```

[House Report 114-612]
[From the U.S. Government Publishing Office]

114th Congress  }                                            {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                            {    114-612

======================================================================

 
          PREVENTING IRS ABUSE AND PROTECTING FREE SPEECH ACT

                                _______
                                

  June 9, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Brady of Texas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 5053]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 5053) to amend the Internal Revenue Code of 1986 to 
prohibit the Secretary of the Treasury from requiring that the 
identity of contributors to 501(c) organizations be included in 
annual returns, 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.................     3
          C. Legislative History.................................     4
 II. EXPLANATION OF THE BILL..........................................4
          A. Prohibition on Requiring that Identity of Certain 
              Contributors to Section 501(c) Organizations be 
              Included on Annual Returns (sec. 32 of the bill and 
              sec. 6033 of the Code).............................     4
III. VOTES OF THE COMMITTEE...........................................7
 IV. BUDGET EFFECTS OF THE BILL.......................................8
          A. Committee Estimate of Budgetary Effects.............     8
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     8
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     8
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......10
          A. Committee Oversight Findings and Recommendations....    10
          B. Statement of General Performance Goals and 
              Objectives.........................................    10
          C. Information Relating to Unfunded Mandates...........    10
          D. Applicability of House Rule XXI 5(b)................    10
          E. Tax Complexity Analysis.............................    10
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    11
          G. Duplication of Federal Programs.....................    11
          H. Disclosure of Directed Rule Makings.................    11
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........11
          A. Text of Existing Law Amended or Repealed by the 
              Bill, as Reported..................................    11
          B. Changes in Existing Law Proposed by the Bill, as 
              Reported...........................................    19
VII. DISSENTING VIEWS................................................29

    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 ``Preventing IRS Abuse and Protecting 
Free Speech Act''.

SEC. 2. PROHIBITION ON REQUIRING THAT IDENTITY OF CONTRIBUTORS TO 
                    501(C) ORGANIZATIONS BE INCLUDED IN ANNUAL RETURNS.

  (a) In General.--Section 6033 of the Internal Revenue Code of 1986 is 
amended by redesignating subsection (n) as subsection (o) and by 
inserting after subsection (m) the following:
  ``(n) Identifying Information of Donors.--
          ``(1) In general.--For purposes of subsection (a), the 
        Secretary may not require the name, address, or other 
        identifying information of any contributor to any organization 
        described in section 501(c) of any amount of any contribution, 
        grant, bequest, devise, or gift of money or property.
          ``(2) Exceptions.--
                  ``(A) In general.--Paragraph (1) shall not apply--
                          ``(i) to any disclosure required by 
                        subsection (a)(2), and
                          ``(ii) with respect to any a contribution, 
                        grant, bequest, devise, or gift of money or 
                        property made by an officer or director of the 
                        organization (or an individual having powers or 
                        responsibilities similar to those of officers 
                        or directors) or any covered employee.
                  ``(B) Covered employee.--For purposes of this 
                paragraph, the term `covered employee' means any 
                employee (including any former employee) of the 
                organization if the employee is one of the 5 highest 
                compensated employees of the organization for the 
                taxable year.
                  ``(C) Compensation from related organizations.--
                          ``(i) In general.--Compensation of a covered 
                        employee by the organization shall include any 
                        compensation paid with respect to employment of 
                        such employee by any related person or 
                        governmental entity.
                          ``(ii) Related organizations.--A person or 
                        governmental entity shall be treated as related 
                        to the organization if such person or 
                        governmental entity--
                                  ``(I) controls, or is controlled by, 
                                the organization,
                                  ``(II) is controlled by one or more 
                                persons that control the organization,
                                  ``(III) is a supported organization 
                                (as defined in section 509(f)(3)) 
                                during the taxable year with respect to 
                                the organization,
                                  ``(IV) is a supporting organization 
                                described in section 509(a)(3) during 
                                the taxable year with respect to the 
                                organization, or
                                  ``(V) in the case of an organization 
                                that is a voluntary employees' 
                                beneficiary association described in 
                                section 501(c)(9), establishes, 
                                maintains, or makes contributions to 
                                such voluntary employees' beneficiary 
                                association.''.
