clause (I), an additional tax shall be
imposed under clause (i) if the esti-
mates in the notices are less than the
actual amounts.
‘‘(iii) AMOUNT
OF
TAX.—For pur-
poses of this subparagraph, the amount of
tax determined under this clause is an
amount equal to the product of the highest
rate of tax imposed by section 11 for the
taxable year and—
‘‘(I) in the case of a failure to
which clause (i) applies, the aggregate
amount not included in the notices de-
scribed in paragraph (1)(A) by reason
of such failure, or
‘‘(II) in the case of an election
under 
clause 
(ii), 
the 
aggregate
amount included in the notices with
respect to which the election was
made.’’
(2) 
NOTICE
REQUIREMENT.—Section
6033(e)(1)(A)(ii) of such Code (relating to reporting
requirements) is amended to read as follows:
‘‘(ii) except as provided in paragraph
(3), shall, at the time of assessment or
payment of such dues or other similar
amounts, provide notice to each person
making such payment which contains—
‘‘(I) a reasonable estimate of the
portion of such dues or other similar
amounts to which such expenditures
are so allocable, and
‘‘(II) whether or not a deduction
is allowable to such person with re-
spect to such portion.’’
(3) PENALTIES FOR FAILURE TO PROVIDE NO-
TICE.—
(A) NOTICE ACCOMPANYING DUES.—Sec-
tion 6710 of such Code (relating to failure to
disclose that contributions are nondeductible) is
amended—
(i) in subsection (a), by inserting ‘‘or
a failure to meet the requirement of sec-
tion 6033(e)(1)(A)(ii) by an organization
to which section 6033(e) applies’’ after
‘‘section 6113 applies’’; and
(ii) in subsection (c), by inserting ‘‘or
section 6033(e)(1)(A)(ii)’’ after ‘‘section
6013’’.
(B) ANNUAL NOTICE.—Section 6724(d)(2)
of such Code (relating to payee statements), as
amended by the Small Business Job Protection
Act of 1996 and the Health Insurance Port-
ability and Accountability Act of 1996, is
amended by striking ‘‘or’’ at the end of the next
to last subparagraph, by striking the period at
the end of the last subparagraph and inserting
‘‘, or’’, and by adding at the end the following
new subparagraph:
‘‘(Z) 
the 
last 
sentence 
of 
section
6033(e)(1)(A).’’
(4) CONFORMING AMENDMENTS.—
(A) Section 6033(e)(2)(B) of such Code is
amended by striking ‘‘subparagraph (A)(ii)’’
and inserting ‘‘subparagraph (A)(i)(I)’’.
(B)(i) The heading for section 6710 of
such Code is amended by inserting ‘‘OR THAT
DUES
ARE
FOR
LOBBYING
ACTIVITIES’’
after ‘‘NONDEDUCTIBLE’’.
(ii) The item relating to section 6710 in
the table of sections for part I of subchapter B
of chapter 68 of such Code is amended by in-
serting ‘‘or that dues are for lobbying activi-
ties’’ after ‘‘nondeductible’’.
(c) ORGANIZATIONS TO WHICH DISCLOSURE RULES
APPLY.—Section 6033(e)(1)(B)(i) of the Internal Reve-
nue Code of 1986 (relating to organizations to which sub-
section applies) is amended to read as follows:
‘‘(i) IN
GENERAL.—This subsection
shall apply to any organization which is de-
scribed in paragraph (4), (5), or (6) of sec-
tion 501(c) (other than a veterans’ organi-
zation) and which is exempt from taxation
under section 501(a).’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
December 31, 1996.
SEC. 2. 2-PERCENT FLOOR ON ITEMIZED DEDUCTIONS NOT
TO APPLY TO DEDUCTION FOR DUES.
(a) IN GENERAL.—Section 67(b) of the Internal Rev-
enue Code of 1986 (defining miscellaneous itemized de-
ductions) is amended by striking ‘‘and’’ at the end of para-
graph (11), by striking the period at the end of paragraph
(12) and inserting ‘‘, and’’, and by adding at the end the
following new paragraph:
‘‘(13) the deduction allowed under section 162
for dues or other similar amounts paid by an indi-
vidual to an organization described in paragraph (4),
(5), or (6) of section 501(c) (other than a veterans’
organization) and exempt from taxation under sec-
tion 501(a).’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
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