106TH CONGRESS

2D SESSION H. R. 4762

AN ACT

To amend the Internal Revenue Code of 1986 to

require 527 organizations to disclose their political activities.

106TH CONGRESS

2D SESSION H. R. 4762

AN ACT

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,
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1 SECTION 1. REQUIRED NOTIFICATION OF SECTION 527 STA2 TUS.

3 (a) IN GENERAL.—Section 527 of the Internal Rev4 enue Code of 1986 (relating to political organizations) is

5 amended by adding at the end the following new sub6 section:

7 ‘‘(i) ORGANIZATIONS MUST NOTIFY SECRETARY

8 THAT THEY ARE SECTION 527 ORGANIZATIONS.—

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graph (5), an organization shall not be treated as an

11 organization described in this section—

12 ‘‘(A) unless it has given notice to the Sec13 retary, electronically and in writing, that it is to

14 be so treated, or

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

16 required under paragraph (2), the organization

17 shall not be so treated for any period before

18 such notice is given.

19 ‘‘(2) TIME TO GIVE NOTICE.—The notice re20 quired under paragraph (1) shall be transmitted not

21 later than 24 hours after the date on which the or22 ganization is established.

23 ‘‘(3) CONTENTS OF NOTICE.—The notice re24 quired under paragraph (1) shall include informa25 tion regarding—
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1 ‘‘(A) the name and address of the organi2 zation (including any business address, if dif3 ferent) and its electronic mailing address,

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

5 ‘‘(C) the names and addresses of its offi6 cers, highly compensated employees, contact

7 person, custodian of records, and members of

8 its Board of Directors,

9 ‘‘(D) the name and address of, and rela10 tionship to, any related entities (within the

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

12 ‘‘(E) such other information as the Sec13 retary may require to carry out the internal

14 revenue laws.

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

16 organization failing to meet the requirements of

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

18 such organization shall be computed by taking into

19 account any exempt function income (and any de20 ductions directly connected with the production of

21 such income).

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

23 apply to any organization—

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

25 reason of subsection (f)(1), or
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1 ‘‘(B) which reasonably anticipates that it

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

3 for any taxable year.

4 ‘‘(6) COORDINATION WITH OTHER REQUIRE5 MENTS.—This subsection shall not apply to any per6 son required (without regard to this subsection) to

7 report under the Federal Election Campaign Act of

8 1971 (2 U.S.C. 431 et seq.) as a political com9 mittee.’’.

10 (b) DISCLOSURE REQUIREMENTS.—

11 (1) INSPECTION AT INTERNAL REVENUE SERV12 ICE OFFICES.—

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

14 of the Internal Revenue Code of 1986 (relating

15 to public inspection of applications) is

16 amended—

17 (i) by inserting ‘‘or a political organi18 zation is exempt from taxation under sec19 tion 527 for any taxable year’’ after ‘‘tax20 able year’’,

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

22 filed by the organization under section

23 527(i)’’ before ‘‘, together’’,

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

25 ‘‘such application’’ each place it appears,
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1 (iv) by inserting ‘‘or notice’’ after

2 ‘‘any application’’,

3 (v) by inserting ‘‘for exemption from

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

5 organization’’ in the last sentence, and

6 (vi) by inserting ‘‘OR 527’’ after ‘‘SEC7 TION 501’’ in the heading.

8 (B) CONFORMING AMENDMENT.—The

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

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

11 before the period.

12 (2) INSPECTION OF NOTICE ON INTERNET AND

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

14 amended by adding at the end the following new

15 paragraph:

16 ‘‘(3) INFORMATION AVAILABLE ON INTERNET

17 AND IN PERSON.—

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

19 make publicly available, on the Internet and at

20 the offices of the Internal Revenue Service—

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

22 which file a notice with the Secretary

23 under section 527(i), and
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1 ‘‘(ii) the name, address, electronic

2 mailing address, custodian of records, and

3 contact person for such organization.

4 ‘‘(B) TIME TO MAKE INFORMATION AVAIL5 ABLE.—The Secretary shall make available the

6 information required under subparagraph (A)

7 not later than five business days after the Sec8 retary receives a notice from a political organi9 zation under section 527(i).’’.

