II

106TH CONGRESS

2D SESSION S. 2583

To amend the Internal Revenue Code of 1986 to increase disclosure for

certain political organizations exempt from tax under section 527.

IN THE SENATE OF THE UNITED STATES

MAY 17, 2000

Mr. LIEBERMAN (for himself, Mr. LEVIN, Mr. DASCHLE, Mr. MCCAIN, Mr.

JEFFORDS, Mr. FEINGOLD, Mr. DURBIN, Mr. CLELAND, Mr. KERRY, Mr.

TORRICELLI, Mr. KENNEDY, Mr. AKAKA, and Mr. BRYAN) introduced the

following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to increase

disclosure for certain political organizations exempt from

tax under section 527.

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

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

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

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

2 THAT THEY ARE SECTION 527 ORGANIZATIONS.—

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

5 organization described in this section—

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

8 be so treated, or

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

10 required under paragraph (2), the organization

11 shall not be so treated for any period before

12 such notice is given.

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

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

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

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

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

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

2 its Board of Directors,

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

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

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

8 revenue laws.

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

10 organization failing to meet the requirements of

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

12 such organization shall be computed by taking into

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

15 such income).

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

17 apply to any organization—

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

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

20 ‘‘(B) which reasonably anticipates that it

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

22 for any taxable year.

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

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

4 (b) DISCLOSURE REQUIREMENTS.—

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

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

8 of the Internal Revenue Code of 1986 (relating

9 to public inspection of applications) is

10 amended—

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

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

16 filed by the organization under section

17 527(i)’’ before ‘‘, together’’,

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

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

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

21 ‘‘any application’’,

22 (v) by inserting ‘‘for exemption from

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

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

3 (B) CONFORMING AMENDMENT.—The

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

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

6 before the period.

7 (2) INSPECTION OF NOTICE ON INTERNET AND

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

9 amended by adding at the end the following new

10 paragraph:

11 ‘‘(3) INFORMATION AVAILABLE ON INTERNET

12 AND IN PERSON.—

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

14 make publicly available, on the Internet and at

15 the offices of the Internal Revenue Service—

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

17 which file a notice with the Secretary

18 under section 527(i), and

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

20 mailing address, custodian of records, and

21 contact person for such organization.

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

24 information required under subparagraph (A)

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

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

6 organization which is exempt from taxation under

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

8 year’’.

9 (4) PUBLIC INSPECTION MADE AVAILABLE BY

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

12 and applications for exemption) is amended—

13 (A) by striking ‘‘AND APPLICATIONS FOR

14 EXEMPTION’’ and inserting ‘‘, APPLICATIONS

15 FOR EXEMPTION, AND NOTICES OF STATUS’’ in

16 the heading,

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

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

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

23 and

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

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

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

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

4 papers submitted in support of such notice and any

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

7 (c) FAILURE TO MAKE PUBLIC.—Section

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

10 is amended—

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

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

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

14 after ‘‘EXEMPTION’’ in the heading.

15 (d) EFFECTIVE DATE.—

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

18 section shall take effect on the date of the enactment

19 of this section.

20 (2) ORGANIZATIONS ALREADY IN EXISTENCE.—

21 In the case of an organization established before the

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

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

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

2 this section.

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

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

7 SEC. 2. DISCLOSURES BY POLITICAL ORGANIZATIONS.

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

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

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

13 ‘‘(j) REQUIRED DISCLOSURE OF EXPENDITURES AND

14 CONTRIBUTIONS.—

15 ‘‘(1) DENIAL OF EXEMPTION.—An organization

16 shall not be treated as an organization described in

17 this section unless it makes the required disclosures

18 under paragraph (2).

