I 

109TH CONGRESS 

1ST SESSION H. R. 2204

To amend the Internal Revenue Code of 1986 to impose penalties for the 

failure of 527 organizations to comply with disclosure requirements. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2005

Mr. SHAW (for himself, Mr. SAM JOHNSON of Texas, Mr. ENGLISH of Pennsylvania, and Mr. FOLEY) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the 

Committee on House Administration, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL

To amend the Internal Revenue Code of 1986 to impose 

penalties for the failure of 527 organizations to comply 

with disclosure requirements.

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 ‘‘527 Transparency Act 

5 of 2005’’. 
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1 SEC. 2. MANDATORY MONTHLY REPORTING. 

2 (a) IN GENERAL.—Section 527(j)(2) of the Internal 

3 Revenue Code of 1986 (relating to required disclosure) is 

4 amended to read as follows: 

5 ‘‘(2) REQUIRED DISCLOSURE.—A political orga6 nization which accepts a contribution, or makes an 

7 expenditure, for an exempt function during any cal8 endar year shall file with the Secretary monthly re9 ports for each such year which shall be filed not 

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

11 month and shall be complete as of the last day of 

12 the month, except that, in lieu of filing the reports 

13 otherwise due in November and December of any 

14 year in which a regularly scheduled general election 

15 is held, the organization shall file—

16 ‘‘(A) a pre-election report, which shall be 

17 filed no later than the 12th day before (or post18 ed by registered or certified mail no later than 

19 the 15th day before) any election with respect 

20 to which the organization accepts a contribution 

21 or makes an expenditure, and which shall be 

22 complete as of the 20th day before the election; 

23 ‘‘(B) a post-general election report, which 

24 shall be filed no later than the 30th day after 

25 the general election and which shall be complete 
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1 as of the 20th day after such general election; 

2 and 

3 ‘‘(C) a year-end report which shall be filed 

4 no later than January 31 of the following cal5 endar year.’’. 

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

7 subsection (a) shall apply to taxable years beginning after 

8 December 31, 2005. 

9 SEC. 3. FAILURE OF 527 ORGANIZATION TO COMPLY WITH 

10 DISCLOSURE REQUIREMENTS. 

11 (a) EXCISE TAX ON MANAGERS.—

12 (1) IN GENERAL.—Subchapter C of chapter 42 

13 of the Internal Revenue Code of 1986 is amended by 

14 adding at the end the following new section: 

15 ‘‘SEC. 4956. TAX ON FAILURE OF POLITICAL ORGANIZA16 TIONS TO MEET DISCLOSURE REQUIRE17 MENTS. 

18 ‘‘(a) TAX IMPOSED.—In the case of a failure of a po19 litical organization to meet the disclosure requirements of 

20 section 527(j) with respect to any contribution to or ex21 penditure from the political organization, there is hereby 

22 imposed on the political organization, in addition to any 

23 other tax or penalty provided in this title, a tax for each 

24 such failure. 
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1 ‘‘(b) AMOUNT OF TAX.—The tax imposed by sub2 section (a) shall be 30 percent of the total amount of the 

3 contribution or expenditure with respect to which such 

4 failure occurred. 

5 ‘‘(c) LIABILITY FOR TAX.—

6 ‘‘(1) IN GENERAL.—Except as provided by 

7 paragraph (2), the tax imposed by subsection (a) 

8 shall be paid by the political organization. 

9 ‘‘(2) JOINT AND SEVERAL LIABILITY OF ORGA10 NIZATION MANAGERS.—Each organization manager 

11 of the political organization shall be jointly and sev12 erally liable for any tax imposed under subsection 

13 (a). 

14 ‘‘(d) ORGANIZATION MANAGER.—For purposes of 

15 this section, the term ‘organization manager’ means any 

16 officer, director, or trustee of the political organization (or 

17 individual having powers or responsibilities similar to 

18 those of an officer, director, or trustee). 

19 ‘‘(e) POLITICAL ORGANIZATION.—The term ‘political 

20 organization’ shall have the meaning given such term by 

21 section 527(e)(1).’’. 

