘(3) INFORMATION AVAILABLE ON INTERNET

12 AND IN PERSON.—

13 ‘‘(A) IN GENERAL.—The Secretary shall

14 make publicly available, on the Internet and at

15 the offices of the Internal Revenue Service—

16 ‘‘(i) a list of all political organizations

17 which file a notice with the Secretary

18 under section 527(i), and

19 ‘‘(ii) the name, address, electronic

20 mailing address, custodian of records, and

21 contact person for such organization.

22 ‘‘(B) TIME TO MAKE INFORMATION AVAIL23 ABLE.—The Secretary shall make available the

24 information required under subparagraph (A)

25 not later than 5 business days after the Sec-
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1 retary receives a notice from a political organi2 zation under section 527(i).’’.

3 (3) INSPECTION BY COMMITTEE OF CON4 GRESS.—Section 6104(a)(2) of such Code is amend5 ed by inserting ‘‘or notice of status of any political

6 organization which is exempt from taxation under

7 section 527 for any taxable year’’ after ‘‘taxable

8 year’’.

9 (4) PUBLIC INSPECTION MADE AVAILABLE BY

10 ORGANIZATION.—Section 6104(d) of such Code (re11 lating to public inspection of certain annual returns

12 and applications for exemption) is amended—

13 (A) by striking ‘‘AND APPLICATIONS FOR

14 EXEMPTION’’ and inserting ‘‘, APPLICATIONS

15 FOR EXEMPTION, AND NOTICES OF STATUS’’ in

16 the heading,

17 (B) by inserting ‘‘or notice of status under

18 section 527(i)’’ after ‘‘section 501’’ and by in19 serting ‘‘or any notice materials’’ after ‘‘mate20 rials’’ in paragraph (1)(A)(ii),

21 (C) by inserting or ‘‘or such notice mate22 rials’’ after ‘‘materials’’ in paragraph (1)(B),

23 and

24 (D) by adding at the end the following new

25 paragraph:
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1 ‘‘(6) NOTICE MATERIALS.—For purposes of

2 paragraph (1), the term ‘notice materials’ means the

3 notice of status filed under section 527(i) and any

4 papers submitted in support of such notice and any

5 letter or other document issued by the Internal Rev6 enue Service with respect to such notice.’’.

7 (c) FAILURE TO MAKE PUBLIC.—Section

8 6652(c)(1)(D) of the Internal Revenue Code of 1986 (re9 lating to public inspection of applications for exemption)

10 is amended—

11 (1) by inserting ‘‘or notice materials (as defined

12 in such section)’’ after ‘‘section)’’, and

13 (2) by inserting ‘‘AND NOTICE OF STATUS’’

14 after ‘‘EXEMPTION’’ in the heading.

15 (d) EFFECTIVE DATE.—

16 (1) IN GENERAL.—Except as provided in para17 graphs (2) and (3), the amendments made by this

18 section shall take effect on the date of the enactment

19 of this section.

20 (2) ORGANIZATIONS ALREADY IN EXISTENCE.—

21 In the case of an organization established before the

22 date of the enactment of this section, the time to file

23 the notice under section 527(i)(2) of the Internal

24 Revenue Code of 1986, as added by this section,
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1 shall be 30 days after the date of the enactment of

2 this section.

3 (3) INFORMATION AVAILABILITY.—The amend4 ment made by subsection (b)(2) shall take effect on

5 the date that is 45 days after the date of the enact6 ment of this section.

7 SEC. 2. DISCLOSURES BY POLITICAL ORGANIZATIONS.

8 (a) REQUIRED DISCLOSURE OF 527 ORGANIZA9 TIONS.—Section 527 of the Internal Revenue Code of

10 1986 (relating to political organizations), as amended by

11 section 1(a), is amended by adding at the end the fol12 lowing new section:

13 ‘‘(j) REQUIRED DISCLOSURE OF EXPENDITURES AND

14 CONTRIBUTIONS.—

15 ‘‘(1) PENALTY FOR FAILURE.—In the case of—

16 ‘‘(A) a failure to make the required disclo17 sures under paragraph (2) at the time and in

18 the manner prescribed therefor, or

19 ‘‘(B) a failure to include any of the infor20 mation required to be shown by such disclo21 sures or to show the correct information,

22 there shall be paid by the organization an amount

23 equal to the rate of tax specified in subsection (b)(1)

24 multiplied by the amount to which the failure re25 lates.
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1 ‘‘(2) REQUIRED DISCLOSURE.—A political orga2 nization which accepts a contribution, or makes an

3 expenditure, for an exempt function during any cal4 endar year shall file with the Secretary either—

5 ‘‘(A)(i) in the case of a calendar year in

6 which a regularly scheduled election is held—

7 ‘‘(I) quarterly reports, beginning with

8 the first quarter of the calendar year in

9 which a contribution is accepted or expend10 iture is made, which shall be filed not later

11 than the 15th day after the last day of

12 each calendar quarter, except that the re13 port for the quarter ending on December