19 ‘‘(2) REQUIRED DISCLOSURE.—A political orga20 nization which accepts a contribution, or makes an

21 expenditure, for an exempt function during any cal22 endar year shall file with the Secretary either—

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

24 which a regularly scheduled election is held—
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1 ‘‘(I) quarterly reports, beginning with

2 the first quarter of the calendar year in

3 which a contribution is accepted or expend4 iture is made, which shall be filed not later

5 than the 15th day after the last day of

6 each calendar quarter, except that the re7 port for the quarter ending on December

8 31 of such calendar year shall be filed not

9 later than January 31 of the following cal10 endar year,

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

12 be filed not later than the 12th day before

13 (or posted by registered or certified mail

14 not later than the 15th day before) any

15 election with respect to which the organiza16 tion makes a contribution or expenditure,

17 and which shall be complete as of the 20th

18 day before the election, and

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

20 which shall be filed not later than the 30th

21 day after the general election and which

22 shall be complete as of the 20th day after

23 such general election, and

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

25 year, a report covering the period beginning
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1 January 1 and ending June 30, which shall be

2 filed no later than July 31 and a report cov3 ering the period beginning July 1 and ending

4 December 31, which shall be filed no later than

5 January 31 of the following calendar year, or

6 ‘‘(B) monthly reports for the calendar

7 year, beginning with the first month of the cal8 endar year in which a contribution is accepted

9 or expenditure is made, which shall be filed not

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

11 month and shall be complete as if the last day

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

13 reports otherwise due in November and Decem14 ber of any year in which a regularly scheduled

15 general election is held, a pre-general election

16 report shall be filed in accordance with sub17 paragraph (A)(i)(II), a post-general election re18 port shall be filed in accordance with subpara19 graph (A)(i)(III), and a year end report shall

20 be filed not later than January 31 of the fol21 lowing calendar year.

22 ‘‘(3) CONTENTS OF REPORT.—A report re23 quired under paragraph (2) shall contain the fol24 lowing information:
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1 ‘‘(A) The amount of each expenditure

2 made to a person if the aggregate amount of

3 expenditures to such person during the calendar

4 year equals or exceeds $500 and the name and

5 address of the person (in the case of an indi6 vidual, include the occupation and name of em7 ployer of such individual).

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

9 an individual, include the occupation and name

10 of employer of such individual) of all contribu11 tors which contributed an aggregate amount of

12 $200 or more to the organization during the

13 calendar year and the amount of the contribu14 tion.

15 Any expenditure or contribution disclosed in a pre16 vious reporting period is not required to be included

17 in the current reporting period.

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

19 For purposes of this subsection, a person shall be

20 treated as having made an expenditure or contribu21 tion if the person has contracted or is otherwise obli22 gated to make the expenditure or contribution.

23 ‘‘(5) COORDINATION WITH OTHER REQUIRE24 MENTS.—This subsection shall not apply—
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1 ‘‘(A) to any person required (without re2 gard to this subsection) to report under the

3 Federal Election Campaign Act of 1971 (2

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

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

6 political party or political committee of a State

7 or local candidate,

8 ‘‘(C) to any organization which reasonably

9 anticipates that it will not have gross receipts

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

11 ‘‘(D) to any organization to which this sec12 tion applies solely by reason of subsection

13 (f)(1), or

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

15 is an independent expenditure (as defined in

16 section 301 of such Act).

17 ‘‘(6) ELECTION.—For purposes of this sub18 section, the term ‘election’ means—

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

20 election for a Federal office,

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

22 party which has authority to nominate a can23 didate for Federal office,
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1 ‘‘(C) a primary election held for the selec2 tion of delegates to a national nominating con3 vention of a political party, or

4 ‘‘(D) a primary election held for the ex5 pression of a preference for the nomination of

6 individuals for election to the office of Presi7 dent.’’.

