[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4717 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 4717

To amend the Internal Revenue Code of 1986 to require 527 organizations 
and certain other tax-exempt organizations to disclose their political 
                              activities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 22, 2000

 Mr. Houghton (for himself, Mr. English, Mrs. Johnson of Connecticut, 
 Mr. Castle, Mr. McInnis, Mr. Cox, Mr. Ramstad, Mr. Smith of Michigan, 
    Mr. Shaw, Mr. Ose, Mr. Frelinghuysen, and Mr. Walden of Oregon) 
 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 require 527 organizations 
and certain other tax-exempt organizations to disclose their political 
                              activities.

    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 ``Full and Fair Political Activity 
Disclosure Act of 2000''.

SEC. 2. INCREASED REPORTING OF POLITICAL ACTIVITIES.

    (a) In General.--Subpart A of part III of subchapter A of chapter 
61 of the Internal Revenue Code of 1986 (relating to information 
concerning persons subject to special provisions) is amended by 
inserting after section 6033 the following new section:

``SEC. 6033A. RETURNS RELATING TO POLITICAL ACTIVITIES.

    ``(a) General Reporting Requirements.--
            ``(1) In general.--Every organization to which this 
        subsection applies for a reporting period shall submit a return 
        to the Secretary for such period. Such return shall include--
                    ``(A) a detailed description of such organization's 
                disclosable activities during the reporting period and 
                the purpose and intended results for the major 
                categories of expenditures for such activities, 
                including the candidates intended to be affected,
                    ``(B) a list identifying--
                            ``(i) each expenditure made for a 
                        disclosable activity during the reporting 
                        period in an amount in excess of the threshold 
                        amount, and
                            ``(ii) the name and address of each person 
                        to whom the organization made any expenditure 
                        required to be reported under clause (i), and
                    ``(C) in the case of a reportable contributor--
                            ``(i) the name and address of the 
                        contributor (and, if the contributor is an 
                        individual, the contributor's occupation and 
                        employer),
                            ``(ii) the amount of each contribution made 
                        by such contributor,
                            ``(iii) the name and address of the person 
                        (if any) on whose behalf the contributor made 
                        any payment to such organization, and
                            ``(iv) if any payment by the contributor 
                        was designated for a beneficiary other than 
                        such organization (including amounts which are 
                        in any way earmarked or otherwise directed 
                        through an intermediary), the name and address 
                        of the intended beneficiary.
        The information required under the preceding sentence for any 
        reporting period shall be set forth separately for such period 
        and in the aggregate for such period and preceding reporting 
        periods during the calendar year.
            ``(2) Organizations to which subsection applies.--This 
        subsection shall apply to an organization if such 
        organization--
                    ``(A) is described in paragraph (4), (5), or (6) of 
                section 501(c), or
                    ``(B) is a 527 organization.
            ``(3) Exception for non-527 organizations having aggregate 
        disclosable expenditures of less than $10,000.--This subsection 
        shall not apply to an organization described in paragraph 
        (2)(A) for any reporting period if the aggregate expenditures 
        of the organization for disclosable activities during the 
        period beginning on January 1 of the calendar year in which the 
        reporting period begins and ending on the last day of the 
        reporting period are less than $10,000.
            ``(4) Reportable contributor.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `reportable contributor' means any person if 
                the aggregate of the contributions and membership dues, 
                fees, and assessments (within the meaning of section 
                527) received by the organization from such person 
                during the testing period exceeds the threshold amount.
                    ``(B) Exception for dues not attributable to 
                disclosable activities.--
                            ``(i) In general.--At the election of the 
                        organization, the only dues taken into account 
                        under subparagraph (A) shall be dues 
                        attributable to expenditures for disclosable 
                        activities.
                            ``(ii) Portion of dues attributable to 
                        disclosable activities.--For purposes of clause 
                        (i), the portion of dues attributable to 
                        expenditures for disclosable activities of an 
                        organization is the amount which bears the same 
                        ratio to the total amount of dues as the 
                        expenditures of the organization which are 
                        disclosable under paragraph (1) for the testing 
                        period bears to the total expenditures of the 
                        organization for such period.
                    ``(C) Testing period.--For purposes of this 
                paragraph, the term `testing period' means, with 