14 31 of such calendar year shall be filed not

15 later than January 31 of the following cal16 endar year,

17 ‘‘(II) a pre-election report, which shall

18 be filed not later than the 12th day before

19 (or posted by registered or certified mail

20 not later than the 15th day before) any

21 election with respect to which the organiza22 tion makes a contribution or expenditure,

23 and which shall be complete as of the 20th

24 day before the election, and
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1 ‘‘(III) a post-general election report,

2 which shall be filed not later than the 30th

3 day after the general election and which

4 shall be complete as of the 20th day after

5 such general election, and

6 ‘‘(ii) in the case of any other calendar

7 year, a report covering the period beginning

8 January 1 and ending June 30, which shall be

9 filed no later than July 31 and a report cov10 ering the period beginning July 1 and ending

11 December 31, which shall be filed no later than

12 January 31 of the following calendar year, or

13 ‘‘(B) monthly reports for the calendar

14 year, beginning with the first month of the cal15 endar year in which a contribution is accepted

16 or expenditure is made, which shall be filed not

17 later than the 20th day after the last day of the

18 month and shall be complete as if the last day

19 of the month, except that, in lieu of filing the

20 reports otherwise due in November and Decem21 ber of any year in which a regularly scheduled

22 general election is held, a pre-general election

23 report shall be filed in accordance with sub24 paragraph (A)(i)(II), a post-general election re25 port shall be filed in accordance with subpara-
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1 graph (A)(i)(III), and a year end report shall

2 be filed not later than January 31 of the fol3 lowing calendar year.

4 ‘‘(3) CONTENTS OF REPORT.—A report re5 quired under paragraph (2) shall contain the fol6 lowing information:

7 ‘‘(A) The amount of each expenditure

8 made to a person if the aggregate amount of

9 expenditures to such person during the calendar

10 year equals or exceeds $500 and the name and

11 address of the person (in the case of an indi12 vidual, including the occupation and name of

13 employer of such individual).

14 ‘‘(B) The name and address (in the case of

15 an individual, including the occupation and

16 name of employer of such individual) of all con17 tributors which contributed an aggregate

18 amount of $200 or more to the organization

19 during the calendar year and the amount of the

20 contribution.

21 Any expenditure or contribution disclosed in a pre22 vious reporting period is not required to be included

23 in the current reporting period.

24 ‘‘(4) CONTRACTS TO SPEND OR CONTRIBUTE.—

25 For purposes of this subsection, a person shall be
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1 treated as having made an expenditure or contribu2 tion if the person has contracted or is otherwise obli3 gated to make the expenditure or contribution.

4 ‘‘(5) COORDINATION WITH OTHER REQUIRE5 MENTS.—This subsection shall not apply—

6 ‘‘(A) to any person required (without re7 gard to this subsection) to report under the

8 Federal Election Campaign Act of 1971 (2

9 U.S.C. 431 et seq.) as a political committee,

10 ‘‘(B) to any State or local committee of a

11 political party or political committee of a State

12 or local candidate,

13 ‘‘(C) to any organization which reasonably

14 anticipates that it will not have gross receipts

15 of $25,000 or more for any taxable year,

16 ‘‘(D) to any organization to which this sec17 tion applies solely by reason of subsection

18 (f)(1), or

19 ‘‘(E) with respect to any expenditure which

20 is an independent expenditure (as defined in

21 section 301 of such Act).

22 ‘‘(6) ELECTION.—For purposes of this sub23 section, the term ‘election’ means—

24 ‘‘(A) a general, special, primary, or runoff

25 election for a Federal office,
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1 ‘‘(B) a convention or caucus of a political

2 party which has authority to nominate a can3 didate for Federal office,

4 ‘‘(C) a primary election held for the selec5 tion of delegates to a national nominating con6 vention of a political party, or

7 ‘‘(D) a primary election held for the ex8 pression of a preference for the nomination of

9 individuals for election to the office of Presi10 dent.’’.

11 (b) PUBLIC DISCLOSURE OF REPORTS.—

12 (1) IN GENERAL.—Section 6104(d) of the In13 ternal Revenue Code of 1986 (relating to public in14 spection of certain annual returns and applications

15 for exemption), as amended by section 1(b)(4), is

16 amended—

17 (A) by inserting ‘‘REPORTS,’’ after ‘‘RE18 TURNS,’’ in the heading,

19 (B) in paragraph (1)(A), by striking ‘‘and’’

20 at the end of clause (i), by inserting ‘‘and’’ at

21 the end of clause (ii), and by inserting after

22 clause (ii) the following new clause:

23 ‘‘(iii) the reports filed under section

24 527(j) (relating to required disclosure of
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1 expenditures and contributions) by such

2 organization,’’, and

3 (C) in paragraph (1)(B), by inserting ‘‘,

4 reports,’’ after ‘‘return’’.

5 (2) DISCLOSURE OF CONTRIBUTORS AL6 LOWED.—Section 6104(d)(3)(A) of such Code (relat7 ing to nondisclosure of contributors, etc.) is amend8 ed by inserting ‘‘or a political organization exempt

9 from taxation under section 527’’ after ‘‘509(a))’’.

