II 113th CONGRESS 1st Session S. 791 IN THE SENATE OF THE UNITED STATES April 23, 2013 Mr. Wyden (for himself and Ms. Murkowski ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Federal Election Campaign Act of 1971 and the Internal Revenue Code of 1986 to require the disclosure of contributions and expenditures for independent Federal election-related activity, and for other purposes.

1. Short title, etc (a) Short title This Act may be cited as the Follow the Money Act of 2013 . (b) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title, etc. TITLE I—Comprehensive reporting of independent Federal election-related expenditures and contributions Sec. 101. Reporting of independent Federal election-related activity expenditures and covered contributions. Sec. 102. Increase in reporting thresholds for candidate only political committees. Sec. 103. Instant disclosure system for contributions. Sec. 104. Modification of rules relating to disclaimer statements required for certain communications. Sec. 105. Statements disavowing communications. Sec. 106. Filing by Senate candidates with commission. TITLE II—Regulation of independent Federal election-related activity by tax-exempt entities Sec. 201. Excise tax on certain tax-exempt organizations failing to report election-related expenditures. Sec. 202. Loss of tax-exempt status for certain organizations failing to register or report election-related expenditures and contributions. Sec. 203. Section 527 political organizations required to file with FEC. Sec. 204. Application of whistleblower protections. TITLE III—Other provisions Sec. 301. Joint regulatory authority and advisory opinions. Sec. 302. Denial of business expense deductions for certain businesses failing to report donations and independent Federal election-related activity expenditures. Sec. 303. Prohibition on discrimination against donors. Sec. 304. Severability. I Comprehensive reporting of independent Federal election-related expenditures and contributions 101. Reporting of independent Federal election-related activity expenditures and covered contributions (a) Definitions Section 7701(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraphs: (51) Independent Federal election-related activity expenditure (A) In general The term independent Federal election-related activity expenditure means— (i) any expenditure that— (I) considering the facts and circumstances, a reasonable person would conclude is made solely or substantially for the purpose of influencing or attempting to influence the nomination or election of any individual to any Federal office (including an expenditure for a public communication that promotes, attacks, supports, or opposes a candidate); and (II) that is not made in concert or cooperation with, or at the suggestion of a candidate, the candidate's authorized committee, or a political party committee; and (ii) any payment made to another person if the transferor knows or has reason to know that such payment will be used to fund an expenditure described in clause (i). (B) Regulations and advisory opinions For authority with respect joint regulations and advisory opinions, see section 301 of the Follow the Money Act of 2013 . (C) Other terms For purposes of this paragraph, the terms candidate , Federal office , election , and public communication have the meaning given such terms under section 301 of the Federal Election Campaign Act of 1971. (52) Covered contribution (A) In general The term covered contribution means anything of value received by an independent political actor (as defined in section 351(1) of the Federal Election Campaign Act of 1971) which can be used by such person to make an independent Federal election-related activity expenditure. (B) Exceptions A receipt from another person shall not be taken into account under subparagraph (A)— (i) if such receipt occurred in a commercial transaction in the ordinary course of business; (ii) to the extent of the fair market value of any goods or services provided by the organization to such person in consideration for such amount; or (iii) if such receipt was derived from investments made by the independent political actor (as so defined). (C) Regulations and advisory opinions For authority with respect joint regulations and advisory opinions, see section 301 of the Follow the Money Act of 2013 . . (b) Registration and reporting Title III of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 431 ) is amended— (1) by inserting before section 301 the following: A Funds provided to candidates , and (2) by adding at the end the following new subtitle: B Disclosure of other election-related expenditures and receipts 351. Definitions In this subtitle: (1) Independent political actor (A) In general The term independent political actor means, with respect to any Federal election cycle, any person that— (i) makes independent Federal election-related activity expenditures of $10,000 or more during such Federal election cycle; (ii) receives contributions which— (I) are intended by the transferor and understood by the recipient to be substantially used for making Independent Federal election-related activity expenditures, and (II) aggregate $10,000 or more during such Federal election cycle; or (iii) makes qualified solicitations to 500 or more persons during such Federal election cycle. For purposes of clause (iii), the term qualified solicitation means any solicitation which discloses to contributors that a portion of funds received in response to the solicitation will be utilized for