109 HR 2204 IH: 527 Transparency Act of 2005 U.S. House of Representatives 2005-05-05 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 2204 IN THE HOUSE OF REPRESENTATIVES May 5, 2005 Mr. Shaw (for himself, Mr. Sam Johnson of Texas, Mr. English of Pennsylvania, and Mr. Foley) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on House Administration, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to impose penalties for the failure of 527 organizations to comply with disclosure requirements.

1.

Short title

This Act may be cited as the 527 Transparency Act of 2005.

2.

Mandatory Monthly Reporting

(a)

In general

Section 527(j)(2) of the Internal Revenue Code of 1986 (relating to required disclosure) is amended to read as follows: (2)

Required disclosure

A political organization which accepts a contribution, or makes an expenditure, for an exempt function during any calendar year shall file with the Secretary monthly reports for each such year which shall be filed not later than the 20th day after the last day of the month and shall be complete as of the last day of the month, except that, in lieu of filing the reports otherwise due in November and December of any year in which a regularly scheduled general election is held, the organization shall file— (A)a pre-election report, which shall be filed no later than the 12th day before (or posted by registered or certified mail no later than the 15th day before) any election with respect to which the organization accepts a contribution or makes an expenditure, and which shall be complete as of the 20th day before the election; (B)a post-general election report, which shall be filed no later than the 30th day after the general election and which shall be complete as of the 20th day after such general election; and (C)a year-end report which shall be filed no later than January 31 of the following calendar year.. (b)

Effective date

The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

3.

Failure of 527 organization to comply with disclosure requirements

(a)

Excise tax on managers

(1)

In general

Subchapter C of chapter 42 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

4956.

Tax on failure of political organizations to meet disclosure requirements

(a)

Tax imposed

In the case of a failure of a political organization to meet the disclosure requirements of section 527(j) with respect to any contribution to or expenditure from the political organization, there is hereby imposed on the political organization, in addition to any other tax or penalty provided in this title, a tax for each such failure. (b)

Amount of tax

The tax imposed by subsection (a) shall be 30 percent of the total amount of the contribution or expenditure with respect to which such failure occurred. (c)

Liability for tax

(1)

In general

Except as provided by paragraph (2), the tax imposed by subsection (a) shall be paid by the political organization. (2)

Joint and several liability of organization managers

Each organization manager of the political organization shall be jointly and severally liable for any tax imposed under subsection (a). (d)

Organization manager

For purposes of this section, the term organization manager means any officer, director, or trustee of the political organization (or individual having powers or responsibilities similar to those of an officer, director, or trustee). (e)

Political organization

The term political organization shall have the meaning given such term by section 527(e)(1).

. (2)

Conforming amendments

(A)The heading for subchapter C of chapter 42 of such Code is amended by adding at the end the following: ; failure of political organizations to meet reporting requirements. (B)The table of sections for such subchapter C is amended by adding at the end the following: Sec. 4956. Tax on failure of political organizations to meet disclosure requirements . (C)The item in the table of subchapters of such chapter 42 relating to subchapter C is amended to read as follows: Subchapter C. Political expenditures of section 501(c)(3) organizations; failure of political organizations to meet reporting requirements.. (3)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2005. (b)

Denial of gift tax exclusion

(1)

In general

Paragraph (4) of section 2501(a) of the Internal Revenue Code of 1986 (relating to taxable transfers) is amended to read as follows: (4)

Transfers to political organizations

(A)

In general

Paragraph (1) shall not apply to the transfer of money or other property to a political organization (within the meaning of section 527(e)(1)) for the use of such organization. (B)

Exception for failure of organization to meet disclosure requirements

Subparagraph (A) shall not apply to any transfer in a calendar year for which the political organization fails to make the disclosures required by section 527(j).. (2)

Notice to contributors of denial of gift tax exception for failure to disclose

Section 527(j) of such Code is amended by adding at the end the following new paragraph: (8)

Notice to contributors of denial of gift tax exception for failure to disclose

In the case of a final determination by the Secretary that a failure described in paragraph (1)(A) with respect to an organization occurred, the organization shall, not later than 90 days after the date of such determination, provide written notice of such failure to each contributor to the organization for the calendar year in which such failure occurred. Such notice shall include a statement that the exception under section 2501(a)(4)(A) does not apply to any contribution to the organization in such calendar year.. (3)

Effective date

The amendments made by this subsection shall apply to transfers made after December 31, 2005.

4.

Simultaneous transmission of Reports to Federal Election Commission

(a)

In General

Section 304 of the Federal Election Campaign Act of 1971 (2 U.S.C. 434) is amended by adding at the end the following new subsection: (i)

Reports of Political Organizations Under Internal Revenue Code of 1986

(1)

Simultaneous filing of Treasury reports with Commission

At the time a political organization described in section 527 of the Internal Revenue Code of 1986 files a report with the Secretary of the Treasury under section 527(j) of such Code, the organization shall file a copy of the report with the Commission. (2)

Treatment as report filed with Commission

For purposes of this Act, the copy filed under this subsection of a report filed with the Secretary of the Treasury shall be treated as a report or statement filed with the Commission under this section.. (b)

Effective Date

The amendment made by subsection (a) shall take effect January 1, 2006.