  (b) Conforming Amendment.--Section 6033(b)(5) of such Code is 
amended--
          (1) by striking ``all'', and
          (2) by adding at the end the following: ``to the extent not 
        prohibited by subsection (n),''.
  (c) Effective Date.--The amendments made by this section shall apply 
to returns required to be filed for taxable years ending after the date 
of the enactment of this Act.

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    H.R. 5053, as reported by the Committee on Ways and Means, 
would prohibit the Internal Revenue Service (IRS) from 
collecting the identity of donors who contribute to tax-exempt 
organizations. Under this legislation, a tax-exempt 
organization would be required to report only information on 
donors who contribute $5,000 or more during a single tax year 
and who are either an officer or director of the organization 
or one of its five highest paid employees. This information 
would be excluded from public disclosure.

                 B. Background and Need for Legislation

    Current law requires section 501(c)(3) tax-exempt 
organizations to report information on substantial donors. The 
IRS defines a substantial donor as a contributor who gives 
$5,000 or more to an organization in a calendar year. This 
information is reported on the Schedule B of the Form 990. The 
requirement to file a Form 990 applies to tax-exempt 
organizations generally, not just to section 501(c)(3) tax-
exempt organizations. Thus, the IRS has expanded the 
substantial donor reporting requirements to more than section 
501(c)(3) tax-exempt organizations. While the IRS does not make 
this information public, there have been instances where IRS 
employees have improperly accessed and released the Schedule B 
donor list. A notable example is the National Organization for 
Marriage, which had information from its Schedule B leaked in 
2012 and the IRS subsequently paid $50,000 to settle a lawsuit 
with the organization claiming that the IRS improperly accessed 
the information.\1\ Certain states, including California, have 
moved to make Schedule B information public. The move to 
publicize Schedule B information was the subject of a recent 
lawsuit, Americans for Prosperity Foundation v. Kamala Harris, 
Attorney General for California. The Attorney General of 
California wanted to require that the Americans for Prosperity 
Foundation disclose its Schedule B to the California State 
Registry. In April 2016, the U.S. District Court ruled that 
requiring the organization to disclose its Schedule B was 
unconstitutional.
---------------------------------------------------------------------------
    \1\Washington Post, ``IRS Agrees to Pay Non-Profit Group $50,000 
for Unauthorized Release of Tax Return,'' June 24, 2014.
---------------------------------------------------------------------------
    In recent years it was also revealed that the IRS used 
inappropriate criteria to target organizations applying for 
tax-exempt status. Additionally, the IRS is considering 
eliminating Schedule B entirely.\2\ H.R. 5053 would protect 
taxpayers from improper disclosure of Schedule B information, 
as well as limit the IRS's ability to target organizations 
improperly. The legislation also eliminates a burdensome 
reporting requirement for tax-exempt organizations.
---------------------------------------------------------------------------
    \2\Internal Revenue Service Director of Exempt Organizations, 
Remarks before the Urban Institute's Center on Nonprofits and 
Philanthropy, December 1, 2015.
---------------------------------------------------------------------------

                         C. Legislative History

Background

    H.R. 5053, the Preventing IRS Abuse and Protecting Free 
Speech Act, was introduced on April 26, 2016, and was referred 
to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 5053, the 
Preventing IRS Abuse and Protecting Free Speech Act, on April 
28, 2016.
    The Committee approved the Chairman's amendment in the 
nature of a substitute. Having considered the bill, as amended, 
the Committee favorable reported H.R. 5053 (with a quorum being 
present).

Committee hearings

    Information reporting requirements for tax-exempt 
organizations, as well as improper targeting of tax-exempt 
organizations by the IRS, were discussed at multiple hearings 
in the 114th Congress including the Oversight Subcommittee 
hearing on the 2015 Tax Filing Season (April 22, 2015), and the 
Oversight Subcommittee hearing on IRS Audit Selection Process 
(July 23, 2015).