                respect to any reporting period, the period--
                            ``(i) beginning on January 1 of the 
                        calendar year in which the reporting period 
                        begins, and
                            ``(ii) ending on the last day of the 
                        reporting period.
            ``(5) Special rule for earmarked contributions deposited 
        into a separate, segregated fund.--
                    ``(A) In general.--In the case of an organization 
                described in paragraph (4), (5), or (6) of section 
                501(c), paragraph (1)(C) shall apply only with respect 
                to amounts received which are earmarked for a 
                disclosable activity if the organization elects--
                            ``(i) to maintain a separate, segregated 
                        fund,
                            ``(ii) to deposit into such fund only and 
                        all amounts received by such organization which 
                        are earmarked by the contributor for a 
                        disclosable activity, and
                            ``(iii) to make no expenditures for 
                        disclosable activities other than from such 
                        fund.
                Such a fund shall not be treated as a 527 organization 
                for purposes of this section.
                    ``(B) Noncompliance.--In the case of an 
                organization with respect to which an election is in 
                effect under subparagraph (A) and which fails to comply 
                with a requirement in subparagraph (A) during any 
                reporting period, subparagraph (A) shall not apply to 
                such period or any subsequent reporting period during 
                the calendar year in which such period begins.
                    ``(C) De minimis expenditures.--Failures to meet 
                the requirement of subparagraph (A)(iii) with respect 
                to de minimis amounts shall not be treated as a failure 
                to comply with such requirement.
            ``(6) Threshold amount.--For purposes of this section, the 
        term `threshold amount' means--
                    ``(A) $200 in the case of a 527 organization, and
                    ``(B) $1,000 in any other case.
    ``(b) Disclosable Activities.--For purposes of this section--
            ``(1) In general.--For purposes of this section, the term 
        `disclosable activities' means--
                    ``(A) a 527-type activity,
                    ``(B) establishing, administering, or soliciting 
                contributions to a 527 organization,
                    ``(C) contributing to an organization which is 
                described in paragraph (4), (5), or (6) of section 
                501(c) or which is a 527 organization, and
                    ``(D) any mass media communication (including any 
                mass mailing) which is not a 527-type activity and 
                which--
                            ``(i) mentions an individual holding 
                        Federal office or a clearly identified 
                        candidate for election for Federal office 
                        (including any individual who has formed an 
                        exploratory committee for such election) or the 
                        political party of such an individual or 
                        candidate, or
                            ``(ii) contains the likeness of such an 
                        individual or candidate.
            ``(2) Exception for communication with members.--
        Subparagraph (D) of paragraph (1) shall not apply to 
        communication with bona fide members of the organization.
    ``(c) Additional Information From 527 Organizations.--
            ``(1) Statement of organization.--
                    ``(A) In general.--Every 527 organization shall 
                file a statement of organization with the Secretary (in 
                such form and manner as the Secretary shall prescribe) 
                which contains the information described in 
                subparagraph (B). Such statement shall be filed not 
                later than 10 days after the date that such 
                organization is established (or, in the case of an 
                organization in existence on the date of the enactment 
                of this section, not later than 10 days after such date 
                of enactment).
                    ``(B) Statement of organization.--The information 
                described in this subparagraph is--
                            ``(i) the name and address of the 527 
                        organization,
                            ``(ii) the name, address, relationship, and 
                        type of any person which is directly or 
                        indirectly related to or affiliated with such 
                        527 organization,
                            ``(iii) the name, address, and position of 
                        the custodian of books and accounts of the 527 
                        organization,
                            ``(iv) the name and address of the 
                        treasurer of the 527 organization, and
                            ``(v) a listing of all banks, safety 
                        deposit boxes, and other depositories used by 
                        the 527 organization.
                    ``(C) Changes in information.--If there is a change 
                in circumstances such that the most recent statement 
                filed under this paragraph is no longer accurate, the 
                527 organization shall file a corrected statement with 
                the Secretary (in such manner as the Secretary shall 
                prescribe) not later than 10 days after the date that 
                the statement first ceased to be accurate.
