I 

108TH CONGRESS 

2D SESSION H. R. 5127 

To amend the Federal Election Campaign Act of 1971 to define political 

committee and clarify when organizations described in section 527 of 

the Internal Revenue Code of 1986 must register as political committees, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 22, 2004 

Mr. SHAYS (for himself and Mr. MEEHAN) introduced the following bill; which 

was referred to the Committee on House Administration 

A BILL 

To amend the Federal Election Campaign Act of 1971 to 

define political committee and clarify when organizations 

described in section 527 of the Internal Revenue Code 

of 1986 must register as political committees, 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 ‘‘527 Reform Act of 

5 2004’’. 
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1 SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS. 

2 (a) DEFINITION OF POLITICAL COMMITTEE.—Sec3 tion 301(4)(A) of the Federal Election Campaign Act of 

4 1971 (2 U.S.C. 431(4)(A)) is amended to read as follows: 

5 ‘‘(A) any committee, club, association, or 

6 other group of persons that— 

7 ‘‘(i) during one calendar year, receives 

8 contributions aggregating in excess of 

9 $1,000 or makes expenditures aggregating 

10 in excess of $1,000; and 

11 ‘‘(ii) has as its major purpose the 

12 nomination or election of one or more can13 didates;’’. 

14 (b) DEFINITION OF MAJOR PURPOSE FOR SECTION

15 527 ORGANIZATIONS.—Title III of the Federal Election 

16 Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended 

17 by adding at the end the following new section: 

18 ‘‘SEC. 325. DEFINITIONS AND RULES FOR DETERMINING 

19 ORGANIZATIONS AND DISBURSEMENTS IN20 FLUENCING FEDERAL ELECTIONS. 

21 ‘‘(a) MAJOR PURPOSE OF SECTION 527 ORGANIZA22 TIONS.—For purposes of section 301(4)(A)— 

23 ‘‘(1) IN GENERAL.—A committee, club, associa24 tion, or group of persons that— 
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1 ‘‘(A) is an organization described in sec2 tion 527 of the Internal Revenue Code of 1986, 

3 and 

4 ‘‘(B) is not described in paragraph (2), 

5 has as its major purpose the nomination or election 

6 of one or more candidates. 

7 ‘‘(2) EXCEPTED ORGANIZATIONS.—Subject to 

8 paragraph (3), a committee, club, association, or 

9 other group of persons described in this paragraph 

10 is— 

11 ‘‘(A) an organization described in section 

12 527(i)(5) of the Internal Revenue Code of 

13 1986, or 

14 ‘‘(B) any other organization which is one 

15 of the following: 

16 ‘‘(i) A committee, club, association, or 

17 other group of persons whose election or 

18 nomination activities relate exclusively to 

19 elections where no candidate for Federal 

20 office appears on the ballot. 

21 ‘‘(ii) A committee, club, association, 

22 or other group of persons that is orga23 nized, operated, and makes disbursements 

24 exclusively for one or more of the following 

25 purposes: 
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1 ‘‘(I) Influencing the selection, 

2 nomination, election, or appointment 

3 of one or more candidates to non-Fed4 eral offices. 

5 ‘‘(II) Influencing one or more 

6 State or local ballot initiatives, State 

7 or local referenda, State or local con8 stitutional amendments, State or local 

9 bond issues, or other State or local 

10 ballot issues. 

11 ‘‘(III) Influencing the selection, 

12 appointment, nomination, or con13 firmation of one or more individuals 

14 to non-elected offices. 

15 ‘‘(IV) Paying expenses described 

16 in the last sentence of section 

17 527(e)(2) of the Internal Revenue 

18 Code of 1986 or expenses of a news19 letter fund described in section 527(g) 

20 of such Code. 

21 ‘‘(3) SECTION 527 ORGANIZATIONS MAKING

22 CERTAIN DISBURSEMENTS.—A committee, club, as23 sociation, or other group of persons described in 

24 paragraph (2)(B) shall not be considered to be de25 scribed in such paragraph for purposes of paragraph 
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1 (1)(B) if it makes disbursements for a public com2 munication that promotes, supports, attacks, or op3 poses a clearly identified candidate for Federal office 

4 during the period beginning on the first day of the 

5 calendar year preceding the calendar year in which 

6 the general election for the office sought by the 

7 clearly identified candidate occurs and ending on the 

8 date of the general election.’’. 