independent Federal election-related activity expenditures. (B) Exclusion of candidate-only political committees The term independent political actor shall not include any political committee that exclusively makes contributions (whether direct, in-kind, or via coordinated communications) to candidates. (2) Federal election cycle The term Federal election cycle means the period beginning on January 1 of any odd numbered year and ending on December 31 of the following year. (3) Independent Federal election-related activity expenditure The term independent Federal election-related activity expenditure has the meaning given such term under section 7701(51) of the Internal Revenue Code of 1986. (4) Covered contribution The term covered contribution has the meaning given such term under section 7701(52) of the Internal Revenue Code of 1986. 352. Organization of independent political actors (a) Personnel (1) In general Each independent political actor shall designate— (A) a treasurer; and (B) a responsible individual. (2) Treasurer As provided by the Commission in regulations— (A) the treasurer of an independent political actor shall have similar duties and responsibilities of the treasurer of a political committee under subsections (b), (c), and (d) of section 302; and (B) rules similar to the rules of section 302(i) shall apply. (3) Joint and several liability The treasurer and responsible individual shall be jointly and severally liable with the independent political actor for any acts or omissions to which this Act applies. (b) Organization of accounts of independent political actors (1) Safe harbor account Each independent political actor may elect to have a segregated safe harbor account with respect to each Federal election cycle consisting of so much of the covered contributions (including dues) received from a person during the Federal election cycle as does not exceed the lesser of— (A) $1,000; or (B) the amount of covered contributions (including dues) received from such person. (2) Supplemental contributions account Each independent political actor may elect to have a segregated supplemental contribution account consisting of the dues and other covered contributions that— (A) are received in that account; and (B) are to be used only for the purpose of making independent Federal election-related activity expenditures. 353. Registration (a) In general Every person who is an independent political actor with respect to a Federal election cycle shall file a registration statement with the Commission not later than 10 days after such person becomes an independent political actor within the meaning of section 351(1). (b) Contents of registration statement The registration statement shall include the following: (1) Registrant information The name and address of the independent political actor, the treasurer of the independent political actor, the responsible individual with respect to the independent political actor, and such other information as the Commission may require. (2) Method for reporting contributions An election with respect to which of the following methods the independent political actor elects to use for reporting covered contributions received during the federal election cycle: (A) All receipts A method under which the independent political actor elects to report all covered contributions received during the Federal election cycle. (B) Use of safe harbor contribution account A method under which the independent political actor elects to make independent Federal election-related activity expenditures only from amounts allocated to the safe harbor account of the independent political actor. (C) Use of supplemental contribution accounts A method under which the independent political actor— (i) elects to make independent Federal election-related expenditures only from amounts allocated to the supplemental contributions account of such independent political actor; and (ii) reports all covered contributions made to the supplemental contribution account of such independent political actor. (D) Use of safe harbor and supplemental contribution accounts A method under which the independent political actor— (i) elects make independent Federal election-related expenditures only from amounts allocated to the safe harbor and supplemental contributions account of such independent political actor; and (ii) reports all covered contributions made to the supplemental contribution account of such independent political actor. (E) Alternative allocation plan A method under which the independent political actor elects to make independent Federal election-related expenditures and reports covered contributions under an alternative allocation plan approved by the Commission. An election under this subsection shall apply to a Federal election cycle and shall be irrevocable for such Federal election cycle. (c) Registration number The Commission shall designate a registration number for each independent political actor registered under this subsection. (d) Amendments Any change in information previously submitted in a registration statement of an independent political actor shall be reported not later than 10 days after the date of the change. 