I 

113TH CONGRESS 

1ST SESSION H. R. 3520 

To amend the Internal Revenue Code of 1986 to reform rules relating to 

501(c)(4) organizations and provide certain taxpayer protections, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 18, 2013 

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

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

rules relating to 501(c)(4) organizations and provide certain taxpayer protections, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Exempt Organization 

5 Simplification and Taxpayer Protection Act of 2013’’. 


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1 SEC. 2. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY 

2 OF INTENT TO OPERATE AS 501(c)(4). 

3 (a) IN GENERAL.—Part I of subchapter F of chapter 

4 1 of the Internal Revenue Code of 1986 is amended by 

5 adding at the end the following new section: 

6 ‘‘SEC. 506. ORGANIZATIONS REQUIRED TO NOTIFY SEC7 RETARY OF INTENT TO OPERATE AS 501(c)(4). 

8 ‘‘(a) IN GENERAL.—An organization described in 

9 section 501(c)(4) shall, not later than 60 days after the 

10 organization is established, notify the Secretary (in such 

11 manner as the Secretary shall by regulation prescribe) 

12 that it is operating as such. 

13 ‘‘(b) CONTENTS OF NOTICE.—The notice required 

14 under subsection (a) shall include the following informa15 tion: 

16 ‘‘(1) The name, address, and taxpayer identi17 fication number of the organization. 

18 ‘‘(2) The date on which, and the State under 

19 the laws of which, the organization was organized. 

20 ‘‘(3) A statement of the purpose of the organi21 zation. 

22 ‘‘(c) ACKNOWLEDGMENT OF RECEIPT.—Not later 

23 than 60 days after receipt of such a notice, the Secretary 

24 shall send to the organization an acknowledgment of such 

25 receipt. 


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1 ‘‘(d) EXTENSION FOR REASONABLE CAUSE.—The 

2 Secretary may, for reasonable cause, extend the 60-day 

3 period described in subsection (a). 

4 ‘‘(e) USER FEE.—The Secretary shall impose a rea5 sonable user fee for submission of the notice under sub6 section (a). 

7 ‘‘(f) REQUEST FOR DETERMINATION.—Upon request 

8 by an organization to be treated as an organization de9 scribed in section 501(c)(4), the Secretary may issue a de10 termination with respect to such treatment. Such request 

11 shall be treated for purposes of section 6104 as an applica12 tion for exemption from taxation under section 501(a).’’. 

13 (b) SUPPORTING INFORMATION WITH FIRST RE14 TURN.—Paragraph (1) of section 6033(f) of such Code is 

15 amended— 

16 (1) by striking the period at the end and insert17 ing ‘‘, and’’, 

18 (2) by striking ‘‘include on the return required 

19 under subsection (a) the information’’ and inserting 

20 the following: ‘‘include on the return required under 

21 subsection (a)— 

22 ‘‘(1) the information’’, and 

23 (3) by adding at the end the following new 

24 paragraph: 


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1 ‘‘(2) in the case of the first such return filed by 

2 such an organization after submitting a notice to the 

3 Secretary under section 506(a), such information as 

4 the Secretary shall by regulation require in support 

5 of the organization’s treatment as an organization 

6 described in section 501(c)(4).’’. 

7 (c) FAILURE TO FILE INITIAL NOTIFICATION.—Sub8 section (c) of section 6652 of such Code is amended by 

9 redesignating paragraphs (4) and (5) as paragraphs (5) 

10 and (6), respectively, and by inserting after paragraph (3) 

11 the following new paragraph: 

12 ‘‘(4) NOTICES UNDER SECTION 506.— 

13 ‘‘(A) PENALTY ON ORGANIZATION.—In the 

14 case of a failure to submit a notice required 

15 under section 506(a) (relating to organizations 

16 required to notify Secretary of intent to operate 

17 as 501(c)(4)) on the date and in the manner 

18 prescribed therefor, there shall be paid by the 

19 organization failing to so submit $20 for each 

20 day during which such failure continues, but 

21 the total amount imposed under this subpara22 graph on any organization for failure to submit 

23 any one notice shall not exceed $5,000. 

24 ‘‘(B) MANAGERS.—The Secretary may 

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1 ject to penalty under subparagraph (A) speci2 fying in such demand a reasonable future date 

3 by which the notice shall be submitted for pur4 poses of this subparagraph. If such notice is not 

5 submitted on or before such date, there shall be 

6 paid by the person failing to so submit $20 for 

7 each day after the expiration of the time speci8 fied in the written demand during which such 

9 failure continues, but the total amount imposed 

10 under this subparagraph on all persons for fail11 ure to submit any one notice shall not exceed 

12 $5,000.’’. 

13 (d) CLERICAL AMENDMENT.—The table of sections 

14 for part I of subchapter F of chapter 1 of such Code is 

15 amended by adding at the end the following new item: 

‘‘Sec. 506. Organizations required to notify Secretary of intent to operate as 

501(c)(4).’’. 

16 (e) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—The amendments made by 

18 this section shall apply to organizations which are 

19 described in section 501(c)(4) of the Internal Rev20 enue Code of 1986 and organized after December 

21 31, 2014. 

22 (2) CERTAIN EXISTING ORGANIZATIONS.—In 

23 the case of any other organization described in sec24 tion 501(c)(4) of such Code, the amendments made 


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1 by this section shall apply to such organization only 

2 if, on or before the date of the enactment of this 

3 Act— 

4 (A) such organization has not applied for 

5 a written determination of recognition as an or6 ganization described in section 501(c)(4) of 

7 such Code, and 

8 (B) such organization has not filed at least 

9 one annual return or notice required under sub10 section (a)(1) or (i) (as the case may be) of sec11 tion 6033 of such Code. 

