Title: Crack Down on Dark Money Act
Policy area: Taxation

Summary:
Crack Down on Dark Money Act
This bill prohibits tax-exempt 501(c)(4) social welfare organizations from using more than 10% of their total expenditures on covered political expenditures (i.e., direct or indirect expenditures for an exempt function, including influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, or local public office or office in a political organization, or the election of presidential or vice-presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed).
The bill also requires a social welfare organization that spends funds on political intervention to publicly disclose the name and address of any contributor donating $5,000 or more to such organization. The term political intervention includes advocacy for the election, defeat, nomination or recall of a political candidate, the making of contributions to a political campaign, communications to the electorate about political candidates, and political use of resources.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5997 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 5997

   To amend the Internal Revenue Code of 1986 to prohibit 501(c)(4) 
   entities from using more than 10 percent of total expenditures on 
        certain political expenditures, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 17, 2021

Mr. Golden (for himself, Mrs. Demings, Ms. Norton, and Mr. DeSaulnier) 
 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 prohibit 501(c)(4) 
   entities from using more than 10 percent of total expenditures on 
        certain political expenditures, 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. SHORT TITLE.

    This Act may be cited as the ``Crack Down on Dark Money Act''.

SEC. 2. LIMITATION ON COVERED POLITICAL EXPENDITURES BY SOCIAL WELFARE 
              ORGANIZATIONS.

    (a) In General.--Section 501(c)(4) of the Internal Revenue Code of 
1986 is amended by adding at the end the following:
                    ``(C)(i) Subparagraph (A) shall not apply to an 
                entity for a taxable year if more than 10 percent of 
                the total expenditures for the taxable year are covered 
                political expenditures.
                    ``(ii) For purposes of this subparagraph, the term 
                `covered political expenditures' means direct or 
                indirect expenditures for an exempt function described 
                in section 527(e)(2).
                    ``(iii) The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to 
                prevent the avoidance of clause (i), including 
                regulations relating to a direct or indirect transfer 
                of all or part of the assets of an entity to an entity 
                controlled (directly or indirectly) by the same person 
                or persons who control the transferor entity.''.
    (b) Expansion of Political Organization Definition.--Section 
527(e)(1) of such Code is amended by striking ``organized and operated 
primarily for the purpose of'' and inserting ``, unless such 
organization is not established under this section,''.
    (c) Political Intervention Added to Exempt Function Definition.--
Section 527(e) of such Code is amended--
            (1) in paragraph (2)--
                    (A) by striking ``includes the making of 
                expenditures relating to an office described in the 
                preceding sentence which, if incurred by the 
                individual, would be allowable as a deduction under 
                section 162(a).'' and inserting ``includes--
                    ``(A) the making of expenditures relating to an 
                office described in the preceding sentence which, if 
                incurred by the individual, would be allowable as a 
                deduction under section 162(a), and
                    ``(B) political intervention.'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(6) Political intervention.--The term `political 
        intervention' has the meaning given to such term by section 
        4956.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2021.

SEC. 3. POLITICAL INTERVENTION.

    (a) Disclosure Requirement.--Section 6104(d)(3) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Certain 501(c)(4) organizations must disclose 
                certain donors.--In the case of an organization 
                described in section 501(c)(4) that spends funds on 
                political intervention (as defined in section 4956), 
                such organization shall be required to disclose the 
                name and address of any contributor donating $5,000 or 
                more to such organization, and such information shall 
                be made open to public inspection in the manner 
                described in subsection (a)(1)(A).''.
    (b) Political Intervention Defined.--Subchapter C of chapter 42 of 
subtitle D of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new section:

``SEC. 4956. POLITICAL INTERVENTION.