354. Reporting by independent political actors (a) Requirement To file (1) In general Every treasurer of an independent political actor shall file a statement with the Commission containing the information described in subsection (b). (2) Timing of reporting (A) In general The statement required to be made under paragraph (1) shall be filed with the Commission at the times such statement would be required to be filed if such person were an authorized political committee of a candidate. (B) Covered contributions (i) In general On and after the date the Commission establishes the instant disclosure system described in section 103(a) of the Follow the Money Act of 2013 , each treasurer of an independent political actor which accepts a covered contribution shall file, not later than the time provided under clause (ii), a statement with the Commission containing the information described in clause (iii). (ii) Timing of reporting The statement required to be made under clause (i) shall be filed with the Commission— (I) in the case of a covered contribution made by check, before the date on which such check has been cashed or deposited into an account of the independent political actor; (II) in the case of a covered contribution made by credit card or debit card, within 48 hours of the receipt of such contribution; and (III) in any other case, within 10 days of the receipt of such contribution. (iii) Contents of statement Each statement required to be filed under this clause shall contain the information required under subsection (b)(2). (b) Contents of statement Each statement required to be filed under this subsection shall contain the following: (1) independent Federal election-related activity expenditures With respect to each independent Federal election-related activity expenditure made by the person— (A) The date and amount of such expenditure. (B) The name and address of the person to whom such expenditure is made. (C) The purpose of the expenditure. (D) Whether such expenditure is in support of, or in opposition to, a candidate, as well as the name and office sought by such candidate. (E) Whether the source of any Federal-related activity expenditures was from— (i) the safe harbor account of the independent political actor, (ii) a supplemental contributions account of the independent political actor, or (iii) another source. (2) Covered contributions (A) In general With respect to each covered contribution, subject to subparagraphs (A), (B), and (C), the date and amount of each covered contribution received by an independent political actor. (i) All receipts method In the case of any independent political actor who has made an election under section 352(b)(2)(A), the identification of each person who made covered contributions to such independent political actor during the Federal election cycle. (ii) Supplemental contributions accounts In the case of an independent political actor who has made an election under section 353(b)(2)(B), the identification of each person who made a covered contribution deposited into any such account during the Federal election cycle. (iii) Alternative allocation plan In the case of an independent political actor who enters into an alternative allocation plan with the Commission under section 353(b)(2)(C), the information required to be reported under such alternative allocation plan. (B) Look through reporting for certain transfers In the case of any covered contribution received by an independent political actor which is a independent Federal election-related activity expenditure of another independent political actor (hereinafter in this subparagraph referred to as the transferor ) which is described in clause (ii) of section 7701(a)(51)(A) of the Internal Revenue Code of 1986, the independent political actor receiving such covered contribution shall attribute the amount of the covered contribution to the transferee and to each person identified in a report of the transferee under this paragraph before the date of such contribution in the proportion that the amount of covered contributions so identified by the transferee in such reports bears to the amount of the covered contribution received by the independent political actor. (c) Confidentiality protections The Commission may prescribe regulations to provide for an exception to the public disclosure of the identity of a person who makes a covered contribution under this section if— (1) the aggregate such contributions made by such person was $5,000 or less; and (2) such person has demonstrated that disclosure of the person’s identity will place the person at a particularized and specific risk of substantial injury to his or her person or business as a consequence of the disclosure. 355. Enforcement For purposes of section 309— (1) a violation of section 354(a) shall be treated as a violation of section 304(a) for purposes of subsection (4)(C) thereof, and (2) the amount required to be paid under any conciliation agreement or civil penalty imposed for a violation of section 304 or section 354 shall be reduced by the amount of any tax imposed and paid under section 4969 of the Internal Revenue Code of 1986. . (c) Coordination with existing requirements (1) Definition of political committee Section 301(4) of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 434(4) ) is amended by adding at the end the following flush sentence: Such term shall not include any person who is an independent political actor, as defined in section 351(1). . (2) Prohibition on transfer of funds from political committees Section 313(b) of such Act ( 2 U.S.C. 439a(b) ) is amended by adding at the end the following new paragraph: (3) Transfers for independent Federal election-related activity expenditures A contribution to a political committee may not be— (A) transferred to a safe harbor account or a supplemental contribution account of an independent