    Improper targeting of tax-exempt organizations was also 
discussed at multiple hearings in the 113th Congress, including 
the Oversight Subcommittee hearing on IRS Operations and the 
2012 Tax Return Filing Season (March 22, 2012), the Oversight 
Subcommittee hearing on Public Charity Organizational Issues, 
Unrelated Business Income Tax, and the Revised Form 990 (July 
25, 2012), the Full Committee hearing on IRS Targeting 
Conservative Groups (May 17, 2013), the Full Committee hearing 
on the Status of IRS's Review of Taxpayer Targeting Practices 
(June 27, 2013), the Oversight Subcommittee hearing on the 
IRS's Exempt Organizations Division Post-Treasury Inspector 
General for Tax Administration Audit (September 18, 2013), and 
the Oversight Subcommittee hearing on IRS Operations and the 
2014 Tax Return Filing Season (April 30, 2014).

                      II. EXPLANATION OF THE BILL

 A. Prohibition on Requiring that Identity of Certain Contributors to 
Section 501(c) Organizations Be Included on Annual Returns (Sec. 32 of 
                  the Bill and Sec. 6033 of the Code)

                              PRESENT LAW

    In general, organizations exempt from taxation under 
section 501(a) are required to file an annual return (Form 990 
series), stating specifically the items of gross income, 
receipts, disbursements, and such other information as the 
Secretary may prescribe.\3\ An organization that is required to 
file an information return, but that has gross receipts of less 
than $200,000 during its taxable year, and total assets of less 
than $500,000 at the end of its taxable year, may file Form 
990-EZ. Section 501(c)(3) private foundations are required to 
file Form 990-PF rather than Form 990. An organization that has 
not received a determination of its tax-exempt status, but that 
claims tax-exempt status under section 501(a), is subject to 
the same annual reporting requirements and exceptions as 
organizations that have received a tax-exemption determination.
---------------------------------------------------------------------------
    \3\Sec. 6033(a).
---------------------------------------------------------------------------
    On the applicable annual information return, organizations 
are required to report their gross income, information on their 
finances, functional expenses, compensation, activities, and 
other information required by the IRS in order to review the 
organization's activities and operations during the previous 
taxable year and to review whether the organization continues 
to meet the statutory requirements for exemption. Examples of 
the information required by Form 990 include: (1) a statement 
of program accomplishments; (2) a description of the 
relationship of the organization's activities to the 
accomplishment of the organization's exempt purposes; (3) a 
description of payments to individuals, including compensation 
to officers and directors, highly paid employees and 
contractors, grants, and certain insider transactions and 
loans; and (4) disclosure of certain activities, such as 
expenses of conferences and conventions, political 
expenditures, compliance with public inspection requirements, 
and lobbying activities.
    Form 990-PF requires, among other things, reporting of: the 
foundation's gross income for the year; expenses attributable 
to such income; disbursements for exempt purposes; total 
contributions and gifts received and the names of all 
substantial contributors; names, addresses, and compensation of 
officers and directors; an itemized statement of securities and 
other assets held at the close of the year; an itemized 
statement of all grants made or approved; and information about 
whether the organization has complied with the restrictions 
applicable to private foundations (secs. 4941 through 4945).
    An organization that files Form 990, Form 990-EZ, or Form 
990-PF and receives during the year $5,000 or more (in money or 
property) from any one contributor generally must report such 
contributions on Schedule B (``Schedule of Contributors'').\4\ 
The Schedule B is open to public inspection for an organization 
that files Form 990-PF (private foundations) or a section 527 
political organization that files Form 990 or Form 990-EZ. For 
all other Form 990 and Form 990-EZ filers, the names and 
addresses of contributors are not required to be made available 
for public inspection. All other information, including the 
amount of contributions, the description of noncash 
contributions, and any other information, is required to be 
made available for public inspection unless it clearly 
identifies the contributor. As a matter of practice, the IRS 
does not include Schedule B on the CD sets or any other form of 
media made available to the public. Instead, on a case-by-case 
basis, when an individual makes a request for a specific 
organization's Schedule B, the IRS reviews and redacts the 
schedule in an effort to avoid divulging information that would 
identify any contributor.
