[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3993 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3993

To amend section 527 of the Internal Revenue Code of 1986 to eliminate 
    reporting and return requirements for State and local candidate 
    committees and to avoid duplicate reporting of campaign-related 
                              information.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 19, 2002

Mr. Brady of Texas introduced the following bill; which was referred to 
                    the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend section 527 of the Internal Revenue Code of 1986 to eliminate 
    reporting and return requirements for State and local candidate 
    committees and to avoid duplicate reporting of campaign-related 
                              information.

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

SECTION 1. MODIFICATIONS OF REPORTING REQUIREMENTS FOR CERTAIN STATE 
              AND LOCAL POLITICAL ORGANIZATIONS.

    (a) Notification.--Paragraph (5) of section 527(i) of the Internal 
Revenue Code of 1986 (relating to organizations must notify Secretary 
that they are section 527 organizations) is amended by striking ``or'' 
at the end of subparagraph (A), by striking the period at the end of 
subparagraph (B) and inserting ``, or'', and by adding at the end the 
following:
                    ``(C) which is a political committee of a State or 
                local candidate, or a local committee of a political 
                party, as defined by State law.''.
    (b) Exemption for Certain State and Local Political Committees From 
Reporting Requirements.--
            (1) In general.--Paragraph (5) of section 527(j) of such 
        Code (relating to required disclosures of expenditures and 
        contributions) is amended by redesignating subparagraphs (C), 
        (D), and (E) as subparagraphs (D), (E), and (F), respectively, 
        and by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) to any organization which is an exempt State 
                or local political organization,''.
            (2) Exempt state or local political organization.--
        Subsection (e) of section 527 of such Code (relating to other 
        definitions) is amended by adding at the end the following new 
        paragraph:
            ``(5) Exempt state or local political organization.--
                    ``(A) In general.--The term `exempt State or local 
                political organization' means a political 
                organization--
                            ``(i) which does not engage in any exempt 
                        function other than to influence or to attempt 
                        to influence the selection, nomination, 
                        election, or appointment of any individual to 
                        any State or local public office or office in a 
                        State or local political organization,
                            ``(ii) which is subject to State or local 
                        requirements to submit reports containing 
                        information--
                                    ``(I) regarding individual 
                                expenditures from and contributions to 
                                such organization, and
                                    ``(II) regarding the person who 
                                makes such contributions or receives 
                                such expenditures,
                        which is substantially similar to the 
                        information which would otherwise be required 
                        to be reported under this section, and
                            ``(iii) with respect to which the reports 
                        referred to in clause (ii) are made public by 
                        the agency with which such reports are filed 
                        and are publicly available for inspection in a 
                        manner similar to that required by section 
                        6104(d)(1).
                    ``(B) Participation of federal candidate or office 
                holder.--The term `exempt State or local political 
                organization' shall not include any organization 
                otherwise described in subparagraph (A) if a candidate 
                for nomination or election to Federal elective office 
                or an individual who holds such office--
                            ``(i) controls or materially participates 
                        in the direction of the organization, or
                            ``(ii) directs, in whole or in part, 
                        expenditures or fundraising activities of the 
                        organization.''.
    (c) Annual Return Requirements.--
            (1) Income tax returns required only where political 
        organization taxable income.--Paragraph (6) of section 6012(a) 
        of such Code (relating to general rule of persons required to 
        make returns of income) is amended by striking ``or which has 
        gross receipts of $25,000 or more for the taxable year (other 
        than an organization to which section 527 applies solely by 
        reason of subsection (f)(1) of such section)''.
            (2) Information returns.--Subsection (g) of section 6033 of 
        such Code (relating to returns required by political 
        organizations) is amended to read as follows:
    ``(g) Returns Required by Political Organizations.--
            ``(1) In general.--Every political organization (within the 
        meaning of section 527(e)(1)), and every fund treated under 
        section 527(g) as if it constituted a political organization, 
        which has gross receipts of $25,000 or more for the taxable 
        year shall file a return--
                    ``(A) containing the information required, and 
                complying with the other requirements, under subsection 
                (a)(1) for organizations exempt from taxation under 
                section 501(a), and
                    ``(B) containing such other information as the 
                Secretary deems necessary to carry out the provisions 
                of this subsection.
            ``(2) Exceptions from filing.--
                    ``(A) Mandatory exceptions.--Paragraph (1) shall 
                not apply to an organization--
                            ``(i) which is an exempt State or local 
                        political organization (as defined in section 
                        527(e)(5)),
                            ``(ii) which is a State or local committee 
                        of a political party, or political committee of 
                        a State or local candidate, as defined by State 
                        law,
                            ``(iii) which is a caucus or association of 
                        State or local elected officials,
                            ``(iv) which is a national association of 
                        State or local officials,
                            ``(v) which is an authorized committee (as 
                        defined in section 301(6) of the Federal 
                        Election Campaign Act of 1971) of a candidate 
                        for Federal office,
                            ``(vi) which is a national committee (as 
                        defined in section 301(14) of the Federal 
                        Election Campaign Act of 1971) of a political 
                        party, or
                            ``(vii) to which section 527 applies for 
                        the taxable year solely by reason of subsection 
                        (f)(1) of such section.
                    ``(B) Discretionary exception.--The Secretary may 
                relieve any organization required under paragraph (1) 
                to file an information return from filing such a return 
                where he determines that such filing is not necessary 
                to the efficient administration of the internal revenue 
                laws.''.
    (d) Waiver of Penalties.--Section 527 of such Code is amended by 
adding at the end the following:
    ``(k) Authority To Waive.--The Secretary may waive all or any 
portion of the--
            ``(1) tax assessed on an organization by reason of the 
        failure of the organization to give notice under subsection 
        (i), or
            ``(2) penalty imposed under subsection (j) for a failure to 
        file a report,
on a showing that such failure was due to reasonable cause and not due 
to willful neglect.''.
    (e) Effective Date.--The amendments made by this section shall take 
effect as if included in the amendments made by Public Law 106-230.