10 (3) DISCLOSURE BY INTERNAL REVENUE SERV11 ICE.—Section 6104(d) of such Code is amended by

12 adding at the end the following new paragraph:

13 ‘‘(6) DISCLOSURE OF REPORTS BY INTERNAL

14 REVENUE SERVICE.—Any report filed by an organi15 zation under section 527(j) (relating to required dis16 closure of expenditures and contributions) shall be

17 made available to the public at such times and in

18 such places as the Secretary may prescribe.’’.

19 (c) FAILURE TO MAKE PUBLIC.—Section

20 6652(c)(1)(C) of the Internal Revenue Code of 1986 (re21 lating to public inspection of annual returns) is

22 amended—

23 (1) by inserting ‘‘or report required under sec24 tion 527(j)’’ after ‘‘filing)’’,
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1 (2) by inserting ‘‘or report’’ after ‘‘1 return’’,

2 and

3 (3) by inserting ‘‘AND REPORTS’’ after ‘‘RE4 TURNS’’ in the heading.

5 (d) EFFECTIVE DATE.—The amendment made by

6 subsection (a) shall apply to expenditures made and con7 tributions received after the date of enactment of this Act,

8 except that such amendment shall not apply to expendi9 tures made, or contributions received, after such date pur10 suant to a contract entered into on or before such date.

11 SEC. 3. RETURN REQUIREMENTS RELATING TO SECTION

12 527 ORGANIZATIONS.

13 (a) RETURN REQUIREMENTS.—

14 (1) ORGANIZATIONS REQUIRED TO FILE.—Sec15 tion 6012(a)(6) of the Internal Revenue Code of

16 1986 (relating to political organizations required to

17 make returns of income) is amended by inserting

18 ‘‘or which has gross receipts of $25,000 or more for

19 the taxable year (other than an organization to

20 which section 527 applies solely by reason of sub21 section (f)(1) of such section)’’ after ‘‘taxable year’’.

22 (2) INFORMATION REQUIRED TO BE INCLUDED

23 ON RETURN.—Section 6033 of such Code (relating

24 to returns by exempt organizations) is amended by

25 redesignating subsection (g) as subsection (h) and
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1 inserting after subsection (f) the following new sub2 section:

3 ‘‘(g) RETURNS REQUIRED BY POLITICAL ORGANIZA4 TIONS.—In the case of a political organization required

5 to file a return under section 6012(a)(6)—

6 ‘‘(1) such organization shall file a return—

7 ‘‘(A) containing the information required,

8 and complying with the other requirements,

9 under subsection (a)(1) for organizations ex10 empt from taxation under section 501(a), and

11 ‘‘(B) containing such other information as

12 the Secretary deems necessary to carry out the

13 provisions of this subsection, and

14 ‘‘(2) subsection (a)(2)(B) (relating to discre15 tionary exceptions) shall apply with respect to such

16 return.’’.

17 (b) PUBLIC DISCLOSURE OF RETURNS.—

18 (1) RETURNS MADE AVAILABLE BY SEC19 RETARY.—

20 (A) IN GENERAL.—Section 6104(b) of the

21 Internal Revenue Code of 1986 (relating to in22 spection of annual information returns) is

23 amended by inserting ‘‘6012(a)(6),’’ before

24 ‘‘6033’’.
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1 (B) CONTRIBUTOR INFORMATION.—Sec2 tion 6104(b) of such Code is amended by in3 serting ‘‘or a political organization exempt from

4 taxation under section 527’’ after ‘‘509(a)’’.

5 (2) RETURNS MADE AVAILABLE BY ORGANIZA6 TIONS.—

7 (A) IN GENERAL.—Paragraph (1)(A)(i) of

8 section 6104(d) of such Code (relating to public

9 inspection of certain annual returns, reports,

10 applications for exemption, and notices of sta11 tus) is amended by inserting ‘‘or section

12 6012(a)(6) (relating to returns by political or13 ganizations)’’ after ‘‘organizations)’’.

14 (B) CONFORMING AMENDMENTS.—

15 (i) Section 6104(d)(1) of such Code is

16 amended in the matter preceding subpara17 graph (A) by inserting ‘‘or an organization

18 exempt from taxation under section

19 527(a)’’ after ‘‘501(a)’’.

20 (ii) Section 6104(d)(2) of such Code

21 is amended by inserting ‘‘or section

22 6012(a)(6)’’ after ‘‘section 6033’’.

23 (c) FAILURE TO FILE RETURN.—Section 6652(c)(1)

24 of the Internal Revenue Code of 1986 (relating to annual

25 returns under section 6033) is amended—
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1 (1) by inserting ‘‘or section 6012(a)(6) (relating

2 to returns by political organizations)’’ after ‘‘organi3 zations)’’ in subparagraph (A)(i),

4 (2) by inserting ‘‘or section 6012(a)(6)’’ after

5 ‘‘section 6033’’ in subparagraph (A)(ii),

6 (3) by inserting ‘‘or section 6012(a)(6)’’ after

7 ‘‘section 6033’’ in the third sentence of subpara8 graph (A), and

9 (4) by inserting ‘‘OR 6012(a)(6)’’ after ‘‘SECTION

10 6033’’ in the heading.

11 (d) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to returns for taxable years begin13 ning after June 30, 2000.

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