---------------------------------------------------------------------------
    \4\Certain section 501(c)(3) organizations that meet a 33-1/3-
percent public support test of the regulations under sections 509(a)(1) 
and 170(b)(1)(A)(vi) generally must report contributions totaling 
$5,000 or more from a single contributor only to the extent that such 
contributions exceed two percent of the organization's total 
contributions. Additional special reporting rules apply to 
organizations described in sections 501(c)(7), (8), or (10).
---------------------------------------------------------------------------
    The requirement that an exempt organization file an annual 
information return (Form 990 or Form 990-EZ) does not apply to 
certain exempt organizations, including organizations (other 
than private foundations) the gross receipts of which in each 
taxable year normally are not more than $50,000. Organizations 
that are excused from filing an information return by reason of 
normally having gross receipts below such amount must furnish 
to the Secretary an annual notice (Form 990-N), in electronic 
form, containing certain basic information about the 
organization.\5\
---------------------------------------------------------------------------
    \5\Sec. 6033(i).
---------------------------------------------------------------------------
    Other organizations exempt from the annual information 
return requirement include: churches, their integrated 
auxiliaries, and conventions or associations of churches; the 
exclusively religious activities of any religious order; 
certain State institutions whose income is excluded from gross 
income under section 115; an interchurch organization of local 
units of a church; certain mission societies; certain church-
affiliated elementary and high schools; and certain other 
organizations, including some that the IRS has relieved from 
the filing requirement pursuant to its statutory discretionary 
authority.\6\
---------------------------------------------------------------------------
    \6\Sec. 6033(a)(2)(A); Treas. Reg. secs. 1.6033-2(a)(2)(i) and 
(g)(1).
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee is concerned that the IRS is collecting 
sensitive information about donors who contribute to tax-exempt 
organizations. Although the IRS is required by law to maintain 
the confidentiality this information, the Committee is aware of 
instances in which the information was released to third 
parties. Furthermore, the Committee is concerned that the IRS 
might use donor information to penalize tax-exempt 
organizations or donors based on their political beliefs. By 
limiting the contribution information tax-exempt organizations 
report to the IRS, the provision will protect taxpayers' 
identities and help prevent inappropriate political targeting 
by the IRS. In addition, the Committee believes the Schedule B 
provides little administrative benefit to the IRS. In fact, 
senior leadership of the IRS's Exempt Organizations Division 
has stated recently that the IRS is considering eliminating the 
Schedule B filing requirement.

                        EXPLANATION OF PROVISION

    The provision limits the contributor information that must 
be reported by an organization described in section 501(c) on 
its annual information return. Under the provision, except as 
described below, the Secretary may not require an organization 
to report the name, address, or other identifying information 
of any contributor to the organization with respect to any 
contribution, grant, bequest, devise, or gift of money or 
property, regardless of amount.
    The provision provides two exceptions to this prohibition. 
First, the Secretary is not prohibited from requiring the 
information described in section 6033(a)(2) relating to 
prohibited tax shelter transactions. Second, the Secretary is 
not prohibited from continuing to require reporting of 
contributions, grants, bequests, devises, or gifts of money or 
property in excess of $5,000 made by an officer or director of 
the organization (or an individual having powers to 
responsibilities similar to those of officers or directors) or 
by a covered employee. Covered employee means any employee 
(including any former employee) of the organization if the 
employee is one of the five highest compensated employees of 
the organization for the taxable year. For this purpose, an 
employee's compensation includes compensation from the 
organization as well as any compensation paid with respect to 
the employment of such employee by any related person or 
governmental entity. A person or governmental entity is treated 
as related to the organization if it: (1) controls or is 
controlled by the organization; (2) is controlled by one or 
more persons that control the organization; (3) is a supported 
organization (as defined in section 509(f)(3)) during the 
taxable year with respect to the organization; (4) is a 
supporting organization described in section 509(a)(3) with 
respect to the organization; or (5) in the case of an 
organization that is a voluntary employees' beneficiary 
association described in section 501(c)(9), establishes, 
maintains, or makes contributions to such voluntary employees' 
beneficiary association.