22 (2) CONFORMING AMENDMENTS.—

23 (A) The heading for subchapter C of chap24 ter 42 of such Code is amended by adding at 

25 the end the following: ‘‘; Failure of Polit-
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1 ical Organizations to Meet Reporting 

2 Requirements’’. 

3 (B) The table of sections for such sub4 chapter C is amended by adding at the end the 

5 following:

‘‘Sec. 4956. Tax on failure of political organizations to meet disclosure requirements.’’.

6 (C) The item in the table of subchapters of 

7 such chapter 42 relating to subchapter C is 

8 amended to read as follows:

‘‘SUBCHAPTER C. POLITICAL EXPENDITURES OF SECTION 501(C)(3) ORGANIZATIONS; FAILURE OF POLITICAL ORGANIZATIONS TO MEET REPORTING REQUIREMENTS’’.

9 (3) EFFECTIVE DATE.—The amendments made 

10 by this subsection shall apply to taxable years begin11 ning after December 31, 2005. 

12 (b) DENIAL OF GIFT TAX EXCLUSION.—

13 (1) IN GENERAL.—Paragraph (4) of section 

14 2501(a) of the Internal Revenue Code of 1986 (re15 lating to taxable transfers) is amended to read as 

16 follows: 

17 ‘‘(4) TRANSFERS TO POLITICAL ORGANIZA18 TIONS.—

19 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

20 not apply to the transfer of money or other 

21 property to a political organization (within the 
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1 meaning of section 527(e)(1)) for the use of 

2 such organization. 

3 ‘‘(B) EXCEPTION FOR FAILURE OF ORGA4 NIZATION TO MEET DISCLOSURE REQUIRE5 MENTS.—Subparagraph (A) shall not apply to 

6 any transfer in a calendar year for which the 

7 political organization fails to make the disclo8 sures required by section 527(j).’’. 

9 (2) NOTICE TO CONTRIBUTORS OF DENIAL OF

10 GIFT TAX EXCEPTION FOR FAILURE TO DISCLOSE.—

11 Section 527(j) of such Code is amended by adding 

12 at the end the following new paragraph: 

13 ‘‘(8) NOTICE TO CONTRIBUTORS OF DENIAL OF

14 GIFT TAX EXCEPTION FOR FAILURE TO DISCLOSE.—

15 In the case of a final determination by the Secretary 

16 that a failure described in paragraph (1)(A) with re17 spect to an organization occurred, the organization 

18 shall, not later than 90 days after the date of such 

19 determination, provide written notice of such failure 

20 to each contributor to the organization for the cal21 endar year in which such failure occurred. Such no22 tice shall include a statement that the exception 

23 under section 2501(a)(4)(A) does not apply to any 

24 contribution to the organization in such calendar 

25 year.’’. 
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1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to transfers made 

3 after December 31, 2005. 

4 SEC. 4. SIMULTANEOUS TRANSMISSION OF REPORTS TO 

5 FEDERAL ELECTION COMMISSION. 

6 (a) IN GENERAL.—Section 304 of the Federal Elec7 tion Campaign Act of 1971 (2 U.S.C. 434) is amended 

8 by adding at the end the following new subsection: 

9 ‘‘(i) REPORTS OF POLITICAL ORGANIZATIONS

10 UNDER INTERNAL REVENUE CODE OF 1986.—

11 ‘‘(1) SIMULTANEOUS FILING OF TREASURY RE12 PORTS WITH COMMISSION.—At the time a political 

13 organization described in section 527 of the Internal 

14 Revenue Code of 1986 files a report with the Sec15 retary of the Treasury under section 527(j) of such 

16 Code, the organization shall file a copy of the report 

17 with the Commission. 

18 ‘‘(2) TREATMENT AS REPORT FILED WITH COM19 MISSION.—For purposes of this Act, the copy filed 

20 under this subsection of a report filed with the Sec21 retary of the Treasury shall be treated as a report 

22 or statement filed with the Commission under this 

23 section.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 subsection (a) shall take effect January 1, 2006.

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