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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘527 Reform Act of 
2004’’.
SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS. 
(a) DEFINITION OF POLITICAL COMMITTEE.—Sec-
tion 301(4)(A) of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431(4)(A)) is amended to read as follows: 
‘‘(A) any committee, club, association, or 
other group of persons that— 
‘‘(i) during one calendar year, receives 
contributions aggregating in excess of 
$1,000 or makes expenditures aggregating 
in excess of $1,000; and 
‘‘(ii) has as its major purpose the 
nomination or election of one or more can-
didates;’’. 
(b) DEFINITION OF MAJOR PURPOSE FOR SECTION 
527 ORGANIZATIONS.—Title III of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended 
by adding at the end the following new section: 
‘‘SEC. 325. DEFINITIONS AND RULES FOR DETERMINING 
ORGANIZATIONS AND DISBURSEMENTS IN-
FLUENCING FEDERAL ELECTIONS. 
‘‘(a) MAJOR PURPOSE OF SECTION 527 ORGANIZA-
TIONS.—For purposes of section 301(4)(A)— 
‘‘(1) IN GENERAL.—A committee, club, associa-
tion, or group of persons that—
‘‘(A) is an organization described in sec-
tion 527 of the Internal Revenue Code of 1986, 
and 
‘‘(B) is not described in paragraph (2), 
has as its major purpose the nomination or election 
of one or more candidates. 
‘‘(2) EXCEPTED
ORGANIZATIONS.—Subject to 
paragraph (3), a committee, club, association, or 
other group of persons described in this paragraph 
is— 
‘‘(A) an organization described in section 
527(i)(5) of the Internal Revenue Code of 
1986, or 
‘‘(B) any other organization which is one 
of the following: 
‘‘(i) A committee, club, association, or 
other group of persons whose election or 
nomination activities relate exclusively to 
elections where no candidate for Federal 
office appears on the ballot. 
‘‘(ii) A committee, club, association, 
or other group of persons that is orga-
nized, operated, and makes disbursements 
exclusively for one or more of the following 
purposes:
‘‘(I) Influencing the selection, 
nomination, election, or appointment 
of one or more candidates to non-Fed-
eral offices. 
‘‘(II) Influencing one or more 
State or local ballot initiatives, State 
or local referenda, State or local con-
stitutional amendments, State or local 
bond issues, or other State or local 
ballot issues. 
‘‘(III) Influencing the selection, 
appointment, 
nomination, 
or 
con-
firmation of one or more individuals 
to non-elected offices. 
‘‘(IV) Paying expenses described 
in 
the 
last 
sentence 
of 
section 
527(e)(2) of the Internal Revenue 
Code of 1986 or expenses of a news-
letter fund described in section 527(g) 
of such Code. 
‘‘(3) SECTION
527
ORGANIZATIONS
MAKING 
CERTAIN DISBURSEMENTS.—A committee, club, as-
sociation, or other group of persons described in 
paragraph (2)(B) shall not be considered to be de-
scribed in such paragraph for purposes of paragraph
or to a political party (regardless of whether a 
candidate for State or local office is also men-
tioned or identified) and that promotes, sup-
ports, attacks, or opposes a candidate for that 
office or a political party (regardless of whether 
the communication expressly advocates a vote 
for or against a candidate), or 
‘‘(B) voter registration activity, voter iden-
tification, get-out-the-vote activity, or generic 
campaign activity conducted in connection with 
an election in which a candidate for Federal of-
fice appears on the ballot (regardless of whether 
a candidate for State or local office also ap-
pears on the ballot), 
shall be an expenditure under section 301(9)(A)(i) if 
made by, or on behalf of, a political committee (as 
defined in section 301(4)) or a committee, club, as-
sociation, or other group of persons for which the 
nomination or election of one or more candidates is 
its major purpose. 
‘‘(2) EXCEPTION.—Any funds used for pur-
poses described in paragraph (1) that, in accordance 
with allocation rules set forth in section 325(c), are 
disbursed from a non-Federal account shall not be 
treated as expenditures.’’.
SEC. 4. RULES FOR ALLOCATION OF EXPENSES BETWEEN 
FEDERAL AND NON-FEDERAL ACTIVITIES. 