political actor (as defined by section 351); or (B) otherwise used for an independent Federal election-related activity expenditure (as defined in section 351). . (3) Termination of duplicate reporting requirements (A) Independent expenditures (i) In general Section 304(c) of such Act ( 2 U.S.C. 434(c) ) is amended by adding at the end the following new paragraph: (4) Termination This subsection shall not apply to expenditures made after December 31, 2014. . (ii) Conforming amendment Section 304((g) of such Act ( 2 U.S.C. 434(g) ) is amended by adding at the end the following new paragraph: (5) Termination This subsection shall not apply to expenditures made after December 31, 2014. . (B) Electioneering communications Section 304(f) of such Act ( 2 U.S.C. 434(f) ) is amended by adding at the end the following new paragraph: (8) Termination Paragraph (1) shall not apply to expenditures made after December 31, 2014. . (d) Effective date The amendments made by this section shall apply to contributions and expenditures made after December 31, 2014. 102. Increase in reporting thresholds for candidate only political committees (a) In general Subparagraphs (A) and (F) of section 304(b)(3) of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 434(b)(3)(A) ) are each amended by striking in excess of $200 and inserting in excess of $1,000 . (b) Political committees Paragraph (3) of section 304(e) of such Act (2 U.S.C. 434(e)) is amended to read as follows: (3) Itemization If a political committee has— (A) receipts to which this subsection applies from any person in excess of $200 for any calendar year, or (B) disbursements to which this subsection applies to any person in excess of $1,000 for any calendar year, the political committee shall separately itemize its reporting for such person in the same manner as required in paragraphs (3)(A), (5), and (6) of subsection (b). . (c) Effective date The amendments made by this section shall apply to contributions and expenditures made after December 31, 2014. 103. Instant disclosure system for contributions (a) In general Not later than January 1, 2015, the Federal Election Commission shall make available an instant disclosure system for use in reporting contributions under section 304 of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 434 ) and covered contributions under section 354 of such Act. Such system shall include a free internet-based system or free software through which participants may report. (b) Use of system by political committees Section 304(a) of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 434 ) is amended by adding at the end the following new paragraph: (13) Reporting of contributions for certain political committees (A) In general On and after the date the Commission establishes the instant disclosure system described in section 103(a) of the Follow the Money Act of 2013 , each treasurer of a political committee which accepts a reportable contribution shall file, not later than the time provided under subparagraph (B), a statement with the Commission containing the information described in subparagraph (C). (B) Timing of reporting The statement required to be made under subparagraph (A) shall be filed with the Commission— (i) in the case of a reportable contribution made by check, before the date on which such check has been cashed or deposited into an account of the independent political actor; (ii) in the case of a reportable contribution made by credit card or debit card, within 48 hours of the receipt of such contribution; and (iii) in any other case, within 10 days of the receipt of such contribution. (C) Contents of statement Each statement required to be filed under this subsection shall contain— (i) the identification of the person who made the contribution, and (ii) the date and amount of each contribution made by such person during the federal election cycle. (D) Reportable contribution For purposes of this paragraph, the term reportable contribution means any contribution which would be required to be reported by the political committee under subparagraphs (A) or (B) of subsection (b)(3) on a report submitted under paragraph (2), (3), or (4) if such report covered activity through the day the statement under subparagraph (A) were filed. . 104. Modification of rules relating to disclaimer statements required for certain communications (a) Applying requirements to all independent Federal election-Related activity expenditures Section 318(a) of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 441d(a) ) is amended by striking or whenever any person makes a disbursement for the purpose of financing communications expressly advocating the election or defeat of a clearly identified candidate, or and inserting whenever an independent political actor makes a independent Federal election-related activity expenditure consisting of a public communication, or whenever any person . (b) Stand by your ad requirements (1) Maintenance of existing requirements for communications by political parties and other political committees Section 318(d)(2) of such Act (2 U.S.C. 441d(d)(2)) is amended— (A) in the heading, by striking others and inserting political committees ; (B) by striking subsection (a) and inserting subsection (a) which is paid for by a political committee (including a political committee of a political party) ; and (C) by striking or other person each place it appears. (2) Special disclaimer requirements for radio and television communications Section 318 of such Act ( 2 U.S.C. 441d ) is