                    ``(D) Related and affiliated persons.--For purposes 
                of subparagraph (B)(ii), a person is directly or 
                indirectly related to or affiliated with a 527 
                organization if such person, at any time during the 3-
                year period ending on the date such statement is 
                submitted to the Secretary--
                            ``(i) was in a position to exercise 
                        substantial direct or indirect influence over 
                        the process of collecting or disbursing the 
                        exempt purpose funds of such organization, or
                            ``(ii) was in a position to exercise 
                        substantial, overall direct or indirect 
                        influence over the activities of such 
                        organization.
            ``(2) Other information.--
                    ``(A) In general.--In addition to the information 
                required by subsection (a), every 527 organization 
                shall include the information described in subparagraph 
                (B) on the return required under subsection (a).
                    ``(B) Information described.--The information 
                described in this subparagraph is--
                            ``(i) a certification, under penalty of 
                        perjury, whether such expenditure is made in 
                        cooperation, consultation, or concert with, or 
                        at the request or suggestion of, any candidate 
                        for public office or any authorized committee 
                        of such candidate or agent of such committee or 
                        candidate,
                            ``(ii) the name, address, and business 
                        purpose of any entity, as well as whether the 
                        entity purports to be exempt from tax under 
                        this title and (if so) the provision under 
                        which the entity purports to be so exempt, 
                        which made (in the aggregate for the reporting 
                        period) a contribution in excess of the 
                        threshold amount to the 527 organization, and
                            ``(iii) the original source and the 
                        intended ultimate recipient of all 
                        contributions made by a person, either directly 
                        or indirectly, on behalf of any particular 
                        person, including contributions which are in 
                        any way earmarked or otherwise directed through 
                        any intermediary.
    ``(d) Reporting Periods and Due Dates for Returns and Statements.--
For purposes of this section--
            ``(1) Organizations other than 527 organizations.--In the 
        case of an organization described in paragraph (4), (5), or (6) 
        of section 501(c)--
                    ``(A) In general.--The term `reporting period' 
                means--
                            ``(i) a calendar quarter, and
                            ``(ii) a calendar year.
                    ``(B) Due date.--
                            ``(i) Quarterly return.--The due date for 
                        each return required by this section for a 
                        calendar quarter shall be the 15th day after 
                        the end of the quarter.
                            ``(ii) Annual return.--The due date for the 
                        return required by this section for a calendar 
                        year shall be the date prescribed by the 
                        Secretary.
            ``(2) 527 organizations.--In the case of a 527 
        organization--
                    ``(A) In general.--The reporting periods and 
                deadlines for filing returns and statements required by 
                this section shall be the same as the periods and 
                deadlines set forth for reports under paragraph (4) of 
                section 304(a) of Federal Election Campaign Act of 1971 
                (2 U.S.C. 434(a)). The Secretary shall issue such 
                guidance as may be necessary concerning the filing 
                deadlines for such returns and statements.
                    ``(B) Certain organizations file annually.--In the 
                case of a 527 organization described in subparagraph 
                (C)--
                            ``(i) subparagraph (A) shall not apply,
                            ``(ii) the reporting period shall be such 
                        organization's taxable year, and
                            ``(iii) the due date for the returns and 
                        statements required by this section shall be 
                        the due date (without regard to extensions) for 
                        filing the return of tax for such year, whether 
                        or not such organization is required to file a 
                        return for such taxable year.
                    ``(C) Organization described.--An organization is 
                described in this subparagraph if such organization is 
                a 527 organization which is organized and operated 
                exclusively for the purpose of securing the nomination, 
                election, or appointment of a clearly identified 
                candidate for State, local, or judicial office.
    ``(e) Definitions.--For purposes of this section--
            ``(1) 527 organization.--The term `527 organization' means 
        any political organization (as defined by section 527(e)(1)).
            ``(2) 527-type activity.--The term `527-type activity' 
        means an exempt function (as defined in section 527(e)(2)).
            ``(3) Contributions.--The term `contributions' has the 
        meaning given to such term by section 271(b)(2).
            ``(4) Expenditures.--The term `expenditures' has the 
