[Congressional Record Volume 151, Number 8 (Tuesday, February 1, 2005)]
[Extensions of Remarks]
[Page E116]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                  527S

                                 ______
                                 

                          HON. JOHN B. LARSON

                             of connecticut

                    in the house of representatives

                       Tuesday, February 1, 2005

  Mr. LARSON of Connecticut. Mr. Speaker, today I rise to draw 
awareness to a bill I will reintroduce to address concerns that have 
been expressed about political organizations referred to as ``527s''.
  527s are named after a section of the Internal Revenue Code that 
specifies the tax treatment accorded political organizations and tax-
exempt organizations which make political expenditures. Under Section 
527, all political organizations are tax-exempt for purposes of federal 
tax law.
  Starting this month, new rules will require more 527s to register 
with the FEC. 527s whose only purpose is to support or oppose a Federal 
candidate may only do so with ``hard money''. Citizens who give to the 
hard money accounts of these 527s will be under the same contribution 
limits as if they were giving to Members of Congress. 527s will also 
not be able to finance their entire operation using ``soft money''. 
They will now have to use a mix of at least 50 percent hard money to 
pay for activates and expenses, raised using federal limits.
  This legislation goes a step farther to give the Department of the 
Treasury, the Federal Election Commission, and the American people a 
better understanding of 527 organizations by aiming to place them to 
the same type of reporting requirements as political action committees 
(PACs) and other political organizations.
  This bill will provide the American people with more information 
about who is donating to the political process and how that money is 
being spent. If we want to inspire and encourage more Americans to 
participate in the political process, we must make all aspects of the 
process accessible to them.
  This bill would make 527s more transparent through the four main 
components of this bill. First, any political organization that meets 
defined minimum financial requirements must disclose this information 
to the Department of the Treasury. Second, political organizations that 
raise, spend or intend to raise and spend over $25,000 in an election 
year will have to file disclosure reports with the IRS monthly. 
Previously, organizations in this category were only required to file 
quarterly. Third, organizations with less than $25,000 in receipts must 
file quarterly. Fourth, the Department of the Treasury and the Federal 
Election Commission must work together to improve the database 
disclosure system.
  The guidelines in my bill will bring to light political 
organizations' donors and demonstrate they have nothing to hide. 
Moreover, this information will help Americans to make more informed 
choices.
  I believe that efforts to restrict 527 organizations could raise 
First Amendment concerns and may merely result in their reconstitution 
as 501(c)4, 501(c)5 and 501(c)6 organizations, which have virtually no 
public disclosure requirements. I believe that it would be more 
beneficial to our political process to mandate greater transparency of 
527s rather than attempting to shut them down or otherwise curtail 
their participation in the political process. Therefore, Mr. Speaker, I 
urge my colleagues to support this bill.

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