10 (3) INSPECTION BY COMMITTEE OF CON11 GRESS.—Section 6104(a)(2) of such Code is amend12 ed by inserting ‘‘or notice of status of any political

13 organization which is exempt from taxation under

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

15 year’’.

16 (4) PUBLIC INSPECTION MADE AVAILABLE BY

17 ORGANIZATION.—Section 6104(d) of such Code (re18 lating to public inspection of certain annual returns

19 and applications for exemption) is amended—

20 (A) by striking ‘‘AND APPLICATIONS FOR

21 EXEMPTION’’ and inserting ‘‘, APPLICATIONS

22 FOR EXEMPTION, AND NOTICES OF STATUS’’ in

23 the heading,

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

25 section 527(i)’’ after ‘‘section 501’’ and by in-
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1 serting ‘‘or any notice materials’’ after ‘‘mate2 rials’’ in paragraph (1)(A)(ii),

3 (C) by inserting or ‘‘or such notice mate4 rials’’ after ‘‘materials’’ in paragraph (1)(B),

5 and

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

7 paragraph:

8 ‘‘(6) NOTICE MATERIALS.—For purposes of

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

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

11 papers submitted in support of such notice and any

12 letter or other document issued by the Internal Rev13 enue Service with respect to such notice.’’.

14 (c) FAILURE TO MAKE PUBLIC.—Section

15 6652(c)(1)(D) of the Internal Revenue Code of 1986 (re16 lating to public inspection of applications for exemption)

17 is amended—

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

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

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

21 after ‘‘EXEMPTION’’ in the heading.

22 (d) EFFECTIVE DATE.—

23 (1) IN GENERAL.—Except as provided in para24 graphs (2) and (3), the amendments made by this
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1 section shall take effect on the date of the enactment

2 of this section.

3 (2) ORGANIZATIONS ALREADY IN EXISTENCE.—

4 In the case of an organization established before the

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

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

7 Revenue Code of 1986, as added by this section,

8 shall be 30 days after the date of the enactment of

9 this section.

10 (3) INFORMATION AVAILABILITY.—The amend11 ment made by subsection (b)(2) shall take effect on

12 the date that is 45 days after the date of the enact13 ment of this section.

14 SEC. 2. DISCLOSURES BY POLITICAL ORGANIZATIONS.

15 (a) REQUIRED DISCLOSURE OF 527 ORGANIZA16 TIONS.—Section 527 of the Internal Revenue Code of

17 1986 (relating to political organizations), as amended by

18 section 1(a), is amended by adding at the end the fol19 lowing new section:

20 ‘‘(j) REQUIRED DISCLOSURE OF EXPENDITURES AND

21 CONTRIBUTIONS.—

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

23 ‘‘(A) a failure to make the required disclo24 sures under paragraph (2) at the time and in

25 the manner prescribed therefor, or
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1 ‘‘(B) a failure to include any of the infor2 mation required to be shown by such disclo3 sures or to show the correct information,

4 there shall be paid by the organization an amount

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

6 multiplied by the amount to which the failure re7 lates.

8 ‘‘(2) REQUIRED DISCLOSURE.—A political orga9 nization which accepts a contribution, or makes an

10 expenditure, for an exempt function during any cal11 endar year shall file with the Secretary either—

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

13 which a regularly scheduled election is held—

14 ‘‘(I) quarterly reports, beginning with

15 the first quarter of the calendar year in

16 which a contribution is accepted or expend17 iture is made, which shall be filed not later

18 than the fifteenth day after the last day of

19 each calendar quarter, except that the re20 port for the quarter ending on December

21 31 of such calendar year shall be filed not

22 later than January 31 of the following cal23 endar year,

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

25 be filed not later than the twelfth day be-
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1 fore (or posted by registered or certified

2 mail not later than the fifteenth day be3 fore) any election with respect to which the

4 organization makes a contribution or ex5 penditure, and which shall be complete as

6 of the twentieth day before the election,

7 and

8 ‘‘(III) a post-general election report,

9 which shall be filed not later than the thir10 tieth day after the general election and