        meaning given to such term by section 271(b)(3).
    ``(f) Special Rules.--
            ``(1) Electronic filing.--The Secretary shall develop 
        procedures for submission in electronic form of returns and 
        statements required to be filed under this section.
            ``(2) Paperwork and burden reduction for organizations 
        otherwise disclosing information.--An organization shall not be 
        required to file any return or statement under subsection (a) 
        or (c) for any period if, with respect to such period, such 
        organization submits to the Secretary, under penalty of 
        perjury, a certified statement that the organization has made a 
        filing, which is publicly available, with another Federal 
        agency which includes all of the information required by 
        subsection (a) or (c), as the case may be, and which specifies 
        the public location where such information may be found.''.
    (b) Public Inspection of Returns and Statements.--
            (1) In general.--Section 6104 of such Code (relating to 
        publicity of information required from certain exempt 
        organizations and certain trusts) is amended by adding at the 
        end the following new subsection:
    ``(e) Inspection of Documents Relating to Political Activities of 
Certain 501(c) Organizations and 527 Organizations .--
            ``(1) In general.--In the case of any organization required 
        to submit a document under section 6033A--
                    ``(A) a copy of such document shall be made 
                available by such organization for inspection during 
                regular business hours by any individual at the 
                principal office of such organization and, if such 
                organization regularly maintains 1 or more regional or 
                district offices having 3 or more employees, at each 
                such regional or district office, and
                    ``(B) upon request of an individual made at such 
                principal office or such a regional or district office, 
                a copy of such document shall be provided to such 
                individual without charge other than a reasonable fee 
                for any reproduction and mailing costs.
        The request described in subparagraph (B) must be made in 
        person or in writing. If such request is made in person, such 
        copy shall be provided immediately and, if made in writing, 
        shall be provided within 30 days.
            ``(2) Annual income tax returns of 527 organizations.--In 
        the case of an organization required to file a return under 
        section 6012(a)(6), the requirements of paragraph (1) shall 
        also apply to such return.
            ``(3) Timely availability.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), documents required to be available 
                under this subsection shall be available no later than 
                2 business days after being filed.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to--
                            ``(i) any document filed under section 
                        6033A with respect to an annual period, and
                            ``(ii) any return filed under section 
                        6012(a)(6).
            ``(4) 3-year limitation on inspection documents.--
        Paragraphs (1) and (2) shall apply to any document only during 
        the 3-year period beginning on the last day prescribed for its 
        filing (determined with regard to any extension of time for 
        filing).
            ``(5) Limitation on providing copies.--A rule similar to 
        the rule of subsection (d)(4) shall apply for purposes of this 
        subsection.''.
            (2) Inspection of information returns and income tax 
        returns of political organizations.--Subsection (b) of section 
        6104 of such Code (relating to inspection of annual information 
        returns) is amended to read as follows:
    ``(b) Inspection of Information Returns and Income Tax Returns of 
Political Organizations.--
            ``(1) In general.--The information required to be furnished 
        by sections 6033, 6033A, 6034, and 6058 (together with the 
        names and addresses of such organizations and trusts) and 
        returns filed under section 6012(a)(6) shall be made available 
        to the public at such times and in such places as the Secretary 
        may prescribe.
            ``(2) Exceptions.--
                    ``(A) Nondisclosure of names and addresses of 
                contributors.--
                            ``(i) In general.--Nothing in this 
                        subsection shall authorize the Secretary to 
                        disclose the name or address of any contributor 
                        to any organization or trust which is required 
                        to furnish such information.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to a private foundation (as defined in 
                        section 509(a)), a 527 organization (as defined 
                        in section 6033A(d)), or information on a 
                        return under section 6033A(a) of an 
                        organization described in paragraph (4), (5) or 
                        (6) of section 501(c).
                    ``(B) Religious and apostolic organizations.--In 
                the case of an organization described in section 
                501(d), this subsection shall not apply to copies 
                referred to in section 6031(b) with respect to such 
                organization.
            ``(3) Special rules for information under section 6033A.--
                    ``(A) Timely availability.--Documents filed under 
                section 6033A (other than with respect to an annual 
                period) shall be available under paragraph (1) no later 
                than 2 business days after being filed.
                    ``(B) Availability on world wide web.--To the 
