H. R. 5596
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the twenty-third day of January, two thousand and two
An Act
To amend section 527 of the Internal Revenue Code of 1986 to eliminate notification
and return requirements for State and local party committees and candidate
committees and avoid duplicate reporting by certain State and local political
committees of information required to be reported and made publicly available
under State law, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL
COMMITTEES FROM NOTIFICATION REQUIREMENTS.
(a) EXEMPTION
FROM
NOTIFICATION
REQUIREMENTS.—Para-
graph (5) of section 527(i) of the Internal Revenue Code of 1986
(relating to organizations must notify Secretary that they are sec-
tion 527 organizations) is amended by striking ‘‘or’’ at the end
of subparagraph (A), by striking the period at the end of subpara-
graph (B) and inserting ‘‘, or’’, and by adding at the end the
following:
‘‘(C) which is a political committee of a State or local
candidate or which is a State or local committee of a
political party.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall take effect as if included in the amendments made by
Public Law 106–230.
SEC. 2. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL
COMMITTEES FROM REPORTING REQUIREMENTS.
(a) IN GENERAL.—Section 527(j)(5) of the Internal Revenue
Code of 1986 (relating to coordination with other requirements)
is amended by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (D), (E), and (F), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
‘‘(C) to any organization which is a qualified State
or local political organization,’’.
(b) QUALIFIED STATE
OR LOCAL POLITICAL ORGANIZATION.—
Subsection (e) of section 527 of the Internal Revenue Code of 1986
(relating to other definitions) is amended by adding at the end
the following new paragraph:
‘‘(5) QUALIFIED STATE OR LOCAL POLITICAL ORGANIZATION.—
‘‘(A) IN GENERAL.—The term ‘qualified State or local
political organization’ means a political organization—
‘‘(i) all the exempt functions of which are solely
for the purposes of influencing or attempting to influ-
ence the selection, nomination, election, or appointment
H. R. 5596—2
of any individual to any State or local public office
or office in a State or local political organization,
‘‘(ii) which is subject to State law that requires
the organization to report (and it so reports)—
‘‘(I) information regarding each separate
expenditure 
from 
and 
contribution 
to 
such
organization, and
‘‘(II) information regarding the person who
makes such contribution or receives such expendi-
ture,
which would otherwise be required to be reported
under this section, and
‘‘(iii) with respect to which the reports referred
to in clause (ii) are (I) made public by the agency
with which such reports are filed, and (II) made pub-
licly available for inspection by the organization in
the manner described in section 6104(d).
‘‘(B) CERTAIN STATE LAW DIFFERENCES DISREGARDED.—
An organization shall not be treated as failing to meet
the requirements of subparagraph (A)(ii) solely by reason
of 1 or more of the following:
‘‘(i) The minimum amount of any expenditure or
contribution required to be reported under State law
is not more than $300 greater than the minimum
amount required to be reported under subsection (j).
‘‘(ii) The State law does not require the organiza-
tion to identify 1 or more of the following:
‘‘(I) The employer of any person who makes
contributions to the organization.
‘‘(II) The occupation of any person who makes
contributions to the organization.
‘‘(III) The employer of any person who receives
expenditures from the organization.
‘‘(IV) The occupation of any person who
receives expenditures from the organization.
‘‘(V) The purpose of any expenditure of the
organization.
‘‘(VI) The date any contribution was made to
the organization.
‘‘(VII) The date of any expenditure of the
organization.
‘‘(C) DE MINIMIS ERRORS.—An organization shall not
fail to be treated as a qualified State or local political
organization solely because such organization makes de
minimis errors in complying with the State reporting
requirements and the public inspection requirements
described in subparagraph (A) as long as the organization
corrects such errors within a reasonable period after the
organization becomes aware of such errors.
‘‘(D) PARTICIPATION OF FEDERAL CANDIDATE OR OFFICE
HOLDER.—The term ‘qualified State or local political
organization’ shall not include any organization otherwise
described in subparagraph (A) if a candidate for nomination
or election to Federal elective public office or an individual
who holds such office—
‘‘(i) controls or materially participates in the direc-
tion of the organization,
H. R. 5596—3
‘‘(ii) solicits contributions to the organization
(unless the Secretary determines that such solicitations
resulted in de minimis contributions and were made
without the prior knowledge and consent, whether
explicit or implicit, of the organization or its officers,
directors, agents, or employees), or
‘‘(iii) directs, in whole or in part, disbursements
by the organization.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the amendments made by Public
Law 106–230.