11 which shall be complete as of the twentieth

12 day after such general election, and

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

14 year, a report covering the period beginning

15 January 1 and ending June 30, which shall be

16 filed no later than July 31 and a report cov17 ering the period beginning July 1 and ending

18 December 31, which shall be filed no later than

19 January 31 of the following calendar year, or

20 ‘‘(B) monthly reports for the calendar

21 year, beginning with the first month of the cal22 endar year in which a contribution is accepted

23 or expenditure is made, which shall be filed not

24 later than the twentieth day after the last day

25 of the month and shall be complete as if the
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1 last day of the month, except that, in lieu of fil2 ing the reports otherwise due in November and

3 December of any year in which a regularly

4 scheduled general election is held, a pre-general

5 election report shall be filed in accordance with

6 subparagraph (A)(i)(II), a post-general election

7 report shall be filed in accordance with sub8 paragraph (A)(i)(III), and a year end report

9 shall be filed not later than January 31 of the

10 following calendar year.

11 ‘‘(3) CONTENTS OF REPORT.—A report re12 quired under paragraph (2) shall contain the fol13 lowing information:

14 ‘‘(A) The amount of each expenditure

15 made to a person if the aggregate amount of

16 expenditures to such person during the calendar

17 year equals or exceeds $500 and the name and

18 address of the person (in the case of an indi19 vidual, including the occupation and name of

20 employer of such individual).

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

22 an individual, including the occupation and

23 name of employer of such individual) of all con24 tributors which contributed an aggregate

25 amount of $200 or more to the organization
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1 during the calendar year and the amount of the

2 contribution.

3 Any expenditure or contribution disclosed in a pre4 vious reporting period is not required to be included

5 in the current reporting period.

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

7 For purposes of this subsection, a person shall be

8 treated as having made an expenditure or contribu9 tion if the person has contracted or is otherwise obli10 gated to make the expenditure or contribution.

11 ‘‘(5) COORDINATION WITH OTHER REQUIRE12 MENTS.—This subsection shall not apply—

13 ‘‘(A) to any person required (without re14 gard to this subsection) to report under the

15 Federal Election Campaign Act of 1971 (2

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

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

18 political party or political committee of a State

19 or local candidate,

20 ‘‘(C) to any organization which reasonably

21 anticipates that it will not have gross receipts

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

23 ‘‘(D) to any organization to which this sec24 tion applies solely by reason of subsection

25 (f)(1), or
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1 ‘‘(E) with respect to any expenditure which

2 is an independent expenditure (as defined in

3 section 301 of such Act).

4 ‘‘(6) ELECTION.—For purposes of this sub5 section, the term ‘election’ means—

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

7 election for a Federal office,

8 ‘‘(B) a convention or caucus of a political

9 party which has authority to nominate a can10 didate for Federal office,

11 ‘‘(C) a primary election held for the selec12 tion of delegates to a national nominating con13 vention of a political party, or

14 ‘‘(D) a primary election held for the ex15 pression of a preference for the nomination of

16 individuals for election to the office of Presi17 dent.’’.

18 (b) PUBLIC DISCLOSURE OF REPORTS.—

19 (1) IN GENERAL.—Section 6104(d) of the In20 ternal Revenue Code of 1986 (relating to public in21 spection of certain annual returns and applications

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

23 amended—

24 (A) by inserting ‘‘REPORTS,’’ after ‘‘RE25 TURNS,’’ in the heading,
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1 (B) in paragraph (1)(A), by striking ‘‘and’’

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

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

4 clause (ii) the following new clause:

5 ‘‘(iii) the reports filed under section

6 527(j) (relating to required disclosure of

7 expenditures and contributions) by such

8 organization,’’, and

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

10 reports,’’ after ‘‘return’’.