8 (b) PUBLIC DISCLOSURE OF REPORTS.—

9 (1) IN GENERAL.—Section 6104(d) of the In10 ternal Revenue Code of 1986 (relating to public in11 spection of certain annual returns and applications

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

13 amended—

14 (A) by inserting ‘‘REPORTS,’’ after ‘‘RE15 TURNS,’’ in the heading,

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

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

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

19 clause (ii) the following new clause:

20 ‘‘(iii) the reports filed under section

21 527(j) (relating to required disclosure of

22 expenditures and contributions) by such

23 organization,’’, and

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

25 reports,’’ after ‘‘return’’.
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1 (2) DISCLOSURE OF CONTRIBUTORS AL2 LOWED.—Section 6104(d)(3)(A) of such Code (relat3 ing to nondisclosure of contributors, etc.) is amend4 ed by inserting ‘‘or a political organization exempt

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

6 (3) DISCLOSURE BY INTERNAL REVENUE SERV7 ICE.—Section 6104(d) of such Code is amended by

8 adding at the end the following new paragraph:

9 ‘‘(6) DISCLOSURE OF REPORTS BY INTERNAL

10 REVENUE SERVICE.—Any report filed by an organi11 zation under section 527(j) (relating to required dis12 closure of expenditures and contributions) shall be

13 made available to the public at such times and in

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

15 (c) FAILURE TO MAKE PUBLIC.—Section

16 6652(c)(1)(C) of the Internal Revenue Code of 1986 (re17 lating to public inspection of annual returns) is

18 amended—

19 (1) by inserting ‘‘or report required under sec20 tion 527(j)’’ after ‘‘filing)’’,

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

22 and

23 (3) by inserting ‘‘AND REPORTS’’ after ‘‘RE24 TURNS’’ in the heading.
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1 (d) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to expenditures made and con3 tributions received after the date of enactment of this Act,

4 except that such amendment shall not apply to expendi5 tures made, or contributions received, after such date pur6 suant to a contract entered into on or before such date.

7 SEC. 3. RETURN REQUIREMENTS RELATING TO SECTION

8 527 ORGANIZATIONS.

9 (a) RETURN REQUIREMENTS.—

10 (1) ORGANIZATIONS REQUIRED TO FILE.—Sec11 tion 6012(a)(6) of the Internal Revenue Code of

12 1986 (relating to political organizations required to

13 make returns of income) is amended by inserting

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

15 the taxable year (other than an organization to

16 which section 527 applies solely by reason of sub17 section (f)(1) of such section)’’ after ‘‘taxable year’’.

18 (2) INFORMATION REQUIRED TO BE INCLUDED

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

20 to returns by exempt organizations) is amended by

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

22 inserting after subsection (f) the following new sub23 section:
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1 ‘‘(g) RETURNS REQUIRED BY POLITICAL ORGANIZA2 TIONS.—In the case of a political organization required

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

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

5 ‘‘(A) containing the information required,

6 and complying with the other requirements,

7 under subsection (a)(1) for organizations ex8 empt from taxation under section 501(a), and

9 ‘‘(B) containing such other information as

10 the Secretary deems necessary to carry out the

11 provisions of this subsection, and

12 ‘‘(2) subsection (a)(2)(B) (relating to discre13 tionary exceptions) shall apply with respect to such

14 return.’’.

15 (b) PUBLIC DISCLOSURE OF RETURNS.—

16 (1) RETURNS MADE AVAILABLE BY SEC17 RETARY.—

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

19 Internal Revenue Code of 1986 (relating to in20 spection of annual information returns) is

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

22 ‘‘6033’’.

23 (B) CONTRIBUTOR INFORMATION.—Sec24 tion 6104(b) of such Code is amended by in-
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1 serting ‘‘or a political organization exempt from

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

3 (2) RETURNS MADE AVAILABLE BY ORGANIZA4 TIONS.—

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

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

7 inspection of certain annual returns, reports,

8 applications for exemption, and notices of sta9 tus) is amended by inserting ‘‘or section

10 6012(a)(6) (relating to returns by political or11 ganizations)’’ after ‘‘organizations)’’.

12 (B) CONFORMING AMENDMENTS.—

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

14 amended in the matter preceding subpara15 graph (A) by inserting ‘‘or an organization

16 exempt from taxation under section

17 527(a)’’ after ‘‘501(a)’’.

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

19 is amended by inserting ‘‘or section

20 6012(a)(6)’’ after ‘‘section 6033’’.

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

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

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

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

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

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

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

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

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

10 6033’’ in the heading.

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

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

Æ