[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5596 Enrolled Bill (ENR)]

        H.R.5596

                      One Hundred Seventh Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

         Begun and held at the City of Washington on Wednesday,
          the twenty-third day of January, two thousand and two


                                 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.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.