11 (2) DISCLOSURE OF CONTRIBUTORS AL12 LOWED.—Section 6104(d)(3)(A) of such Code (relat13 ing to nondisclosure of contributors, etc.) is amend14 ed by inserting ‘‘or a political organization exempt

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

16 (3) DISCLOSURE BY INTERNAL REVENUE SERV17 ICE.—Section 6104(d) of such Code is amended by

18 adding at the end the following new paragraph:

19 ‘‘(6) DISCLOSURE OF REPORTS BY INTERNAL

20 REVENUE SERVICE.—Any report filed by an organi21 zation under section 527(j) (relating to required dis22 closure of expenditures and contributions) shall be

23 made available to the public at such times and in

24 such places as the Secretary may prescribe.’’.
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1 (c) FAILURE TO MAKE PUBLIC.—Section

2 6652(c)(1)(C) of the Internal Revenue Code of 1986 (re3 lating to public inspection of annual returns) is

4 amended—

5 (1) by inserting ‘‘or report required under sec6 tion 527(j)’’ after ‘‘filing)’’,

7 (2) by inserting ‘‘or report’’ after ‘‘1 return’’,

8 and

9 (3) by inserting ‘‘AND REPORTS’’ after ‘‘RE10 TURNS’’ in the heading.

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

12 subsection (a) shall apply to expenditures made and con13 tributions received after the date of the enactment of this

14 Act, except that such amendment shall not apply to ex15 penditures made, or contributions received, after such date

16 pursuant to a contract entered into on or before such date.

17 SEC. 3. RETURN REQUIREMENTS RELATING TO SECTION

18 527 ORGANIZATIONS.

19 (a) RETURN REQUIREMENTS.—

20 (1) ORGANIZATIONS REQUIRED TO FILE.—Sec21 tion 6012(a)(6) of the Internal Revenue Code of

22 1986 (relating to political organizations required to

23 make returns of income) is amended by inserting

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

25 the taxable year (other than an organization to
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1 which section 527 applies solely by reason of sub2 section (f)(1) of such section)’’ after ‘‘taxable year’’.

3 (2) INFORMATION REQUIRED TO BE INCLUDED

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

5 to returns by exempt organizations) is amended by

6 redesignating subsection (g) as subsection (h) and

7 inserting after subsection (f) the following new sub8 section:

9 ‘‘(g) RETURNS REQUIRED BY POLITICAL ORGANIZA10 TIONS.—In the case of a political organization required

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

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

13 ‘‘(A) containing the information required,

14 and complying with the other requirements,

15 under subsection (a)(1) for organizations ex16 empt from taxation under section 501(a), and

17 ‘‘(B) containing such other information as

18 the Secretary deems necessary to carry out the

19 provisions of this subsection, and

20 ‘‘(2) subsection (a)(2)(B) (relating to discre21 tionary exceptions) shall apply with respect to such

22 return.’’.

23 (b) PUBLIC DISCLOSURE OF RETURNS.—

24 (1) RETURNS MADE AVAILABLE BY SEC25 RETARY.—
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1 (A) IN GENERAL.—Section 6104(b) of the

2 Internal Revenue Code of 1986 (relating to in3 spection of annual information returns) is

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

5 ‘‘6033’’.

6 (B) CONTRIBUTOR INFORMATION.—Sec7 tion 6104(b) of such Code is amended by in8 serting ‘‘or a political organization exempt from

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

10 (2) RETURNS MADE AVAILABLE BY ORGANIZA11 TIONS.—

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

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

14 inspection of certain annual returns, reports,

15 applications for exemption, and notices of sta16 tus) is amended by inserting ‘‘or section

17 6012(a)(6) (relating to returns by political or18 ganizations)’’ after ‘‘organizations)’’.

19 (B) CONFORMING AMENDMENTS.—

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

21 amended in the matter preceding subpara22 graph (A) by inserting ‘‘or an organization

23 exempt from taxation under section

24 527(a)’’ after ‘‘501(a)’’.
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1 (ii) Section 6104(d)(2) of such Code

2 is amended by inserting ‘‘or section

3 6012(a)(6)’’ after ‘‘section 6033’’.

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

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

6 returns under section 6033) is amended—

7 (1) by inserting ‘‘or section 6012(a)(6) (relating

8 to returns by political organizations)’’ after ‘‘organi9 zations)’’ in subparagraph (A)(i),

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

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

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

13 ‘‘section 6033’’ in the third sentence of subpara14 graph (A), and

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

16 6033’’ in the heading.

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

18 this section shall apply to returns for taxable years begin19 ning after June 30, 2000.

Passed the House of Representatives June 28 (legislative day, June 27), 2000.

Attest:

Clerk.