    The provision makes a conforming amendment to section 
6033(b), which describes certain information that a section 
501(c)(3) organization must include on its annual information 
return.

                             EFFECTIVE DATE

    The provision is effective for returns required to be filed 
for taxable years ending 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. 5053, a bill to prohibit the Secretary of 
the Treasury from requiring that the identity of contributors 
of 501(c) organizations be included in annual returns.
    The Chairman's amendment in the nature of a substitute was 
adopted by a voice vote (with a quorum being present).
    The bill, H.R. 5053, was ordered favorably reported to the 
House of Representatives as amended by a roll call vote of 23 
yeas to 15 nays (with a quorum being present). The vote was as 
follows:

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

                     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. 5053, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal fiscal year budget receipts for the period 
2016-2026.

                                       Fiscal Years [Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
  2016     2017     2018     2019    2020    2021    2022    2023    2024    2025    2026    2016-21    2016-26
----------------------------------------------------------------------------------------------------------------
     --       -1       -2       -2      -2      -2      -2      -2      -2      -2      -2         -7        -16
----------------------------------------------------------------------------------------------------------------
Note: Details do not add to totals due to rounding.

    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, May 6, 2016.
Hon. Kevin Brady,
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. 5053, the 
Preventing IRS Abuse and Protecting Free Speech Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Peter 
Huether.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5053--Preventing IRS Abuse and Protecting Free Speech Act

    H.R. 5053 would amend the Internal Revenue Code to limit 
the information that a tax-exempt organization must report 
about its contributors on its annual information return. Under 
current law, some organizations that are tax-exempt under 
section 501(c) of the Internal Revenue Code must report to the 
Internal Revenue Service the names and addresses or other 
identifying information of contributors of $5,000 or more. The 
bill would limit the Secretary of the Treasury from requiring 
the name, address, or other identifying information of any 
contributor regardless of the nature or size of the 
contribution with two exceptions. The Secretary may still 
require the information relating to prohibited tax shelter 
transactions and for contributions of $5,000 or more by 
officers, directors, or certain highly paid employees of the 
organization.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that the legislation would reduce revenues by $7 
million over the 2016-2021 period and by $16 million over the 
2016-2026 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. Enacting H.R. 5053 would result 
in a reduction in revenues in each year beginning in 2017. The 
estimated increases in the deficit are shown in the following 
table.
    CBO and JCT estimate that enacting the bill would not 
increase net direct spending or on-budget deficits by more than 
$5 billion in any of the four consecutive 10-year periods 
beginning in 2027.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Peter Huether. 
The estimate was approved by David Weiner, Assistant Director 
for Tax Analysis.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5053, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON APRIL 28, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       By fiscal year, in millions of dollars--
                                                            --------------------------------------------------------------------------------------------
                                                                                                                                           2016-   2016-
                                                              2016   2017   2018   2019   2020   2021   2022   2023   2024   2025   2026   2021    2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.............................      0      1      2      2      2      2      2      2      2      2      2       7      16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components do not sum to totals because of rounding.

     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. 5053 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 contains no 
unfunded mandate on the private sector, nor does it 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

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (``IRS Reform Act'') 
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 of 1986 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 of 1986 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:

         Changes in Existing Law Made 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)--
          (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.

           *       *       *       *       *       *       *

      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 
made 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 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, to the extent not 
        prohibited by subsection (n),
          (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)--
          (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) Identifying Information of Donors.--
          (1) In general.--For purposes of subsection (a), the 
        Secretary may not require the name, address, or other 
        identifying information of any contributor to any 
        organization described in section 501(c) of any amount 
        of any contribution, grant, bequest, devise, or gift of 
        money or property.
          (2) Exceptions.--
                  (A) In general.--Paragraph (1) shall not 
                apply--
                          (i) to any disclosure required by 
                        subsection (a)(2), and
                          (ii) with respect to any a 
                        contribution, grant, bequest, devise, 
                        or gift of money or property made by an 
                        officer or director of the organization 
                        (or an individual having powers or 
                        responsibilities similar to those of 
                        officers or directors) or any covered 
                        employee.