9 SEC. 3. CERTAIN EXPENSES BY MAJOR PURPOSE ORGANI10 ZATIONS TREATED AS EXPENDITURES. 

11 (a) IN GENERAL.—Section 301(9)(A)(i) of the Fed12 eral Election Campaign Act of 1971 (2 U.S.C. 

13 431(9)(A)(i)) is amended by inserting ‘‘, including any 

14 amount described in section 325(b)’’ after ‘‘office’’. 

15 (b) APPLICABLE COMMUNICATIONS.—Section 325 of 

16 the Federal Election Campaign Act of 1971 (as added by 

17 section 2(b)) is amended by adding at the end the fol18 lowing new subsection: 

19 ‘‘(b) CERTAIN EXPENDITURES FOR MAJOR PURPOSE

20 ORGANIZATIONS.— 

21 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a 

22 purchase, payment, distribution, loan, advance, de23 posit, or gift of money or anything of value for— 

24 ‘‘(A) a public communication that refers to 

25 a clearly identified candidate for Federal office 
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1 or to a political party (regardless of whether a 

2 candidate for State or local office is also men3 tioned or identified) and that promotes, sup4 ports, attacks, or opposes a candidate for that 

5 office or a political party (regardless of whether 

6 the communication expressly advocates a vote 

7 for or against a candidate), or 

8 ‘‘(B) voter registration activity, voter iden9 tification, get-out-the-vote activity, or generic 

10 campaign activity conducted in connection with 

11 an election in which a candidate for Federal of12 fice appears on the ballot (regardless of whether 

13 a candidate for State or local office also ap14 pears on the ballot), 

15 shall be an expenditure under section 301(9)(A)(i) if 

16 made by, or on behalf of, a political committee (as 

17 defined in section 301(4)) or a committee, club, as18 sociation, or other group of persons for which the 

19 nomination or election of one or more candidates is 

20 its major purpose. 

21 ‘‘(2) EXCEPTION.—Any funds used for pur22 poses described in paragraph (1) that, in accordance 

23 with allocation rules set forth in section 325(c), are 

24 disbursed from a non-Federal account shall not be 

25 treated as expenditures.’’. 
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1 SEC. 4. RULES FOR ALLOCATION OF EXPENSES BETWEEN 

2 FEDERAL AND NON-FEDERAL ACTIVITIES. 

3 Section 325 of the Federal Election Campaign Act 

4 of 1971 (as added by section 2(b) and amended by section 

5 3) is amended by adding at the end the following: 

6 ‘‘(c) ALLOCATION AND FUNDING RULES FOR EX7 PENSES OF SEPARATE SEGREGATED FUNDS AND NON8 CONNECTED COMMITTEES RELATING TO FEDERAL AND

9 NON-FEDERAL ACTIVITIES.— 

10 ‘‘(1) IN GENERAL.—In the case of any dis11 bursements by any separate segregated fund or non12 connected committee for which allocation rules are 

13 provided under paragraph (2)— 

14 ‘‘(A) the disbursements shall be allocated 

15 between Federal and non-Federal accounts in 

16 accordance with this subsection and regulations 

17 prescribed by the Commission, and 

18 ‘‘(B) in the case of disbursements allocated 

19 to non-Federal accounts, may be paid only from 

20 a qualified non-Federal account. 

21 ‘‘(2) COSTS TO BE ALLOCATED AND ALLOCA22 TION RULES.—Disbursements by any separate seg23 regated fund or nonconnected committee in connec24 tion with Federal and non-Federal elections for any 

25 of the following categories of activity shall be allo26 cated as follows: 
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1 ‘‘(A) At least 50 percent of any adminis2 trative expenses, including rent, utilities, office 

3 supplies, and salaries not attributable to a 

4 clearly identified candidate shall be paid with 

5 funds from a Federal account, except that for 

6 a separate segregated fund such expenses may 

7 be paid instead by its connected organization. 

8 ‘‘(B) At least 50 percent of the direct costs 

9 of a fundraising program or event, including 

10 disbursements for solicitation of funds and for 

11 planning and administration of actual fund12 raising events, where Federal and non-Federal 

13 funds are collected through such program or 

14 event shall be paid with funds from a Federal 

15 account, except that for a separate segregated 

16 fund such costs may be paid instead by its con17 nected organization. 

