[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5596 Engrossed in House (EH)]
2d Session
H. R. 5596
_______________________________________________________________________
AN ACT
To amend section 527 of the Internal Revenue Code of 1986 to eliminate
notification and return requirements for State and local party
committees and candidate committees and avoid duplicate reporting by
certain State and local political committees of information required to
be reported and made publicly available under State law, and for other
purposes.
107th CONGRESS
2d Session
H. R. 5596
_______________________________________________________________________
AN ACT
To amend section 527 of the Internal Revenue Code of 1986 to eliminate
notification and return requirements for State and local party
committees and candidate committees and avoid duplicate reporting by
certain State and local political committees of information required to
be reported and made publicly available under State law, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES
FROM NOTIFICATION REQUIREMENTS.
(a) Exemption From Notification Requirements.--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 which is a State or local committee
of a political party.''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect as if included in the amendments made by Public Law 106-
230.
SEC. 2. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES FROM
REPORTING REQUIREMENTS.
(a) In General.--Section 527(j)(5) of the Internal Revenue Code of
1986 (relating to coordination with other requirements) 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 a qualified
State or local political organization,''.
(b) Qualified State or Local Political Organization.--Subsection
(e) of section 527 of the Internal Revenue Code of 1986 (relating to
other definitions) is amended by adding at the end the following new
paragraph:
``(5) Qualified state or local political organization.--
``(A) In general.--The term `qualified State or
local political organization' means a political
organization--
``(i) all the exempt functions of which are
solely for the purposes of influencing or
attempting 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 law that
requires the organization to report (and it so
reports)--
``(I) information regarding each
separate expenditure from and
contribution to such organization, and
``(II) information regarding the
person who makes such contribution or
receives such expenditure,
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 (I) made public
by the agency with which such reports are
filed, and (II) made publicly available for
inspection by the organization in the manner
described in section 6104(d).
``(B) Certain state law differences disregarded.--
An organization shall not be treated as failing to meet
the requirements of subparagraph (A)(ii) solely by
reason of 1 or more of the following:
``(i) The minimum amount of any expenditure
or contribution required to be reported under
State law is not more than $300 greater than
the minimum amount required to be reported
under subsection (j).
``(ii) The State law does not require the
organization to identify 1 or more of the
following:
``(I) The employer of any person
who makes contributions to the
organization.
``(II) The occupation of any person
who makes contributions to the
organization.
``(III) The employer of any person
who receives expenditures from the
organization.
``(IV) The occupation of any person
who receives expenditures from the
organization.
``(V) The purpose of any
expenditure of the organization.
``(VI) The date any contribution
was made to the organization.
``(VII) The date of any expenditure
of the organization.
``(C) De minimis errors.--An organization shall not
fail to be treated as a qualified State or local
political organization solely because such organization
makes de minimis errors in complying with the State
reporting requirements and the public inspection
requirements described in subparagraph (A) as long as
the organization corrects such errors within a
reasonable period after the organization becomes aware
of such errors.
``(D) Participation of federal candidate or office
holder.--The term `qualified 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 public
office or an individual who holds such office--
``(i) controls or materially participates
in the direction of the organization,
``(ii) solicits contributions to the
organization (unless the Secretary determines
that such solicitations resulted in de minimis
contributions and were made without the prior
knowledge and consent, whether explicit or
implicit, of the organization or its officers,
directors, agents, or employees), or
``(iii) directs, in whole or in part,
disbursements by the organization.''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by Public Law 106-230.
SEC. 3. EXEMPTION FROM ANNUAL RETURN REQUIREMENTS.
(a) Income Tax Returns Required Only for Political Organization
Taxable Income.--Paragraph (6) of section 6012(a) of the Internal
Revenue Code of 1986 (relating to persons required to make returns of
income) is amended by striking ``or which has'' and all that follows
through ``section)''.
(b) Income Tax Returns Not Subject to Disclosure.--
(1) Disclosure by the secretary.--Subsection (b) of section
6104 of such Code (relating to disclosure by the Secretary of
annual information returns) is amended by striking
``6012(a)(6),''.