SEC. 2. NOTIFICATION OF INTERACTION OF REPORTING REQUIREMENTS.

    (a) In General.--The Secretary of the Treasury, in consultation 
with the Federal Election Commission, shall publicize information on--
            (1) the effect of the amendments made by this Act, and
            (2) the interaction of requirements to file a notification 
        or report under section 527 of the Internal Revenue Code of 
        1986 and reports under the Federal Election Campaign Act of 
        1971.
    (b) Information.--Information provided under subsection (a) shall 
be included in any appropriate form, instruction, notice, or other 
guidance issued to the public by the Secretary of the Treasury or the 
Federal Election Commission regarding reporting requirements of 
political organizations (as defined in section 527 of the Internal 
Revenue Code of 1986) or reporting requirements under the Federal 
Election Campaign Act of 1971.

SEC. 3. TECHNICAL CORRECTIONS TO SECTION 527 ORGANIZATION DISCLOSURE 
              PROVISIONS.

    (a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of section 
527(i) of the Internal Revenue Code of 1986 (relating to failure to 
notify) is amended by adding at the end the following new sentence: 
``For purposes of the preceding sentence, the term `exempt function 
income' means any amount described in a subparagraph of subsection 
(c)(3), whether or not segregated for use for an exempt function.''.
    (b) Procedures for Assessment and Collection of Penalty.--Paragraph 
(1) of section 527(j) of such Code (relating to required disclosure of 
expenditures and contributions) is amended by adding at the end the 
following new sentence: ``For purposes of subtitle F, the penalty 
imposed by this paragraph shall be assessed and collected in the same 
manner as penalties imposed by section 6652(c).''.
    (c) Application of Fraud Penalty.--Section 7207 of such Code 
(relating to fraudulent returns, statements, and other documents) is 
amended by striking ``pursuant to subsection (b) of section 6047 or 
pursuant to subsection (d) of section 6104'' and inserting ``pursuant 
to section 6047(b), section 6104(d), or subsection (i) or (j) of 
section 527''.
    (d) Duplicate Electronic and Written Filings Not Required.--
            (1) Subparagraph (A) of section 527(i)(1) of such Code is 
        amended by striking ``, electronically and in writing,''.
            (2) Subsection (i) of section 527 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(7) Electronic filing.--The Secretary shall develop 
        procedures for submission in electronic form of notices 
        required to be filed under this subsection and reports required 
        to be filed under subsection (j).''.
    (e) Effective Dates.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to failures occurring on or 
        after the date of the enactment of this Act.
            (2) Subsections (c) and (d).--The amendments made by 
        subsections (c) and (d) shall take effect as if included in the 
        amendments made by Public Law 106-230.
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