I

107TH CONGRESS

1ST SESSION H. R. 1676

To amend the Internal Revenue Code of 1986 to avoid duplicate reporting

of information on political activities of certain State and local political

organizations, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 2, 2001

Mr. DOGGETT (for himself, Mr. STARK, Mr. MATSUI, Mr. COYNE, Mr. LEVIN,

Mr. CARDIN, Mr. MCDERMOTT, Mr. KLECZKA, Mr. LEWIS of Georgia,

Mr. MCNULTY, Mr. JEFFERSON, Mr. BECERRA, Mrs. THURMAN, Mr.

ALLEN, Mr. BACA, Mr. BALDACCI, Mr. BENTSEN, Mr. CLEMENT, Mr.

DAVIS of Florida, Mr. DOOLEY of California, Mr. EDWARDS, Mr.

ETHERIDGE, Mr. FARR of California, Mr. FILNER, Mr. FROST, Mr. GONZALEZ, Mr. GORDON, Mr. GREEN of Texas, Mr. HALL of Ohio, Mr. HINCHEY, Mr. HINOJOSA, Ms. JACKSON-LEE of Texas, Ms. EDDIE BERNICE

JOHNSON of Texas, Mrs. JONES of Ohio, Mr. TURNER, Mr. LAFALCE,

Mr. LAMPSON, Mr. MCGOVERN, Mr. MCINTYRE, Mr. MOORE, Mr. NADLER, Mr. OLVER, Mr. REYES, Ms. RIVERS, Mr. RODRIGUEZ, Ms.

SANCHEZ, Mr. SANDLIN, Mr. ORTIZ, Mr. STENHOLM, Mr. WAXMAN, and

Ms. WOOLSEY) 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 avoid duplicate reporting of information on political activities of

certain State and local political organizations, 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,
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1 SECTION 1. MODIFICATIONS OF REPORTING REQUIRE2 MENTS FOR CERTAIN STATE AND LOCAL PO3 LITICAL ORGANIZATIONS.

4 (a) NOTIFICATION.—Paragraph (5) of section 527(i)

5 of the Internal Revenue Code of 1986 (relating to organi6 zations must notify Secretary that they are section 527

7 organizations) is amended by striking ‘‘or’’ at the end of

8 subparagraph (A), by striking the period at the end of

9 subparagraph (B) and inserting ‘‘, or’’, and by adding at

10 the end the following new subparagraph:

11 ‘‘(C) which is a political committee of a

12 State or local candidate.’’.

13 (b) REPORTING.—Paragraph (5) of section 527(j) of

14 such Code (relating to required disclosures of expenditures

15 and contributions) is amended by striking ‘‘or’’ at the end

16 of at the end of subparagraph (D), by redesignating sub17 paragraphs (C), (D), and (E) as subparagraphs (D), (E),

18 and (F), respectively, and by inserting after subparagraph

19 (B) the following new subparagraph:

20 ‘‘(C) to any organization which is an ex21 empt State or local political organization,’’.

22 (c) ANNUAL RETURN REQUIREMENTS.—Paragraph

23 (6) of section 6012(a) of such Code is amended to read

24 as follows:

25 ‘‘(6)(A) Except as provided by subparagraphs

26 (B) and (C), every political organization (within the
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1 meaning of section 527(e)(1)), and every fund treat2 ed under section 527(g) as if it constituted a polit3 ical organization, which has—

4 ‘‘(i) political organization taxable income

5 (within the meaning of section 527(c)(1)) for

6 the taxable year, or

7 ‘‘(ii) gross receipts of $25,000 or more for

8 the taxable year (other than an organization to

9 which section 527 applies solely by reason of

10 subsection (f)(1) of such section).

11 ‘‘(B) Subparagraph (A)(ii) shall not apply to an

12 organization which is a political committee of a

13 State or local candidate (within the meaning of sec14 tion 527(i)(5)(C)).

15 ‘‘(C) In the case of an exempt State or local po16 litical organization (as defined in section 527(e)(5)),

17 subparagraph (A)(ii) shall be applied by substituting

18 ‘$100,000’ for ‘$25,000’.’’.

