[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 277 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 277

    To amend the Internal Revenue Code of 1986 to permit tax-exempt 
          organizations to participate in political campaigns.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 30, 2001

Mr. Jones of North Carolina (for himself and Mr. Hostettler) 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 permit tax-exempt 
          organizations to participate in political campaigns.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TAX-EXEMPT ORGANIZATIONS PERMITTED TO ENGAGE IN POLITICAL 
              CAMPAIGNS, ETC.

    (a) In General.--Paragraph (3) of section 501(c) of the Internal 
Revenue Code of 1986 is amended by striking ``which does not 
participate in, or intervene in'' and all that follows and inserting 
``no substantial part of the activities of which is participating in, 
or intervening in (including the publishing or distributing of 
statements), any political campaign on behalf of (or in opposition to) 
any candidate for public office (except as otherwise provided in 
subsection (h)).''.
    (b) Expansion of Election Under Section 501(h).--
            (1) In general.--So much of subsection (h) of section 501 
        of such Code as precedes paragraph (2) is amended to read as 
        follows:
    ``(h) Expenditures by Public Charities To Influence Legislation or 
for Political Campaigns.--
            ``(1) General rules.--
                    ``(A) Expenditures to influence legislation.--In 
                the case of an organization to which this subsection 
                applies, exemption from taxation under subsection (a) 
                shall be denied because a substantial part of the 
                activities of such organization consists of carrying on 
                propaganda, or otherwise attempting, to influence 
                legislation, but only if such organization normally--
                            ``(i) makes lobbying expenditures in excess 
                        of the lobbying ceiling amount for such 
                        organization for each taxable year, or
                            ``(ii) makes grass roots expenditures in 
                        excess of the grass roots ceiling amount for 
                        such organization for each taxable year.
                    ``(B) Expenditures for political campaigns.--In the 
                case of an organization to which this subsection 
                applies, exemption from taxation under subsection (a) 
                shall be denied because a substantial part of the 
                activities of such organization consists of 
                participating in, or intervening in (including the 
                publishing or distributing of statements), any 
                political campaign on behalf of (or in opposition to) 
                any candidate for public office, but only if such 
                organization normally makes political expenditures (as 
                defined in section 4911(e)) in excess of the political 
                campaign ceiling amount for such organization for each 
                taxable year.''
            (2) Political campaign ceiling amount.--Paragraph (2) of 
        section 501(h) of such Code is amended by adding at the end the 
        following new subparagraphs:
                    ``(E) Political campaign ceiling amount.--The 
                political campaign ceiling amount for any organization 
                is 150 percent of the political campaign nontaxable 
                amount, determined under section 4911(e).''
            (3) Conforming amendment.--Paragraph (7) of section 501(h) 
        of such Code is amended by striking ``the interpretation'' and 
        all that follows and inserting ``the interpretation under 
        subsection (c)(3) of the material following `private 
        shareholder or individual'.''
    (c) Comparable Test for Charitable Contribution Deduction.--
Subparagraph (D) of section 170(c)(2) of such Code is amended by 
striking ``and which does not participate in, or intervene in'' and 
inserting ``or by reason of participating in, or intervening in''.
    (d) Revision of Excise Taxes.--
            (1) So much of chapter 41 of such Code as precedes 
        subsection (c) of section 4911 is amended to read as follows:

                     ``CHAPTER 41--PUBLIC CHARITIES

                              ``Sec. 4911. Tax on excess lobbying and 
                                        political expenditures.
                              ``Sec. 4912. Tax on disqualifying 
                                        lobbying and political 
                                        expenditures of certain 
                                        organizations.

``SEC. 4911. TAX ON EXCESS LOBBYING AND POLITICAL EXPENDITURES.

    ``(a) Tax Imposed.--
            ``(1) In general.--There is hereby imposed on the excess 
        lobbying and political expenditures of any organization to 
        which this section applies a tax equal to 25 percent of the 
        amount of the excess lobbying and political expenditures for 
        the taxable year.
            ``(2) Organizations to which this section applies.--This 
        section applies to any organization with respect to which an 
        election under section 501(h) (relating to lobbying and 
        political expenditures by public charities) is in effect for 
        the taxable year.
    ``(b) Excess Lobbying and Political Expenditures.--For purposes of 
this section, the term `excess lobbying and political expenditures' 
means, for a taxable year, the sum of--
            ``(1) the greater of--
                    ``(A) the amount by which the lobbying expenditures 
                made by the organization during the taxable year exceed 
                the lobbying nontaxable amount for such organization 
                for such taxable year, or
                    ``(B) the amount by which the grass roots 
                expenditures made by the organization during the 
                taxable year exceed the grass roots nontaxable amount 
                for such organization for such taxable year, plus
            ``(2) the amount by which the political expenditures made 
        by the organization during the taxable year exceed the 
        political campaign nontaxable amount for such organization for 
        such taxable year.''
            (2) Section 4911 of such Code is amended by redesignating 
        subsections (e) and (f) as subsections (f) and (g) and by 
        inserting after subsection (d) the following new subsection:
    ``(e) Definitions Relating to Political Expenditures.--For purposes 
of this section--
            ``(1) Political expenditures.--
                    ``(A) In general.--The term `political expenditure' 
                means any amount paid or incurred by a section 
                501(c)(3) organization in any participation in, or 
                intervention in (including the publication or 
                distribution of statements), any political campaign on 
                behalf of (or in opposition to) any candidate for 
                public office.
                    ``(B) Certain other expenditures included.--In the 
                case of an organization which is formed primarily for 
                purposes of promoting the candidacy (or prospective 
                candidacy) of an individual for public office (or which 
                is effectively controlled by a candidate or prospective 
                candidate and which is availed of primarily for such 
                purposes), the term `political expenditure' includes 
                any of the following amounts paid or incurred by the 
                organization:
                            ``(i) Amounts paid or incurred to such 
                        individual for speeches or other services.
                            ``(ii) Travel expenses of such individual.
                            ``(iii) Expenses of conducting polls, 
                        surveys, or other studies, or preparing papers 
                        or other materials, for use by such individual.
                            ``(iv) Expenses of advertising, publicity, 
                        and fundraising for such individual.
                            ``(v) Any other expense which has the 
                        primary effect of promoting public recognition, 
                        or otherwise primarily accruing to the benefit, 
                        of such individual.
            ``(2) Political campaign nontaxable amount.--
                    ``(A) In general.--The lobbying nontaxable amount 
                for any organization for any taxable year is the lesser 
                of (i) $1,000,000 or (ii) the amount determined under 
                the following table:

``If the exempt purpose 
        expenditures are--

                                    The lobbying nontaxable amount is--

    Not over $500,000..............

                                        20 percent of the exempt 
                                                purpose expenditures.

    Over $500,000 but not over 
        $1,000,000.

                                        $100,000 plus 15 percent of the 
                                                excess of the exempt 
                                                purpose expenditures 
                                                over $500,000.

    Over $1,000,000 but not over 
        $1,500,000.

                                        $175,000 plus 10 percent of the 
                                                excess of the exempt 
                                                purpose expenditures 
                                                over $1,000,000.

    Over $1,500,000................
                                        $225,000 plus 5 percent of the 
                                                excess of the exempt 
                                                purpose expenditures 
                                                over $1,500,000.
                    ``(B) Exempt purpose expenditures.--
                            ``(i) In general.--The term `exempt purpose 
                        expenditures' means, with respect to any 
                        organization for any taxable year, the total of 
                        the amounts paid or incurred by such 
                        organization to accomplish purposes described 
                        in section 170(c)(2)(B) (relating to religious, 
                        charitable, educational, etc., purposes).
                            ``(ii) Certain amounts included.--The term 
                        `exempt purpose expenditures' includes--
                                    ``(I) administrative expenses paid 
                                or incurred for purposes described in 
                                section 170(c)(2)(B), and
                                    ``(II) political expenditures paid 
                                or incurred (whether or not for 
                                purposes described in section 
                                170(c)(2)(B)).
                            ``(iii) Certain amounts excluded.--The term 
                        `exempt purpose expenditures' does not include 
                        amounts paid or incurred to or for--
                                    ``(I) a separate fundraising unit 
                                of such organization, or
                                    ``(II) one or more other 
                                organizations, if such amounts are paid 
                                or incurred primarily for 
                                fundraising.''
            (3) Subsection (g) of section 4911 of such Code, as 
        redesignated by paragraph (2), is amended by striking ``excess 
        lobbying expenditures'' each place it appears and inserting 
        ``excess lobbying and political expenditures''.
            (4)(A) Section 4912 of such Code is amended--
                    (i) in the heading by striking ``lobbying 
                expenditures'' and inserting ``lobbying and political 
                expenditures'', and
                    (ii) in the text by striking ``lobbying 
                expenditures'' and inserting ``lobbying and political 
                expenditures''.
            (B) Paragraph (2) of section 4912(d) of such Code is 
        amended to read as follows:
            ``(2) Organization manager.--The term `organization 
        manager' means--
                    ``(A) any officer, director, or trustee of the 
                organization (or individual having powers or 
                responsibilities similar to those of officers, 
                directors, or trustees of the organization), and
                    ``(B) with respect to any expenditure, any employee 
                of the organization having authority or responsibility 
                with respect to such expenditure.''
    (e) Other Conforming Amendments.--
            (1) Subchapter C of chapter 42 of such Code is hereby 
        repealed.
            (2) Section 4962 of such Code is amended by striking 
        subsection (c).
            (3) Sections 4963 and 7422(g) of such Code are each amended 
        by striking ``4955,'' each place it appears.
            (4) Paragraph (10) of section 6033(b) of such Code is 
        amended by adding ``and'' at the end of subparagraph (A), by 
        striking ``and'' at the end of subparagraph (B), and by 
        striking subparagraph (C).
            (5) Section 6213(e) of such Code is amended by striking 
        ``4955 (relating to taxes on political expenditures),''.
            (6) The table of subchapters for chapter 42 of such Code is 
        amended by striking the item relating to subchapter C.
            (7) Section 6852 (relating to termination assessments in 
        case of flagrant political expenditures of section 501(c)(3) 
        organizations) is hereby repealed.
            (8) Clause (v) of section 6091(b)(1)(B) of such Code is 
        amended by striking ``or 6852(a)''.
            (9) Sections 6211(b)(1) and 6212(c)(1) of such Code are 
        each amended by striking ``or 6852''.
            (10) Sections 6213(a), 6234(e)(3), 6863, and 7429(g) of 
        such Code are each amended by striking ``, 6852,'' each place 
        it appears.
            (11) Section 7429(a)(1)(A) of such Code is amended by 
        striking ``6852(a),''.
            (12) Paragraph (3) of section 7611(i) of such Code is 
        amended by striking ``, section 6852 (relating to termination 
        assessments in case of flagrant political expenditures of 
        section 501(c)(3) organizations),''.
            (13) The table of sections for part I of subchapter A of 
        chapter 70 of such Code is amended by striking the item 
        relating to section 6852.
            (14) Subchapter A of chapter 76 of such Code is amended by 
        striking section 7409 and by redesignating section 7410 as 
        section 7409.
            (15) The table of sections for such subchapter A is amended 
        by striking the last 2 items and inserting the following new 
        item:

                              ``Sec. 7409. Cross references.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to expenditures made after the date of the enactment of this Act.
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