    ``(a) Political Intervention Defined.--For purposes of this 
section, the term `political intervention' means (except as provided in 
subsection (b)), with respect to activities conducted by an 
organization in relation to Federal, state, local, and foreign election 
campaigns of candidates for public office--
            ``(1) express advocation--
                    ``(A) for the election, defeat, nomination, or 
                recall of a political candidate,
                    ``(B) for the election or defeat of candidates 
                affiliated with a specific political party,
                    ``(C) that voters select candidates for support or 
                opposition based on one or more criteria that clearly 
                distinguish certain candidates from other candidates, 
                or
                    ``(D) the making of contributions to a candidate's 
                campaign, a political party, or (unless the 
                contribution is restricted so that it must not be used 
                to support political intervention) any other political 
                organization within the meaning of section 527(e)(1),
            ``(2) communication to any part of the electorate, other 
        than an express advocacy communication within the meaning of 
        clause (i), if the communication--
                    ``(A) refers to a political candidate, and
                    ``(B) reflects a view on such candidate, and
            ``(3) political use of resources.
    ``(b) Exceptions.--A communication described in subsection (a) 
shall not constitute political intervention if--
            ``(1) it does not consist of paid mass media advertising, 
        and
            ``(2) it falls under one of the following exceptions:
                    ``(A) Communications to influence official 
                action.--Commentary on a public official that has a 
                direct, limited, and reasonable relationship to 
                specific actions the official may yet perform within 
                his or her current term of office without mention of 
                any election or voting in an election, or of the 
                official's candidacy or opponent.
                    ``(B) Voter education.--Voter education activities 
                or the dissemination of materials that compare two or 
                more candidates for an office, including materials 
                disclosing the views of the organization on political 
                issues, if the communication consists solely of content 
                in which the time, text, or space is offered in equal 
                shares to each of the participating candidates, and the 
                organization's share of content is no greater than the 
                share available to any of the participating candidates. 
                The opportunity to participate, including a full 
                description of the opportunity and of the 
                organization's share of the content, if any, must be 
                given to all candidates meeting an objective threshold 
                of viability for nomination or election to the office 
                at least 72 hours in advance of the final preparation 
                of the communication.
                    ``(C) Self-defense communications.--A response by 
                the organization to a public or publicly-reported 
                statement by a candidate or candidates that either (i) 
                attacks the organization itself, or (ii) comments upon 
                a specific public policy position that the organization 
                has taken publicly in furtherance of its exempt purpose 
                within the prior year, or (iii) results in press 
                inquiries to the organization that were not solicited 
                subsequent to the candidate's statement by the 
                organization. The response by the organization must be 
                educational, limited topically to addressing the 
                candidate's statement, and as to (i) or (ii), 
                disseminated in a manner commensurate in medium and 
                scale, and proximate in time, to the publicity of the 
                candidate's statement, and as to (iii), limited to 
                dissemination to the requesting press organization.
                    ``(D) Personal, oral remarks at official 
                meetings.--Oral remarks made by anyone other than a 
                candidate who is present in person at an official 
                meeting of an organization held in a single room or 
                location, so long as--
                            ``(i) no announcement of the meeting refers 
                        to any candidate, party, election, or voting, 
                        and
                            ``(ii) a disclaimer is made to those in 
                        attendance, stating that remarks are the 
                        speaker's personal opinion and are not made on 
                        behalf of the organization.
                This exception covers only oral remarks made by and to 
                persons in attendance, and not any other form of 
                communication or redistribution of those remarks, 
                whether written, electronic, recorded, broadcast, or 
                otherwise transmitted.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Candidate.--The term `candidate' means a person who 
        offers himself or herself for election to public office or 
        whose election the person conducting the activity or making the 
        expenditure in question expressly proposes, supports, or 
        opposes.
            ``(2) Election.--The term `election' means a process 
        culminating in a vote by the public to determine whether a 
        candidate will serve in a public office, including primary, 
        general, special, and runoff elections, nominations by caucus, 
        convention, or other means, and recall and confirmation votes.
            ``(3) Paid mass media advertising.--
                    ``(A) In general.--The term `paid mass media 
                advertising' means communication to the general public 
                placed for a fee on one of the following media operated 
                by another person: a broadcast, cable, or satellite 
                facility, newspaper, magazine, outdoor advertising 
                facility, mass mailing service, telephone bank, or 
                another person's web site or internet communications 
                service.
                    ``(B) Mass mailing.--The term `mass mailing' 
                means--
                            ``(i) a mailing by United States mail or 
                        facsimile,
                            ``(ii) of more than 500 pieces of mail 
                        matter of an identical or substantially similar 
                        nature within any 30-day period, and
                            ``(iii) that is not voter education 
                        materials.
            ``(4) Political use of resources.--The term `political use 
        of resources'--
                    ``(A) means--
                            ``(i) the provision any of an 
                        organization's resources, tangible or 
                        intangible, including monetary or in-kind, 
                        goods, services, or facilities, by gift, loan, 
                        sale, rental, or any other method of transfer 
                        to another person or entity, if--
                                    ``(I) the transferee uses such 
                                resources to support or oppose any 
                                candidate's election to public office,
                                    ``(II) such use is reasonably 
                                foreseeable, and
                                    ``(III) if the transferor has not 
                                taken reasonable steps to prevent such 
                                use,
                            ``(ii) any other transfer that is a 
                        reportable contribution related to one or more 
                        candidates for elective public office, to a 
                        political party, or (unless the transfer is 
                        restricted so that it must not be used to 
                        support political intervention) to any other 
                        political organization within the meaning of 
                        section 527(e)(1), and
                            ``(iii) any other use of an organization's 
                        resources in support of or opposition to a 
                        candidate, if not specifically allowed under a 
                        Revenue Ruling or other Federal tax authority, 
                        and
                    ``(B) does not include a transfer that is--
                            ``(i) made in a transaction in which the 
                        fair market value of goods or services provided 
                        by the organization does not exceed the value 
                        of the consideration received in exchange,
                            ``(ii) similar to other transactions 
                        conducted by the organization, and
                            ``(iii) without preference for or against 
                        any candidate.
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
and other guidance as may be appropriate or necessary to carry out the 
purposes of this section.''.
    (c) Conforming Amendments.--
            (1) The heading for subchapter C of chapter 42 of such Code 
        is amended by adding at the end the following: ``; Political 
        Intervention''.
            (2) The table of sections for such subchapter C is amended 
        by adding at the end the following:

``Sec. 4956. Political intervention.''.
            (3) 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) 
               organizations; political intervention.''.

    (d) Effective Date.--The amendments made by this section shall 
apply to contributions made in taxable years beginning after December 
31, 2021.
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