19 (d) EXEMPT STATE OR LOCAL POLITICAL ORGANIZA20 TION.—Subsection (e) of section 527 of such (relating to

21 other definitions) is amended by adding at the end the

22 following new paragraph:

23 ‘‘(5) EXEMPT STATE OR LOCAL POLITICAL OR24 GANIZATION.—
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1 ‘‘(A) IN GENERAL.—The term ‘exempt

2 State or local political organization’ means a

3 political organization which—

4 ‘‘(i) does not engage in exempt func5 tion activity other than solely in influ6 encing or attempting to influence the selec7 tion, nomination, election, or appointment

8 of any individual to any State or local pub9 lic office or office in a State or local polit10 ical organization,

11 ‘‘(ii) is subject to State or local re12 quirements to submit reports (and so re13 ports)—

14 ‘‘(I) regarding each separate ex15 penditure from and contribution to,

16 such organization, and

17 ‘‘(II) including information re18 garding the person who makes such

19 contribution or receives such expendi20 ture,

21 which would otherwise be required to be

22 reported under this section, and

23 ‘‘(iii) with respect to which the reports

24 referred to in clause (ii) are made public

25 by the agency with which such reports are
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1 filed and are publicly available for inspec2 tion in a manner similar to that required

3 by section 6104(d)(1).

4 ‘‘(B) MINIMUM REPORTABLE AMOUNTS.—

5 An organization shall not be treated as failing

6 to meet the requirements of subparagraph

7 (A)(ii) solely because the minimum amount of

8 any expenditure or contribution required to be

9 reported under State or local law is not more

10 than $100 greater than the minimum amount

11 required to be reported under subsection (j)

12 with respect to such expenditure or contribu13 tion.

14 ‘‘(C) PARTICIPATION OF FEDERAL CAN15 DIDATE OR OFFICE HOLDER.—The term ‘ex16 empt State or local political organization’ shall

17 not include any organization otherwise de18 scribed in subparagraph (A) if a candidate for

19 nomination or election to Federal elective office

20 or an individual who holds such office—

21 ‘‘(i) controls or materially participates

22 in the direction of the organization,

23 ‘‘(ii) solicits contributions to the orga24 nization, or
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1 ‘‘(iii) directs, in whole or in part, dis2 bursements by the organization.’’.

3 (e) WAIVER OF FILING PENALTIES.—Section 527 of

4 such Code is amended by adding at the end the following:

5 ‘‘(k) AUTHORITY TO WAIVE.—The Secretary may

6 waive all or any portion of the—

7 ‘‘(1) tax assessed on an organization by reason

8 of the failure of the organization to give notice

9 under subsection (i), or

10 ‘‘(2) penalty imposed under subsection (j) for a

11 failure to file a report,

12 on a showing that such failure was due to reasonable cause

13 and not due to willful neglect.’’.

14 (f) EFFECTIVE DATE.—The amendments made by

15 this section shall take effect as if included in the amend16 ments made by Public Law 106–230.

17 SEC. 2. TECHNICAL CORRECTIONS TO SECTION 527 ORGA18 NIZATION DISCLOSURE PROVISIONS.

19 (a) UNSEGREGATED FUNDS NOT TO AVOID PEN20 ALTY.—Paragraph (4) of section 527(i) of the Internal

21 Revenue Code of 1986 (relating to failure to notify) is

22 amended by adding at the end the following new sentence:

23 ‘‘For purposes of the preceding sentence, the term ‘exempt

24 function income’ means any amount described in a sub-
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1 paragraph of subsection (c)(3), whether or not segregated

2 for use for an exempt function.’’

3 (b) PROCEDURES FOR ASSESSMENT AND COLLEC4 TION OF PENALTY.—Paragraph (1) of section 527(j) of

5 such Code (relating to required disclosure of expenditures

6 and contributions) is amended by adding at the end the

7 following new sentence: ‘‘For purposes of subtitle F, the

8 penalty imposed by this paragraph shall be assessed and

9 collected in the same manner as penalties imposed by sec10 tion 6652(c).’’

11 (c) APPLICATION OF FRAUD PENALTY.—Section

12 7207 of such Code (relating to fraudulent returns, state13 ments, and other documents) is amended by striking ‘‘pur14 suant to subsection (b) of section 6047 or pursuant to sub15 section (d) of section 6104’’ and inserting ‘‘pursuant to

16 section 6047(b), section 6104(d), or subsection (i) or (j)

17 of section 527’’.

18 (d) DUPLICATE ELECTRONIC AND WRITTEN FILINGS

19 NOT REQUIRED.—

20 (1) Subparagraph (A) of section 527(i)(1) of

21 such Code is amended by striking ‘‘, electronically

22 and in writing,’’.

23 (2) Subsection (i) of section 527 of such Code

24 is amended by adding at the end the following new

25 paragraph:
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1 ‘‘(7) ELECTRONIC FILING.—The Secretary shall

2 develop procedures for submission in electronic form

3 of notices required to be filed under this subsection

4 and reports required to be filed under subsection

5 (j).’’

6 (e) EFFECTIVE DATE.—The amendments made by

7 this section shall take effect as if included in the amend8 ments made by Public Law 106–230.

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