amended by adding at the end the following new subsection: (e) Communications by others (1) In general Any communication described in paragraph (3) of subsection (a) which is paid for by an independent political actor and transmitted through radio or television shall include, in addition to the requirements of that paragraph, the following: (A) The name of the independent political actor, conveyed by audio. (B) The registration number of the independent political actor, conveyed by audio. (C) The top 3 funders with respect to the registrant (as described in paragraph (2)), together with the city or residence of each such funder, unless, on the basis of criteria established in regulations promulgated by the Commission, the communication is of such short duration that including the top 3 funders with respect to the registrant would constitute a hardship to the person paying for the communication by requiring a disproportionate amount of the communication’s content to consist of the top 3 funders. (2) Top 3 funders For purposes of paragraph (1), the top 3 funders described in this paragraph are the 3 persons who provided the largest covered contributions to the independent political actor during the Federal election cycle. The Commission shall provide for rules determining the top 3 funders in any case in which 2 or more persons are reported as having provided covered contributions. (3) Manner of statement The information required under paragraph (1) . (3) Application to certain mass mailings Section 318(a)(3) of such Act ( 2 U.S.C. 441d(a)(3) ) is amended to read as follows: (3) if not authorized by a candidate, an authorized political committee of a candidate, or its agents, shall clearly state— (A) the name and permanent street address, telephone number, and, if applicable, the World Wide Web address of the person who paid for the communication; (B) if the communication is a independent Federal election-related activity expenditure made by an independent political actor— (i) the name, registration number, and permanent street address, telephone number, and, if applicable, the World Wide Web address of the independent political actor; (ii) the name of the treasurer of the independent political actor; and (iii) each person who would be included in the top 3 funders which would be submitted with respect to the communication if the communication were transmitted through television, if any (as determined in accordance with subsection (e)(2); and (C) that the communication is not authorized by any candidate or candidate’s committee. . (4) Application to political robocalls Section 318 of such Act (2 U.S.C. 441d), as amended by paragraph (2), is further amended by adding at the end the following new subsection: (f) Special rules for political robocalls (1) Requiring communications to include certain disclaimer statements Any communication consisting of a political robocall which would be subject to the requirements of subsection (e) if the communication were transmitted through radio or television shall include the following: (A) The name and city and state of residence of the independent political actor. (B) The registration number of the independent political actor. (C) A phone number associated with the independent political actor where individuals may call with questions and comments and which is staffed during all hours in which such political robocalls are made and for 1 hour after the last such political robocall was made. (D) The top 3 funders with respect to the registrant (as described in subsection (e)(2)). (2) Timing of certain statement The statements required to be included under paragraph (1) shall be made at the beginning of the political robocall, unless, on the basis of criteria established in regulations promulgated by the Commission, the communication is of such short duration that including the statement in the communication would constitute a hardship to the person paying for the communication by requiring a disproportionate amount of the communication’s content to consist of the statement. (3) Political robocall defined In this subsection, the term political robocall means any outbound telephone call— (A) in which a person is not available to speak with the person answering the call, and the call instead plays a recorded message; and (B) which promotes, supports, attacks, or opposes a candidate for election for Federal office. . (5) Additional authority (A) In general Section 318 of such Act ( 2 U.S.C. 441d ), as amended by paragraph (4), is further amended by adding at the end the following new subsection: (g) Certain requirements determined by the Commission The Commission may by regulation prescribe disclosure requirements in addition to those required by this section for communications paid for through independent Federal election-related activity expenditures, including requirements for communications using new technologies. . (B) Rulemaking Not later than August 1 of each odd numbered year beginning with calendar year 2015, the Federal Election Commission shall issue an advanced notice of proposed rulemaking with respect to regulations under section 318(g) of the Federal Election Campaign Act of 1971. (c) Effective date The amendments made by this section shall apply to communications made after December 31, 2014, and shall take effect without regard to whether or not the Federal Election Commission has promulgated regulations to carry out such amendments. 