                extent practicable, documents filed under section 6033A 
                shall also be made available to the public on the world 
                wide web.
            ``(4) Cooperation with other federal agencies.--The 
        Secretary may cooperate with another Federal agency to carry 
        out the requirements of this subsection with respect to returns 
        and statements required to be filed under section 6033A.''.
    (c) Penalties for Failure To File Documents or Provide Public 
Inspection of Documents.--
            (1) Penalty for failure to report disclosable activities.--
        Subsection (c) of section 6652 of such Code is amended by 
        redesignating paragraphs (2), (3), and (4) as paragraphs (3), 
        (4), and (5), respectively, and by inserting after paragraph 
        (1) the following new paragraph:
            ``(2) Information under section 6033a.--
                    ``(A) In general.--In the case of--
                            ``(i) a failure to file a document required 
                        under section 6033A (relating to returns 
                        relating to political activities) at the time 
                        and in the manner prescribed therefor 
                        (determined without regard to any extension of 
                        time for filing), or
                            ``(ii) a failure to include any of the 
                        information required to be shown on such a 
                        return or statement or to show the correct 
                        information,
                there shall be paid by the organization an amount equal 
                to the highest rate of tax specified in section 11(b) 
                multiplied by the amount to which the failure relates.
                    ``(B) Public inspection.--In the case of a failure 
                to comply with the requirements of section 6104(e) at 
                the time and in the manner prescribed therefor 
                (determined without regard to any extension of time for 
                filing), there shall be paid by the person failing to 
meet such requirements $20 for each day during which such failure 
continues. The maximum penalty imposed under this subparagraph on all 
persons for failures with respect to any 1 statement shall not exceed 
$10,000.
                    ``(C) Additional penalty on managers of 527 
                organizations.--
                            ``(i) In general.--The Secretary may make a 
                        written demand on any 527 organization subject 
                        to penalty under subparagraph (A) specifying 
                        therein a reasonable future date by which the 
                        return or statement shall be filed (or the 
                        information furnished) for purposes of this 
                        subparagraph.
                            ``(ii) Failure to comply with demand.--If 
                        any person fails to comply with any demand 
                        under clause (i) on or before the date 
                        specified in such demand, there shall be paid 
                        by the person failing to so comply $10 for each 
                        day after the expiration of the time specified 
                        in such demand during which such failure 
                        continues. The maximum penalty imposed under 
                        this subparagraph on all persons for failures 
                        with respect to any 1 statement shall not 
                        exceed $5,000.''.
            (2) Other penalties.--
                    (A) Section 6685 of such Code (relating to 
                assessable penalty with respect to public inspection 
                requirements for certain tax-exempt organizations) is 
                amended--
                            (i) by striking ``subsection (d)'' and 
                        inserting ``subsection (d) or (e)'', and
                            (ii) by striking ``return or application'' 
                        each place it appears and inserting ``return, 
                        application, or statement''.
                    (B) Section 7207 of such Code (relating to 
                fraudulent returns, statements, and other documents) is 
                amended by striking ``subsection (d)'' and inserting 
                ``subsection (d) or (e)''.
    (d) Conforming Amendments.--
            (1) Section 527 of such Code is amended by adding at the 
        end the following new subsection:
    ``(i) Cross References.--

                                ``(1) For reporting and inspection 
requirements, see sections 6033A and 6104.
                                ``(2) For penalties for failure to file 
returns and statements, see sections 6652, 6685, and 7207.''.
            (2) The table of sections for subpart A of part III of 
        subchapter A of chapter 61 of such Code is amended by inserting 
        after the item relating to section 6033 the following new item:

                              ``Sec. 6033A. Returns relating to 
                                        political activities.''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to----
                    (A) expenditures made and contributions received in 
                reporting periods beginning after the date of the 
                enactment of this Act, and
                    (B) expenditures made and contributions received in 
                annual reporting periods ending after the date of the 
                enactment of this Act, except that only expenditures 
                and contributions described in subparagraph (A) shall 
                be taken into account.
            (2) Statement of organization.--Paragraph (1) of section 
        6033A(c) of the Internal Revenue Code of 1986 (as added by this 
        section) shall take effect on the date of the enactment of this 
        Act.
                                 <all>