I 
109TH CONGRESS 
1ST SESSION H. R. 1942 
To amend the Internal Revenue Code of 1986 to impose penalties for the 
failure of 527 organizations to comply with disclosure requirements. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 27, 2005 
Mr. SHAW (for himself, Mr. FOLEY, Mr. SAM JOHNSON of Texas, and Mr. 
ENGLISH of Pennsylvania) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to impose 
penalties for the failure of 527 organizations to comply 
with disclosure requirements. 
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 Transparency Act 
of 2005’’.
SEC. 2. REPORTING FREQUENCY IN NON-ELECTION YEARS 
INCREASED TO QUARTERLY. 
(a) IN GENERAL.—Clause (ii) of section 527(j)(2)(A) 
of the Internal Revenue Code of 1986 (relating to required 
disclosure) is amended to read as follows: 
‘‘(ii) quarterly reports, which shall be 
filed not later than the fifteenth day after 
the last day of each calendar quarter, and 
which shall be complete as of the last day 
of each calendar quarter, except that the 
report for the quarter ending December 31 
shall be filed not later than January 31 of 
the following calendar year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 3. FAILURE OF 527 ORGANIZATION TO COMPLY WITH 
DISCLOSURE REQUIREMENTS. 
(a) EXCISE TAX ON MANAGERS.— 
(1) IN GENERAL.—Subchapter C of chapter 42 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section:
‘‘SEC. 4956. TAX ON FAILURE OF POLITICAL ORGANIZA-
TIONS 
TO 
MEET 
DISCLOSURE 
REQUIRE-
MENTS. 
‘‘(a) TAX IMPOSED.—In the case of a failure of a po-
litical organization to meet the disclosure requirements of 
section 527(j) with respect to any contribution to or ex-
penditure from the political organization, there is hereby 
imposed on the political organization a tax for each such 
failure. 
‘‘(b) AMOUNT OF TAX.—The tax imposed by sub-
section (a) shall be 30 percent of the total amount of the 
contribution or expenditure with respect to which such 
failure occurred. 
‘‘(c) LIABILITY FOR TAX.— 
‘‘(1) IN
GENERAL.—Except as provided by 
paragraph (2), the tax imposed by subsection (a) 
shall be paid by the political organization. 
‘‘(2) JOINT AND SEVERAL LIABILITY OF ORGA-
NIZATION MANAGERS.—Each organization manager 
of the political organization shall be jointly and sev-
erally liable for any tax imposed under subsection 
(a). 
‘‘(d) ORGANIZATION MANAGER.—For purposes of 
this section, the term ‘organization manager’ means any 
officer, director, or trustee of the political organization (or
individual having powers or responsibilities similar to 
those of an officer, director, or trustee). 
‘‘(e) POLITICAL ORGANIZATION.—The term ‘political 
organization’ shall have the meaning given such term by 
section 527(e)(1).’’. 
(2) CONFORMING AMENDMENTS.— 
(A) The heading for subchapter C of chap-
ter 42 of such Code is amended by adding at 
the end the following: ‘‘; Failure of Polit-
ical Organizations to Meet Reporting 
Requirements’’. 
(B) The table of sections for such sub-
chapter C is amended by adding at the end the 
following: 
‘‘Sec. 4956. Tax on failure of political organizations to meet disclosure require-
ments.’’. 
(C) The item in the table of subchapters of 
such chapter 42 relating to subchapter C is 
amended to read as follows: 
‘‘SUBCHAPTER C. POLITICAL EXPENDITURES OF SECTION 501(C)(3) ORGANIZA-
TIONS; FAILURE OF POLITICAL ORGANIZATIONS TO MEET REPORTING RE-
QUIREMENTS’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2005. 
(b) DENIAL OF GIFT TAX EXCLUSION.—
(1) IN
GENERAL.—Paragraph (4) of section 
2501(a) of the Internal Revenue Code of 1986 (re-
lating to taxable transfers) is amended to read as 
follows: 
‘‘(4) TRANSFERS
TO
POLITICAL
ORGANIZA-
TIONS.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply to the transfer of money or other 
property to a political organization (within the 
meaning of section 527(e)(1)) for the use of 
such organization. 
‘‘(B) EXCEPTION FOR FAILURE OF ORGA-
NIZATION
TO
MEET
DISCLOSURE
REQUIRE-
MENTS.—Subparagraph (A) shall not apply to 
any transfer in a calendar year for which the 
political organization fails to make the disclo-
sures required by section 527(j).’’. 
(2) NOTICE TO CONTRIBUTORS OF DENIAL OF 
GIFT TAX EXCEPTION FOR FAILURE TO DISCLOSE.— 
Section 527(j) of such Code is amended by adding 
at the end the following new paragraph: 
‘‘(8) NOTICE TO CONTRIBUTORS OF DENIAL OF 
GIFT TAX EXCEPTION FOR FAILURE TO DISCLOSE.— 
In the case of a final determination by the Secretary 
that a failure described in paragraph (1)(A) with re-
spect to an organization occurred, the organization 
shall, not later than 90 days after the date of such 
determination, provide written notice of such failure 
to each contributor to the organization for the cal-
endar year in which such failure occurred. Such no-
tice shall include a statement that the exception 
under section 2501(a)(4)(A) does not apply to any 
contribution to the organization in such calendar 
year.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transfers made 
after December 31, 2005. 
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