105. Statements disavowing communications Section 304 of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 434 ), as amended by this Act, is amended by adding at the end the following new subsection: (k) Statements of disavowal (1) In general A candidate or an authorized committee of a candidate may file with the Commission a statement disavowing any public communication which is not made in cooperation, consultation, or concert with such candidate or authorized committee. (2) Publication of statement The Commission shall make such statement publicly available on the Commission's website. . 106. Filing by Senate candidates with commission (a) In general Section 302(g) of the Federal Election Campaign Act of 1971 ( 2 U.S.C. 432(g) ) is amended to read as follows: (g) Filing with the commission All designations, statements, and reports required to be filed under this Act shall be filed with the Commission. . (b) Effective date The amendment made by subsection (a) shall apply to designations, statements, and reports required to be filed after the date that is 2 months after the date of the enactment of this Act. II Regulation of independent Federal election-related activity by tax-exempt entities 201. Excise tax on certain tax-exempt organizations failing to report election-related expenditures (a) In general Chapter 42 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter: H Reporting election-related activity Sec. 4968. Taxes on failure to report certain election-related activity. 4968. Taxes on failure to report certain election-related activity (a) In general (1) On the organization There is hereby imposed on each failure to report described in subsection (b) by a covered tax-exempt organization a tax equal to 10 percent of the unreported amount. The tax imposed by this paragraph shall be paid by the organization. (2) On the responsible person Unless a failure to report described in subsection (b) is not due to negligence or intentional disregard, there is hereby imposed on the responsible individual with respect to the organization to which the failure to report relates, a tax equal to 2 1/2 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the responsible individual. (b) Failures To report described in this subsection A failure to report is described in this subsection if such failure is a failure to report a covered contribution or an independent Federal election-related activity expenditure under section 354 of such Act. For purposes of this section, a failure to accurately report an amount shall be treated as a failure to report such amount to the extent of the difference between the amount required to be reported and the amount so reported. (c) Reduction in amount of tax (1) Taxes on the organization The tax imposed under subsection (a)(1) shall be reduced by any amount paid by such organization in connection with the failure to report described in subsection (b)— (A) under any conciliation agreement with the Federal Election Commission under section 309 of the Federal Election Campaign Act of 1971, or (B) under a civil penalty imposed by the Commission. (2) Taxes on the responsible individual The tax imposed under subsection (a)(2) shall be reduced by any amount paid by such responsible individual in connection with the failure to report described in subsection (b)— (A) under any conciliation agreement with the Federal Election Commission under section 309 of the Federal Election Campaign Act of 1971, or (B) under a civil penalty imposed by the Commission. (d) Other definitions For purposes of this section— (1) Covered tax-exempt organization The term covered tax-exempt organization means any organization which— (A) without regard to any failure described in subsection (b)— (i) would be described in section 501(c) and exempt from taxation under section 501(a), or (ii) is a political organization (as defined in section 527), and (B) is an independent political actor (as defined in section 351(1) of such Act). (2) Responsible individual The term responsible individual means, with respect to any covered tax-exempt organization, the individual designated as a responsible individual under section 352(a) of the Federal Election Campaign Act of 1971. (e) Abatement If it is established to the satisfaction of the Secretary that a failure to report described in subsection (b) was due to reasonable cause and not negligence or intentional disregard, then any tax imposed under subsection (a) with respect to such failure (including interest) shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be credited or refunded as an overpayment. . (b) Conforming amendment The table of subchapters for chapter 42 of such Code is amended by adding at the end the following new item: SUBCHAPTER H—Reporting election-related activity . (c) Effective date The amendments made by this section shall apply to contributions and expenditures made after December 31, 2014. 