18 ‘‘(C) At least 50 percent of the expenses 

19 for public communications or voter drive activi20 ties that refer to a political party, but do not 

21 refer to any clearly identified Federal or non22 Federal candidate, shall be paid with funds 

23 from a Federal account. 

24 ‘‘(D) 100 percent of the expenses for pub25 lic communications or voter drive activities that 
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1 refer to a political party, and refer to one or 

2 more clearly identified Federal candidates, but 

3 do not refer to any clearly identified non-Fed4 eral candidates, shall be paid with funds from 

5 a Federal account. 

6 ‘‘(E) At least 50 percent of the expenses 

7 for public communications or voter drive activi8 ties that refer to a political party, and refer to 

9 one or more clearly identified non-Federal can10 didates, but do not refer to any clearly identi11 fied Federal candidates, shall be paid with 

12 funds from a Federal account, except that this 

13 subparagraph shall not apply to communica14 tions or activities that relate exclusively to elec15 tions where no candidate for Federal office ap16 pears on the ballot. 

17 ‘‘(F) At least 50 percent of the expenses 

18 for public communications and voter drive ac19 tivities that refer to one or more clearly identi20 fied candidates for Federal office and one or 

21 more clearly defined non-Federal candidates, 

22 without regard to whether the communication 

23 refers to a political party, shall be paid with 

24 funds from a Federal account. 
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1 ‘‘(3) QUALIFIED NON-FEDERAL ACCOUNT.—For 

2 purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘qualified 

4 non-Federal account’ means an account which 

5 consists solely of amounts— 

6 ‘‘(i) that, subject to the limitations of 

7 subparagraphs (B) and (C), are raised by 

8 the separate segregated fund or noncon9 nected committee only from individuals, 

10 and 

11 ‘‘(ii) with respect to which all other 

12 requirements of Federal, State, or local 

13 law are met. 

14 ‘‘(B) LIMITATION ON INDIVIDUAL DONA15 TIONS.— 

16 ‘‘(i) IN GENERAL.—A separate seg17 regated fund or nonconnected committee 

18 may not accept more than $25,000 in 

19 funds for its qualified non-Federal account 

20 from any one individual in any calendar 

21 year. 

22 ‘‘(ii) AFFILIATION.—For purposes of 

23 this subparagraph, all qualified non-Fed24 eral accounts of separate segregated funds 

25 or nonconnected committees which are di-
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1 rectly or indirectly established, financed, 

2 maintained, or controlled by the same per3 son or persons shall be treated as one ac4 count. 

5 ‘‘(C) FUNDRAISING LIMITATION.—No do6 nation to a qualified non-Federal account may 

7 be solicited, received, directed, transferred, or 

8 spent by or in the name of any person described 

9 in subsection (a) or (e) of section 323. 

10 ‘‘(4) VOTER DRIVE ACTIVITY AND FEDERAL AC11 COUNT DEFINED.—For purposes of this sub12 section— 

13 ‘‘(A) VOTER DRIVE ACTIVITY.—The term 

14 ‘voter drive activity’ means any of the following 

15 activities conducted in connection with an elec16 tion in which a candidate for Federal office ap17 pears on the ballot (regardless of whether a 

18 candidate for State or local office also appears 

19 on the ballot): 

20 ‘‘(i) Voter registration activity. 

21 ‘‘(ii) Voter identification. 

22 ‘‘(iii) Get-out-the-vote activity. 

23 ‘‘(iv) Generic campaign activity. 

24 ‘‘(B) FEDERAL ACCOUNT.—The term 

25 ‘Federal account’ means an account which con-
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1 sists solely of contributions subject to the limi2 tations, prohibitions, and reporting require3 ments of this Act. Nothing in this subsection or 

4 in section 323(b)(2)(B)(iii) shall be construed 

5 to infer that a limit other than the limit under 

6 section 315(a)(1)(C) applies to contributions to 

7 the account.’’. 

8 SEC. 5. CONSTRUCTION. 

9 No provision of this Act, or amendment made by this 

10 Act, shall be construed— 

11 (1) as approving, ratifying, or endorsing a regu12 lation promulgated by the Federal Election Commis13 sion, or 

14 (2) as establishing, modifying, or otherwise af15 fecting the definition of political organization for 

16 purposes of the Internal Revenue Code of 1986. 

17 SEC. 6. EFFECTIVE DATE. 

18 The amendments made by this Act shall take effect 

19 on January 1, 2005. 

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