I
105TH CONGRESS
1ST SESSION
H. R. 480
To amend the Internal Revenue Code of 1986 to ensure that members
of tax-exempt organizations are notified of the portion of their dues
used for political and lobbying activities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 21, 1997
Mr. HERGER 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 ensure
that members of tax-exempt organizations are notified
of the portion of their dues used for political and lobby-
ing activities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. INCREASED DISCLOSURE OF DUES OF TAX-EX-
EMPT ORGANIZATIONS USED FOR POLITICAL
PURPOSES.
(a) REPLACEMENT OF EXCEPTION WHERE DUES
ARE GENERALLY NONDEDUCTIBLE.—Section 6033(e)(3)
of the Internal Revenue Code of 1986 (relating to excep-
tion where dues are generally nondeductible) is amended
to read as follows:
‘‘(3) EXCEPTION
WHERE
ANNUAL
DUES
ARE
SMALL OR FROM OTHER EXEMPT ORGANIZATIONS.—
‘‘(A) IN
GENERAL.—Paragraph (1)(A)
shall not apply to an organization which estab-
lishes to the satisfaction of the Secretary that
at least 90 percent of all annual dues or other
similar amounts are received from—
‘‘(i) persons who each pay annual
dues or other similar amounts which are
$100 or less, or
‘‘(ii) the following:
‘‘(I) organizations exempt from
taxation under subtitle A other than
organizations described in paragraph
(1)(B)(i);
‘‘(II) State and local govern-
ments; and
‘‘(III) entities the income from
which is exempt from taxation under
section 115.
Clause (i) shall not apply to an organization de-
scribed in section 501(c)(6).
‘‘(B) COST-OF-LIVING
ADJUSTMENT.—In
the case of taxable years beginning in a cal-
endar year after 1997, the $100 amount under
subparagraph (A)(i) shall be increased by an
amount equal to the product of $100 and the
cost-of-living adjustment for such calendar year
under section 1(f)(3), except that subparagraph
(B) thereof shall be applied by substituting
‘1996’ for ‘1992’. If the amount of any such in-
crease is not a multiple of $1, such amount
shall be increased to the next highest $1.’’
(b) PROXY TAX MAY NOT BE USED TO AVOID DIS-
CLOSURE TO MEMBERS.—
(1) IN GENERAL.—Section 6033(e)(2)(A) of the
Internal Revenue Code of 1986 (relating to tax im-
posed where organization does not notify) is amend-
ed to read as follows:
‘‘(A) IMPOSITION OF TAX.—
‘‘(i) IN GENERAL.—If an organization
fails to include in the notices described in
paragraph (1)(A) for any taxable year the
amount allocable to expenditures to which
section 162(e)(1) applies (determined on
the basis of actual amounts rather than
the reasonable estimates under paragraph
(1)(A)(ii)), then there is hereby imposed
on such organization for such taxable year
a tax in an amount determined under
clause (iii).
‘‘(ii) ELECTION TO PAY SURROGATE
TAX.—
‘‘(I) IN GENERAL.—An organiza-
tion providing the notices described in
paragraph (1)(A) for any taxable year
may elect to pay a tax for such tax-
able year in the amount determined
under clause (iii).
‘‘(II) EFFECT OF ELECTION ON
DEDUCTIBILITY.—If an organization
pays a tax under subclause (I) for any
taxable year, paragraph (3) of section
162(e) shall not apply to the portion
of the dues or other similar amounts
paid by a taxpayer to such organiza-
tion which are allocable to the expend-
itures with respect to which such or-
ganization paid the tax under sub-
clause (I).
‘‘(III) INCORRECT NOTICES.—In
the case of an election under sub-