202. Loss of tax-exempt status for certain organizations failing to register or report election-related expenditures and contributions (a) In general Part I of subchapter F of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 506. Requirement to register and report independent Federal election-related activity expenditures (a) In general (1) Loss of tax-exempt status An organization described in section 501(c) shall not be exempt from taxation under section 501(a), and a political organization described in section 527 shall not be exempt from tax under such section, for any period after the date described in paragraph (2) if such organization is required to register under section 303 or 353 of the Federal Election Campaign Act of 1971 or report under section 304 or 354 of such Act and fails to do so or, in the case of a report under such section 304 or 354, files an inaccurate report. (2) Time of loss of exemption The date described in this paragraph is the date on which the first failure described in paragraph (1) occurred. (b) Exceptions (1) Safe harbor Notwithstanding subsection (a), an organization shall not fail to be treated as exempt from tax under section 501(a) or section 527 if the sums for which there was a failure to report under section 304 or 354 of the Federal Election Campaign Act of 1971 aggregates $25,000 or less. (2) Best efforts An organization shall not fail to be treated as exempt from tax under section 501(a) or section 527 if the Secretary determines that the treasurer or responsible person with respect to such organization (within the meaning of section 352 of the Federal Election Campaign Act of 1971) has made best efforts to comply with the requirements to which the failure relates. In any case in which such failure relates to a failure to report the identification (as defined in section 301 of such Act) of a person, such best efforts shall not be considered to have been made unless the treasurer or responsible person made efforts to contact the person through multiple means of communication and attempted to use publicly available information to establish such identification. (c) Denial of reinstatement Any organization to which subsection (a) applies, and any responsible individual with respect to such organization (as defined in section 4968(d)(2))— (1) shall not be eligible to apply for exemption from taxation under section 501(a), and (2) shall not be treated as a political organization under section 527, before the end of the Federal election cycle (as defined in section 351(2) of the Federal Election Campaign Act of 1971) in which the failure described in subsection (a) occurred. (d) Reasonable cause exception If it is established to the satisfaction of the Secretary that a failure described in subsection (a)(1) was due to reasonable cause and not negligence or intentional disregard, then subsection (a) shall not apply. . (b) Conforming amendments (1) Section 501(a) of such Code is amended by striking or 503 and inserting 503, or 506 . (2) The table of sections for part I of subchapter F of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 506. Requirement to register and report independent Federal election-related activity expenditures. . (c) Effective date The amendments made by this section shall apply to contributions and expenditures made after December 31, 2014. 203. Section 527 political organizations required to file with FEC Section 527(j) of such Code is amended by adding at the end the following new paragraph: (8) Nonapplication to independent political actors (A) In general In the case of a political organization which is an independent political actor (as defined in section 351 of the Federal Election Campaign Act of 1971)— (i) such political organization shall file statements and reports in accordance with section 354 of the Federal Election Campaign Act of 1971, and (ii) this subsection shall not apply with respect to information required to be included on such statements. (B) Cross-reference For failure to meet the requirements of subparagraph (A), see sections 506 and 4968. . 204. Application of whistleblower protections Paragraph (5) of section 7623(b) of the Internal Revenue Code of 1986 is amended by striking any action and inserting any action which relates to a violation of section 506 or to any other action . III Other provisions 301. Joint regulatory authority and advisory opinions (a) Regulations and forms (1) Joint regulations Not later than September 30, 2014, the Secretary of the Treasury, or the Secretary's delegate, and the Federal Election Commission shall prescribe joint regulations with respect to— (A) the definitions of the terms independent Federal election-related activity expenditure and covered contribution , as defined in section 7701(a) of the Internal Revenue Code of 1986 and section 351 of the Federal Election Campaign Act of 1971, as added by this Act, and (B) forms and regulations necessary to carry out the registration and reports required under sections 353 and 354 of the Federal Election Campaign Act of 1971. (2) Treasury regulations In the case that the joint regulations described in paragraph (1) have not been prescribed by September 31, 2014, the Secretary of the Treasury, or the Secretary's delegate, shall prescribe such regulations not later than December 1, 2014, and such regulations shall apply with respect to the administration, application, and enforcement of the Federal Election Campaign Act of 1971. (3) Rule of construction The regulations promulgated under this subsection shall prescribe that the substance of any transaction shall control over the form of the transaction. (b) Advisory opinions (1) In general The Secretary of the Treasury, or the Secretary's delegate, in consultation with the Federal Election Commission, shall issue advisory opinions on requests relating to the matters described under subsection (a)(1). (2) User fees The Secretary of the Treasury is authorized to impose user fees to cover the costs of any advisory opinions requested under paragraph (1), and the Secretary is authorized to transfer to the Federal Election Commission, and the Commission is authorized to accept, the portion of such fees which is determined to be related to costs incurred by the Commission in connection with an advisory opinion. (3) Sense of Congress It is the sense of Congress that advisory opinions under this section shall be furnished within 30 days of the request unless public interest requires otherwise. 