(2) Public inspection.--Subsection (d) of section 6104 of
such Code (relating to public inspection of certain annual
returns) is amended--
(A) in paragraph (1)(A)(i) by striking ``or section
6012(a)(6) (relating to returns by political
organizations)'', and
(B) in subparagraph (2) by striking ``or section
6012(a)(6)''.
(c) 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.--This section shall apply to a political
organization (as defined by section 527(e)(1)) which has gross
receipts of $25,000 or more for the taxable year. In the case
of a political organization which is a qualified State or local
political organization (as defined in section 527(e)(5)), the
preceding sentence shall be applied by substituting `$100,000'
for `$25,000'.
``(2) Annual returns.--Political organizations described in
paragraph (1) shall file an annual 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), with such modifications as the
Secretary considers appropriate to require only
information which is necessary for the purposes of
carrying out section 527, and
``(B) containing such other information as the
Secretary deems necessary to carry out the provisions
of this subsection.
``(3) Mandatory exceptions from filing.--Paragraph (2)
shall not apply to an organization--
``(A) which is a State or local committee of a
political party, or political committee of a State or
local candidate,
``(B) which is a caucus or association of State or
local officials,
``(C) 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,
``(D) which is a national committee (as defined in
section 301(14) of the Federal Election Campaign Act of
1971) of a political party,
``(E) which is a United States House of
Representatives or United States Senate campaign
committee of a political party committee,
``(F) which is required to report under the Federal
Election Campaign Act of 1971 as a political committee
(as defined in section 301(4) of such Act), or
``(G) to which section 527 applies for the taxable
year solely by reason of subsection (f)(1) of such
section.
``(4) Discretionary exception.--The Secretary may relieve
any organization required under paragraph (2) to file an
information return from filing such a return if the Secretary
determines that such filing is not necessary to the efficient
administration of the internal revenue laws.''.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by Public Law 106-230.
SEC. 4. NOTIFICATION OF INTERACTION OF REPORTING REQUIREMENTS.
(a) In General.--The Secretary of the Treasury, in consultation
with the Federal Election Commission, shall publicize--
(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. 5. WAIVER OF FILING AMOUNTS.
(a) Waiver of Filing Amounts.--Section 527 of the Internal Revenue
Code of 1986 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 comply with the requirements of
subsection (i), or
``(2) amount imposed under subsection (j) for a failure to
comply with the requirements thereof,
on a showing that such failure was due to reasonable cause and not due
to willful neglect.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to any tax assessed or amount imposed after June 30, 2000.
SEC. 6. MODIFICATIONS 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 Amounts.--Paragraph
(1) of section 527(j) of the Internal Revenue Code of 1986 (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 amount imposed by this paragraph shall be assessed and
collected in the same manner as penalties imposed by section
6652(c).''.
(c) Duplicate Written Filings Not Required.--Subparagraph (A) of
section 527(i)(1) of the Internal Revenue Code of 1986 is amended by
striking ``, electronically and in writing,'' and inserting
``electronically''.
(d) Application of Fraud Penalty.--Section 7207 of the Internal
Revenue Code of 1986 (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''.
(e) Contents and Filing of Report.--
(1) Contents.--Section 527(j)(3) of the Internal Revenue
Code of 1986 (relating to contents of report) is amended--
(A) by inserting ``, date, and purpose'' after
``The amount'' in subparagraph (A), and
(B) by inserting ``and date'' after ``the amount''
in subparagraph (B).
(2) Electronic filing.--Section 527(j) of such Code is
amended by adding at the end the following new paragraph:
``(7) Electronic filing.--Any report required under
paragraph (2) with respect to any calendar year shall be filed
in electronic form if the organization has, or has reason to
expect to have, contributions exceeding $50,000 or expenditures
exceeding $50,000 in such calendar year.''.