SEC. 3. EXEMPTION FROM ANNUAL RETURN REQUIREMENTS.
(a) INCOME TAX RETURNS REQUIRED ONLY
FOR POLITICAL
ORGANIZATION TAXABLE INCOME.—Paragraph (6) of section 6012(a)
of the Internal Revenue Code of 1986 (relating to persons required
to make returns of income) is amended by striking ‘‘or which has’’
and all that follows through ‘‘section)’’.
(b) INCOME TAX RETURNS NOT SUBJECT TO DISCLOSURE.—
(1) DISCLOSURE BY THE SECRETARY.—Subsection (b) of sec-
tion 6104 of such Code (relating to disclosure by the Secretary
of annual information returns) is amended by striking
‘‘6012(a)(6),’’.
(2) PUBLIC INSPECTION.—Subsection (d) of section 6104 of
such Code (relating to public inspection of certain annual
returns) is amended—
(A) in paragraph (1)(A)(i) by striking ‘‘or section
6012(a)(6) (relating to returns by political organizations)’’,
and
(B) in subparagraph (2) by striking ‘‘or section
6012(a)(6)’’.
(c) INFORMATION RETURNS.—Subsection (g) of section 6033 of
such Code (relating to returns required by political organizations)
is amended to read as follows:
‘‘(g) RETURNS REQUIRED BY POLITICAL ORGANIZATIONS.—
‘‘(1) IN GENERAL.—This section shall apply to a political
organization (as defined by section 527(e)(1)) which has gross
receipts of $25,000 or more for the taxable year. In the case
of a political organization which is a qualified State or local
political organization (as defined in section 527(e)(5)), the pre-
ceding sentence shall be applied by substituting ‘$100,000’ for
‘$25,000’.
‘‘(2) ANNUAL
RETURNS.—Political organizations described
in paragraph (1) shall file an annual return—
‘‘(A) containing the information required, and com-
plying with the other requirements, under subsection (a)(1)
for organizations exempt from taxation under section
501(a), with such modifications as the Secretary considers
appropriate to require only information which is necessary
for the purposes of carrying out section 527, and
‘‘(B) containing such other information as the Secretary
deems necessary to carry out the provisions of this sub-
section.
‘‘(3) MANDATORY EXCEPTIONS FROM FILING.—Paragraph (2)
shall not apply to an organization—
‘‘(A) which is a State or local committee of a political
party, or political committee of a State or local candidate,
H. R. 5596—4
‘‘(B) which is a caucus or association of State or local
officials,
‘‘(C) which is an authorized committee (as defined in
section 301(6) of the Federal Election Campaign Act of
1971) of a candidate for Federal office,
‘‘(D) which is a national committee (as defined in sec-
tion 301(14) of the Federal Election Campaign Act of 1971)
of a political party,
‘‘(E) which is a United States House of Representatives
or United States Senate campaign committee of a political
party committee,
‘‘(F) which is required to report under the Federal
Election Campaign Act of 1971 as a political committee
(as defined in section 301(4) of such Act), or
‘‘(G) to which section 527 applies for the taxable year
solely by reason of subsection (f)(1) of such section.
‘‘(4) DISCRETIONARY EXCEPTION.—The Secretary may relieve
any organization required under paragraph (2) to file an
information return from filing such a return if the Secretary
determines that such filing is not necessary to the efficient
administration of the internal revenue laws.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the amendments made by Public
Law 106–230.
SEC. 4. NOTIFICATION OF INTERACTION OF REPORTING REQUIRE-
MENTS.
(a) IN GENERAL.—The Secretary of the Treasury, in consultation
with the Federal Election Commission, shall publicize—
(1) the effect of the amendments made by this Act, and
(2) the interaction of requirements to file a notification
or report under section 527 of the Internal Revenue Code
of 1986 and reports under the Federal Election Campaign Act
of 1971.