302. Denial of business expense deductions for certain businesses failing to report donations and independent Federal election-related activity expenditures (a) Denial of deduction for election-Related activity expenditures (1) In general Paragraph (1) of section 162(e) of the Internal Revenue Code of 1986 is amended to read as follows: (1) In general No deduction shall be allowed under subsection (a) for— (A) any independent Federal election-related activity expenditure (as defined in section 7701(a)(51)), or (B) any amount paid or incurred in connection with— (i) influencing legislation, (ii) participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office, (iii) any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referendums, or (iv) any direct communication with a covered executive branch official in an attempt to influence the official actions or positions of such official. . (2) Conforming amendments (A) Section 162(e)(2)(A) of such Code is amended by striking paragraph (1)(A) and inserting paragraph (1)(B)(i) . (B) Section 162(e)(5)(B) of such Code is amended by striking paragraph (1)(A) and (D) each place it appears and inserting paragraph (1)(B)(i) and (iv) . (C) Section 6033(e)(1)(B)(ii) of such Code is amended by striking subparagraphs (A) and (D) of section 162(e)(1) and inserting clauses (i) and (iv) of section 162(e)(1)(B) . (b) Exception to allowance of deduction for amounts expended on behalf of another person Subparagraph (A) of section 162(e)(5) of the Internal Revenue Code of 1986 is amended— (1) by striking In the case of and inserting the following: (i) In general Except as provided in clause (ii), in the case of , and (2) by adding at the end the following new clauses: (ii) Exception not to apply with respect to certain organizations failing to file reports Clause (i) shall not apply to any activity described in paragraph (1) which is a independent Federal election-related activity expenditure (as defined in section 7701(a)(51)) unless the taxpayer has complied with the requirements of sections 303, 304, 353 and 354 of the Federal Election Campaign Act of 1971. . (c) Penalty for improperly claiming deduction (1) In general Section 6662(b) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (7) the following new paragraph: (8) Any improper independent Federal election-related activity expenditure deduction. . (2) Improper election-related activity expenditure deduction Section 6662 of such Code is amended by adding at the end the following new subsection: (k) Improper independent Federal election-related activity expenditure deduction For purposes of this subsection, the term improper independent Federal election-related activity expenditure deduction means, for any taxable year, any portion of an understatement for such taxable year which is attributable to any independent Federal election-related activity expenditure (as defined in section 7701(a)(51)) improperly claimed as a deduction under section 162. . (d) Certification of compliance on tax return (1) In general The Secretary of the Treasury, or the Secretary's delegate, shall revise appropriate tax forms to provide that the chief executive officer (or the equivalent) of any person claiming a trade or business expense as a deduction under section 162 of the Internal Revenue Code of 1986 on an income tax return provide an answer to the following questions on such return: (1) Has the taxpayer made a independent Federal election-related activity expenditure (as defined in section 7701(a)(51) of the Internal Revenue Code of 1986) during the period covered by the tax return? (2) Has the taxpayer claimed a deduction for any independent Federal election-related activity expenditure (as so defined) on the tax return? . (2) Penalty Section 7207 of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: Any person required to provide an answer with respect to election-related activity expenditures pursuant to section 303(d)(1) of the Follow the Money Act of 2013 who willfully provides a false or fraudulent answer with respect to such expenditures shall be fined not more than $1,000,0000, or imprisoned not more than 10 years, or both. . (e) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2014. (2) Certification and penalty The amendments made by subsection (d) shall apply to returns required to be filed after December 31, 2014. 303. Prohibition on discrimination against donors Chapter 43 of title 18, United States Code, is amended by adding at the end the following new section: 1925. Prohibition on discrimination against donors in connection with Federal elections Whoever, being an officer or employee of the United States or of any department or agency thereof, discriminates against any person on the basis of any information reported under section 304 or 354 of the Federal Election Campaign Act of 1971 shall be fined under this title 18, or imprisoned not more than one year, or both; and shall be removed from office or employment. . 304. Severability If any provision of this Act or any amendment made by this Act, or the application of a provision to any person or circumstance, is held to be unconstitutional, the remainder of this Act and the amendments made by this Act, and the application of the provisions to any person or circumstance, shall not be affected by the holding.