                  (B) Covered employee.--For purposes of this 
                paragraph, the term ``covered employee'' means 
                any employee (including any former employee) of 
                the organization if the employee is one of the 
                5 highest compensated employees of the 
                organization for the taxable year.
                  (C) Compensation from related 
                organizations.--
                          (i) In general.--Compensation of a 
                        covered employee by the organization 
                        shall include any compensation paid 
                        with respect to employment of such 
                        employee by any related person or 
                        governmental entity.
                          (ii) Related organizations.--A person 
                        or governmental entity shall be treated 
                        as related to the organization if such 
                        person or governmental entity--
                                  (I) controls, or is 
                                controlled by, the 
                                organization,
                                  (II) is controlled by one or 
                                more persons that control the 
                                organization,
                                  (III) is a supported 
                                organization (as defined in 
                                section 509(f)(3)) during the 
                                taxable year with respect to 
                                the organization,
                                  (IV) is a supporting 
                                organization described in 
                                section 509(a)(3) during the 
                                taxable year with respect to 
                                the organization, or
                                  (V) in the case of an 
                                organization that is a 
                                voluntary employees' 
                                beneficiary association 
                                described in section 501(c)(9), 
                                establishes, maintains, or 
                                makes contributions to such 
                                voluntary employees' 
                                beneficiary association.
  [(n)] (o) 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.

           *       *       *       *       *       *       *

                         VII. DISSENTING VIEWS

    We oppose H.R. 5053, which would prohibit the Secretary of 
the Treasury from collecting the name, address, or other 
identifying information of contributors to any tax-exempt, 
501(c) organization except in limited circumstances. This bill 
would open the floodgates for unlimited, anonymous, 
unaccountable money to pour into U.S. elections--including 
possibly from foreign sources.
    Under present law, certain 501(c) organizations must attach 
to their annual information returns (IRS Forms 990) a list 
(Schedule B) of donors who contribute $5,000 or more during the 
year (``substantial contributors''). The Schedule B is kept 
confidential by the Internal Revenue Service (IRS) and is not 
made public.
    Certain 501(c) organizations, such as social welfare 
organizations, are permitted to engage in political activity. 
These politically active 501(c)(4) organizations are required 
to disclose their substantial contributors to the IRS but are 
not required to disclose them to the public.
    There has been a sharp rise in undisclosed money being 
spent by tax-exempt groups in federal elections since the 
Supreme Court issued its 2010 Citizens United decision. This 
bill would make it even easier for donors to anonymously funnel 
money in support of political candidates. Already in this 
election cycle, according to the Center for Responsive 
Politics, political spending by tax-exempt groups is five times 
the amount spent at this point during the 2012 election cycle.
    It is no secret as to why Republicans are working to keep 
donors a secret: the three largest spenders from 2012--
representing fully 51% of the total--include Karl Rove's 
Crossroads GPS (that spent $71 million); the Koch Brothers' 
Americans for Prosperity (that spent $36 million); and the Koch 
Brothers' American Future Fund (that spent $25 million). It is 
no surprise the Koch Companies Public Sector, LLC sent a letter 
to Republican Members on the day of the markup urging them to 
support the bill. Simply put, H.R. 5053 does nothing more than 
solidify the secrecy around the Republicans' big campaign 
efforts.
    The bill also potentially opens the door for unlimited, 
secret money from foreign governments or individuals to be 
funneled into our elections. Currently, foreign money cannot be 
given or spent in our elections. The only real protection we 
have against the use of foreign money by politically active 
social welfare organizations is that they must disclose their 
substantial contributors to the IRS. This requirement means 
that tax-exempt, 501(c)(4) groups know they can be held 
accountable if they illegally spend foreign money in federal 
elections. Campaign finance reform groups opposing this bill 
warned that, if donor disclosure to the IRS is eliminated, no 
one will know whether a social welfare organization has 
received foreign funds and is illegally spending them in our 
elections.
    We should not support efforts to reduce transparency and 
make it easier for donors to pour unlimited funds into 
political campaigns. For these reasons, we oppose this bill.

                                           Sander M. Levin,
                                                    Ranking Member.
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