(b) INFORMATION.—Information provided under subsection (a)
shall be included in any appropriate form, instruction, notice, or
other guidance issued to the public by the Secretary of the Treasury
or the Federal Election Commission regarding reporting require-
ments of political organizations (as defined in section 527 of the
Internal Revenue Code of 1986) or reporting requirements under
the Federal Election Campaign Act of 1971.
SEC. 5. WAIVER OF FILING AMOUNTS.
(a) WAIVER OF FILING AMOUNTS.—Section 527 of the Internal
Revenue Code of 1986 is amended by adding at the end the fol-
lowing:
‘‘(k) AUTHORITY TO WAIVE.—The Secretary may waive all or
any portion of the—
‘‘(1) tax assessed on an organization by reason of the failure
of the organization to comply with the requirements of sub-
section (i), or
‘‘(2) amount imposed under subsection (j) for a failure to
comply with the requirements thereof,
on a showing that such failure was due to reasonable cause and
not due to willful neglect.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to any tax assessed or amount imposed after June
30, 2000.
H. R. 5596—5
SEC. 6. MODIFICATIONS TO SECTION 527 ORGANIZATION DISCLOSURE
PROVISIONS.
(a) UNSEGREGATED FUNDS NOT TO AVOID TAX.—Paragraph (4)
of section 527(i) of the Internal Revenue Code of 1986 (relating
to failure to notify) is amended by adding at the end the following
new sentence: ‘‘For purposes of the preceding sentence, the term
‘exempt function income’ means any amount described in a subpara-
graph of subsection (c)(3), whether or not segregated for use for
an exempt function.’’.
(b) PROCEDURES
FOR
ASSESSMENT
AND
COLLECTION
OF
AMOUNTS.—Paragraph (1) of section 527(j) of the Internal Revenue
Code of 1986 (relating to required disclosure of expenditures and
contributions) is amended by adding at the end the following new
sentence: ‘‘For purposes of subtitle F, the amount imposed by this
paragraph shall be assessed and collected in the same manner
as penalties imposed by section 6652(c).’’.
(c) DUPLICATE WRITTEN FILINGS NOT REQUIRED.—Subpara-
graph (A) of section 527(i)(1) of the Internal Revenue Code of
1986 is amended by striking ‘‘, electronically and in writing,’’ and
inserting ‘‘electronically’’.
(d) APPLICATION
OF FRAUD PENALTY.—Section 7207 of the
Internal Revenue Code of 1986 (relating to fraudulent returns,
statements, and other documents) is amended by striking ‘‘pursuant
to subsection (b) of section 6047 or pursuant to subsection (d)
of section 6104’’ and inserting ‘‘pursuant to section 6047(b), section
6104(d), or subsection (i) or (j) of section 527’’.
(e) CONTENTS AND FILING OF REPORT.—
(1) CONTENTS.—Section 527(j)(3) of the Internal Revenue
Code of 1986 (relating to contents of report) is amended—
(A) by inserting ‘‘, date, and purpose’’ after ‘‘The
amount’’ in subparagraph (A), and
(B) by inserting ‘‘and date’’ after ‘‘the amount’’ in
subparagraph (B).
(2) ELECTRONIC
FILING.—Section 527(j) of such Code is
amended by adding at the end the following new paragraph:
‘‘(7) ELECTRONIC FILING.—Any report required under para-
graph (2) with respect to any calendar year shall be filed
in electronic form if the organization has, or has reason to
expect to have, contributions exceeding $50,000 or expenditures
exceeding $50,000 in such calendar year.’’.
(3) ELECTRONIC FILING AND ACCESS OF REQUIRED DISCLO-
SURES.—Section 527 of such Code, as amended by section 5(a),
is amended by redesignating subsection (k) as subsection (l)
and by inserting after subsection (j) the following new sub-
section:
‘‘(k) PUBLIC AVAILABILITY OF NOTICES AND REPORTS.—
‘‘(1) IN GENERAL.—The Secretary shall make any notice
described in subsection (i)(1) or report described in subsection
(j)(7) available for public inspection on the Internet not later
than 48 hours after such notice or report has been filed (in
addition to such public availability as may be made under
section 6104(d)(7)).