Section 325 of the Federal Election Campaign Act 
of 1971 (as added by section 2(b) and amended by section 
3) is amended by adding at the end the following: 
‘‘(c) ALLOCATION AND FUNDING RULES FOR EX-
PENSES OF SEPARATE SEGREGATED FUNDS AND NON-
CONNECTED COMMITTEES RELATING TO FEDERAL AND 
NON-FEDERAL ACTIVITIES.— 
‘‘(1) IN
GENERAL.—In the case of any dis-
bursements by any separate segregated fund or non-
connected committee for which allocation rules are 
provided under paragraph (2)— 
‘‘(A) the disbursements shall be allocated 
between Federal and non-Federal accounts in 
accordance with this subsection and regulations 
prescribed by the Commission, and 
‘‘(B) in the case of disbursements allocated 
to non-Federal accounts, may be paid only from 
a qualified non-Federal account. 
‘‘(2) COSTS TO BE ALLOCATED AND ALLOCA-
TION RULES.—Disbursements by any separate seg-
regated fund or nonconnected committee in connec-
tion with Federal and non-Federal elections for any 
of the following categories of activity shall be allo-
cated as follows:
‘‘(A) At least 50 percent of any adminis-
trative expenses, including rent, utilities, office 
supplies, and salaries not attributable to a 
clearly identified candidate shall be paid with 
funds from a Federal account, except that for 
a separate segregated fund such expenses may 
be paid instead by its connected organization. 
‘‘(B) At least 50 percent of the direct costs 
of a fundraising program or event, including 
disbursements for solicitation of funds and for 
planning and administration of actual fund-
raising events, where Federal and non-Federal 
funds are collected through such program or 
event shall be paid with funds from a Federal 
account, except that for a separate segregated 
fund such costs may be paid instead by its con-
nected organization. 
‘‘(C) At least 50 percent of the expenses 
for public communications or voter drive activi-
ties that refer to a political party, but do not 
refer to any clearly identified Federal or non- 
Federal candidate, shall be paid with funds 
from a Federal account. 
‘‘(D) 100 percent of the expenses for pub-
lic communications or voter drive activities that
refer to a political party, and refer to one or 
more clearly identified Federal candidates, but 
do not refer to any clearly identified non-Fed-
eral candidates, shall be paid with funds from 
a Federal account. 
‘‘(E) At least 50 percent of the expenses 
for public communications or voter drive activi-
ties that refer to a political party, and refer to 
one or more clearly identified non-Federal can-
didates, but do not refer to any clearly identi-
fied Federal candidates, shall be paid with 
funds from a Federal account, except that this 
subparagraph shall not apply to communica-
tions or activities that relate exclusively to elec-
tions where no candidate for Federal office ap-
pears on the ballot. 
‘‘(F) At least 50 percent of the expenses 
for public communications and voter drive ac-
tivities that refer to one or more clearly identi-
fied candidates for Federal office and one or 
more clearly defined non-Federal candidates, 
without regard to whether the communication 
refers to a political party, shall be paid with 
funds from a Federal account.
‘‘(3) QUALIFIED NON-FEDERAL ACCOUNT.—For 
purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
non-Federal account’ means an account which 
consists solely of amounts— 
‘‘(i) that, subject to the limitations of 
subparagraphs (B) and (C), are raised by 
the separate segregated fund or noncon-
nected committee only from individuals, 
and 
‘‘(ii) with respect to which all other 
requirements of Federal, State, or local 
law are met. 
‘‘(B) LIMITATION ON INDIVIDUAL DONA-
TIONS.— 
‘‘(i) IN
GENERAL.—A separate seg-
regated fund or nonconnected committee 
may not accept more than $25,000 in 
funds for its qualified non-Federal account 
from any one individual in any calendar 
year. 
‘‘(ii) AFFILIATION.—For purposes of 
this subparagraph, all qualified non-Fed-
eral accounts of separate segregated funds 
or nonconnected committees which are di-
rectly or indirectly established, financed, 
maintained, or controlled by the same per-
son or persons shall be treated as one ac-
count. 
‘‘(C) FUNDRAISING LIMITATION.—No do-
nation to a qualified non-Federal account may 
be solicited, received, directed, transferred, or 
spent by or in the name of any person described 
in subsection (a) or (e) of section 323. 
‘‘(4) VOTER DRIVE ACTIVITY AND FEDERAL AC-
COUNT
DEFINED.—For purposes of this sub-
section— 
‘‘(A) VOTER DRIVE ACTIVITY.—The term 
‘voter drive activity’ means any of the following 
activities conducted in connection with an elec-
tion in which a candidate for Federal office ap-
pears on the ballot (regardless of whether a 
candidate for State or local office also appears 
on the ballot): 
‘‘(i) Voter registration activity. 
‘‘(ii) Voter identification. 
‘‘(iii) Get-out-the-vote activity. 
‘‘(iv) Generic campaign activity. 
‘‘(B) 
FEDERAL
ACCOUNT.—The 
term 
‘Federal account’ means an account which con-