(3) Electronic filing and access of required disclosures.--
Section 527 of such Code, as amended by section 5(a), is
amended by redesignating subsection (k) as subsection (l) and
by inserting after subsection (j) the following new subsection:
``(k) Public Availability of Notices and Reports.--
``(1) In general.--The Secretary shall make any notice
described in subsection (i)(1) or report described in
subsection (j)(7) available for public inspection on the
Internet not later than 48 hours after such notice or report
has been filed (in addition to such public availability as may
be made under section 6104(d)(7)).
``(2) Access.--The Secretary shall make the entire database
of notices and reports which are made available to the public
under paragraph (1) searchable by the following items (to the
extent the items are required to be included in the notices and
reports):
``(A) Names, States, zip codes, custodians of
records, directors, and general purposes of the
organizations.
``(B) Entities related to the organizations.
``(C) Contributors to the organizations.
``(D) Employers of such contributors.
``(E) Recipients of expenditures by the
organizations.
``(F) Ranges of contributions and expenditures.
``(G) Time periods of the notices and reports.
Such database shall be downloadable.''.
(f) Contents of Notice.--Section 527(i)(3) of the Internal Revenue
Code of 1986 (relating to contents of notice) is amended by striking
``and'' at the end of subparagraph (D), by redesignating subparagraph
(E) as subparagraph (F), and by inserting after subparagraph (D) the
following new subparagraph:
``(E) whether the organization intends to claim an
exemption from the requirements of subsection (j) or
section 6033, and''.
(g) Timing of Notice in Case of Material Change.--
(1) In general.--Subparagraph (B) of section 527(i)(1) of
the Internal Revenue Code of 1986 (relating to general
notification requirement) is amended by inserting ``or, in the
case of any material change in the information required under
paragraph (3), for the period beginning on the date on which
the material change occurs and ending on the date on which such
notice is given'' after ``given''.
(2) Time to give notice.--Section 527(i)(2) of the Internal
Revenue Code of 1986 (relating to time to give notice) is
amended by inserting ``or, in the case of any material change
in the information required under paragraph (3), not later than
30 days after such material change'' after ``established''.
(3) Effect of failure.--Paragraph (4) of section 527(i) of
the Internal Revenue Code of 1986 (relating to effect of
failure) is amended by inserting before the period at the end
the following: ``or, in the case of a failure relating to a
material change, by taking into account such income and
deductions only during the period beginning on the date on
which the material change occurs and ending on the date on
which notice is given under this subsection''.
(h) 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) Subsection (c).--The amendments made by subsection (c)
shall take effect as if included in the amendments made by
Public Law 106-230.
(3) Subsection (d).--The amendment made by subsection (d)
shall apply to reports and notices required to be filed on or
after the date of the enactment of this Act.
(4) Subsections (e)(1) and (f).--The amendments made by
subsections (e)(1) and (f) shall apply to reports and notices
required to be filed more than 30 days after the date of the
enactment of this Act.
(5) Subsections (e)(2) and (e)(3).--The amendments made by
subsections (e)(2) and (e)(3) shall apply to reports required
to be filed on or after June 30, 2003.
(6) Subsection (g).--
(A) In general.--The amendments made by subsection
(g) shall apply to material changes on or after the
date of the enactment of this Act.
(B) Transition rule.--In the case of a material
change occurring during the 30-day period beginning on
the date of the enactment of this Act, a notice under
section 527(i) of the Internal Revenue Code of 1986 (as
amended by this Act) shall not be required to be filed
under such section before the later of--
(i) 30 days after the date of such material
change, or
(ii) 45 days after the date of the
enactment of this Act.
SEC. 7. EFFECT OF AMENDMENTS ON EXISTING DISCLOSURES.
Notices, reports, or returns that were required to be filed with
the Secretary of the Treasury before the date of the enactment of the
amendments made by this Act and that were disclosed by the Secretary of
the Treasury consistent with the law in effect at the time of
disclosure shall remain subject on and after such date to the
disclosure provisions of section 6104 of the Internal Revenue Code of
1986.
Passed the House of Representatives October 16, 2002.
Attest:
Clerk.