‘‘(2) ACCESS.—The Secretary shall make the entire database
of notices and reports which are made available to the public
under paragraph (1) searchable by the following items (to the
extent the items are required to be included in the notices
and reports):
H. R. 5596—6
‘‘(A) Names, States, zip codes, custodians of records,
directors, and general purposes of the organizations.
‘‘(B) Entities related to the organizations.
‘‘(C) Contributors to the organizations.
‘‘(D) Employers of such contributors.
‘‘(E) Recipients of expenditures by the organizations.
‘‘(F) Ranges of contributions and expenditures.
‘‘(G) Time periods of the notices and reports.
Such database shall be downloadable.’’.
(f) CONTENTS OF NOTICE.—Section 527(i)(3) of the Internal Rev-
enue Code of 1986 (relating to contents of notice) is amended
by striking ‘‘and’’ at the end of subparagraph (D), by redesignating
subparagraph (E) as subparagraph (F), and by inserting after
subparagraph (D) the following new subparagraph:
‘‘(E) whether the organization intends to claim an
exemption from the requirements of subsection (j) or section
6033, and’’.
(g) TIMING OF NOTICE IN CASE OF MATERIAL CHANGE.—
(1) IN GENERAL.—Subparagraph (B) of section 527(i)(1) of
the Internal Revenue Code of 1986 (relating to general notifica-
tion requirement) is amended by inserting ‘‘or, in the case
of any material change in the information required under para-
graph (3), for the period beginning on the date on which the
material change occurs and ending on the date on which such
notice is given’’ after ‘‘given’’.
(2) TIME TO GIVE NOTICE.—Section 527(i)(2) of the Internal
Revenue Code of 1986 (relating to time to give notice) is
amended by inserting ‘‘or, in the case of any material change
in the information required under paragraph (3), not later
than 30 days after such material change’’ after ‘‘established’’.
(3) EFFECT OF FAILURE.—Paragraph (4) of section 527(i)
of the Internal Revenue Code of 1986 (relating to effect of
failure) is amended by inserting before the period at the end
the following: ‘‘or, in the case of a failure relating to a material
change, by taking into account such income and deductions
only during the period beginning on the date on which the
material change occurs and ending on the date on which notice
is given under this subsection’’.
(h) EFFECTIVE DATES.—
(1) SUBSECTIONS (a) AND (b).—The amendments made by
subsections (a) and (b) shall apply to failures occurring on
or after the date of the enactment of this Act.
(2) SUBSECTION (c).—The amendments made by subsection
(c) shall take effect as if included in the amendments made
by Public Law 106–230.
(3) SUBSECTION (d).—The amendment made by subsection
(d) shall apply to reports and notices required to be filed on
or after the date of the enactment of this Act.
(4) SUBSECTIONS (e)(1) AND (f).—The amendments made
by subsections (e)(1) and (f) shall apply to reports and notices
required to be filed more than 30 days after the date of the
enactment of this Act.
(5) SUBSECTIONS (e)(2) AND (e)(3).—The amendments made
by subsections (e)(2) and (e)(3) shall apply to reports required
to be filed on or after June 30, 2003.
(6) SUBSECTION (g).—
H. R. 5596—7
(A) IN GENERAL.—The amendments made by subsection
(g) shall apply to material changes on or after the date
of the enactment of this Act.
(B) TRANSITION RULE.—In the case of a material change
occurring during the 30-day period beginning on the date
of the enactment of this Act, a notice under section 527(i)
of the Internal Revenue Code of 1986 (as amended by
this Act) shall not be required to be filed under such
section before the later of—
(i) 30 days after the date of such material change,
or
(ii) 45 days after the date of the enactment of
this Act.
SEC. 7. EFFECT OF AMENDMENTS ON EXISTING DISCLOSURES.
Notices, reports, or returns that were required to be filed with
the Secretary of the Treasury before the date of the enactment
of the amendments made by this Act and that were disclosed
by the Secretary of the Treasury consistent with the law in effect
at the time of disclosure shall remain subject on and after such
date to the disclosure provisions of section 6104 of the Internal
Revenue Code of 1986.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.