12 In the case of any organization to which the amend13 ments made by this section apply by reason of the 

14 preceding sentence, such organization shall submit 

15 the notice required by section 506(a) of such Code, 

16 as added by this Act, not later than 180 days after 

17 the date of the enactment of this Act. 

18 SEC. 3. DECLARATORY JUDGMENTS FOR 501(c)(4) ORGANI19 ZATIONS. 

20 (a) IN GENERAL.—Paragraph (1) of section 7428(a) 

21 of the Internal Revenue Code of 1986 is amended by strik22 ing ‘‘or’’ at the end of subparagraph (C) and by inserting 

23 after subparagraph (D) the following new subparagraph: 

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1 tion described in section 501(c)(4) which is ex2 empt from tax under section 501(a), or’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to pleadings filed after the date 

5 of the enactment of this Act. 

6 SEC. 4. RELEASE OF INFORMATION REGARDING THE STA7 TUS OF CERTAIN INVESTIGATIONS. 

8 (a) IN GENERAL.—Subsection (e) of section 6103 of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(11) DISCLOSURE OF INFORMATION REGARD12 ING STATUS OF INVESTIGATION OF VIOLATION OF

13 THIS SECTION.—In the case of a person who pro14 vides to the Secretary information indicating a viola15 tion of section 7213, 7213A, or 7214 with respect 

16 to any return or return information of such person, 

17 the Secretary may disclose to such person (or such 

18 person’s designee)— 

19 ‘‘(A) whether an investigation based on the 

20 person’s provision of such information has been 

21 initiated and whether it is open or closed, 

22 ‘‘(B) whether any such investigation sub23 stantiated such a violation by any individual, 

24 and 


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1 ‘‘(C) whether any action has been taken 

2 with respect to such individual (including 

3 whether a referral has been made for prosecu4 tion of such individual).’’. 

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

6 this section shall take effect on the date of the enactment 

7 of this Act. 

8 SEC. 5. REVIEW OF INTERNAL REVENUE SERVICE EXAM9 INATION SELECTION PROCEDURES. 

10 (a) IN GENERAL.—The Comptroller General of the 

11 United States shall conduct a study of each Internal Rev12 enue Service operating division to assess the process used 

13 for determining how enforcement cases are selected and 

14 processed. Such study shall include a review of the fol15 lowing: 

16 (1) The standards each such operating division 

17 has established for enforcement case selection (in18 cluding any automated or discretionary selection 

19 processes) and case work, and whether such stand20 ards meet the objectives of impartiality, objectivity, 

21 compliance, and minimizing taxpayer burden. 

22 (2) The extent to which any cases are initiated 

23 by referrals or complaints from inside or outside of 

24 the operating division (including from outside of the 

25 Internal Revenue Service). 


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1 (3) The Internal Revenue Service controls (in2 cluding management reviews and regular updates) 

3 for assuring that its standards for enforcement cases 

4 (and handling of referrals and complaints) in each 

5 operating division are sufficient for achieving the ob6 jectives described in paragraph (1). 

7 (4) The Internal Revenue Service controls (in8 cluding training, monitoring, and quality assess9 ments) for assuring that its standards are adhered 

10 to by all division personnel and the effectiveness of 

11 such controls. 

12 (5) Whether the existing standards and controls 

13 provide reasonable assurance that each division’s en14 forcement processes meet the Internal Revenue Serv15 ice objectives of impartiality, objectivity, compliance, 

16 and minimizing taxpayer burden. 

17 (b) INITIAL REPORT.—Not later than 1 year after 

18 the date of the enactment of this section, the Comptroller 

19 General shall submit to the Committee on Ways and 

20 Means of the House of Representatives, the Committee on 

21 Finance of the Senate, and the Secretary of the Treasury 

22 a report on the results of such study. Such report shall 

23 include such recommendations as the Comptroller General 

24 may deem advisable. 


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1 (c) FOLLOW-UP ON RECOMMENDATIONS.—Not later 

2 than 180 days after a report is submitted with respect 

3 to an operating division under subsection (b), the Comp4 troller General shall conduct a follow-up study, and submit 

5 to the Committee on Ways and Means of the House of 

6 Representatives, the Committee on Finance of the Senate, 

7 and the Secretary of the Treasury a report, on whether 

8 any recommendations to improve case selection and case 

9 work processes have been implemented and are working 

10 as intended. 

11 (d) CONTINUING CASE MANAGEMENT STUDIES AND

12 REPORTS.— 

13 (1) IN GENERAL.—After a report is submitted 

14 under subsection (b), the Comptroller General shall 

15 conduct follow-up studies and reports in the same 

16 manner as provided in subsections (a) and (b) with 

17 respect to each operating division of the Internal 

18 Revenue Service and shall include in such study and 

19 report a review of whether any previous rec20 ommendations to improve case selection and case 

21 work processes have been implemented and are 

22 working as intended. 

23 (2) FREQUENCY.—Each such report with re24 spect to an operating division shall be submitted not 

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1 port was submitted with respect to such operating 

2 division under subsection (b) or this subsection. The 

3 Comptroller General shall submit no fewer than 1 

4 such report each year. 

5 SEC. 6. IRS EMPLOYEES PROHIBITED FROM USING PER6 SONAL EMAIL ACCOUNTS FOR OFFICIAL 

7 BUSINESS. 

8 No officer or employee of the Internal Revenue Serv9 ice may use a personal email account to conduct any offi10 cial business of the Government. 

Æ 


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