[Congressional Record Volume 161, Number 54 (Wednesday, April 15, 2015)]
[House]
[Pages H2236-H2238]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
IRS BUREAUCRACY REDUCTION AND JUDICIAL REVIEW ACT
Mr. RYAN of Wisconsin. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 1295) to amend the Internal Revenue Code of 1986 to
improve the process for making determinations with respect to whether
organizations are exempt from taxation under section 501(c)(4) of such
Code, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1295
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``IRS Bureaucracy Reduction
and Judicial Review Act''.
SEC. 2. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY OF INTENT
TO OPERATE AS 501(C)(4).
(a) In General.--Part I of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 506. ORGANIZATIONS REQUIRED TO NOTIFY SECRETARY OF
INTENT TO OPERATE AS 501(C)(4).
``(a) In General.--An organization described in section
501(c)(4) shall, not later than 60 days after the
organization is established, notify the Secretary (in such
manner as the Secretary shall by regulation prescribe) that
it is operating as such.
``(b) Contents of Notice.--The notice required under
subsection (a) shall include the following information:
``(1) The name, address, and taxpayer identification number
of the organization.
``(2) The date on which, and the State under the laws of
which, the organization was organized.
``(3) A statement of the purpose of the organization.
``(c) Acknowledgment of Receipt.--Not later than 60 days
after receipt of such a notice, the Secretary shall send to
the organization an acknowledgment of such receipt.
``(d) Extension for Reasonable Cause.--The Secretary may,
for reasonable cause, extend the 60-day period described in
subsection (a).
``(e) User Fee.--The Secretary shall impose a reasonable
user fee for submission of the notice under subsection (a).
``(f) Request for Determination.--Upon request by an
organization to be treated as an organization described in
section 501(c)(4), the Secretary may issue a determination
with respect to such treatment. Such request shall be treated
for purposes of section 6104 as an application for exemption
from taxation under section 501(a).''.
(b) Supporting Information With First Return.--Section
6033(f) of such Code is amended--
(1) by striking the period at the end and inserting ``,
and'',
(2) by striking ``include on the return required under
subsection (a) the information'' and inserting the following:
``include on the return required under subsection (a)--
``(1) the information'', and
(3) by adding at the end the following new paragraph:
``(2) in the case of the first such return filed by such an
organization after submitting a notice to the Secretary under
section 506(a), such information as the Secretary shall by
regulation require in support of the organization's treatment
as an organization described in section 501(c)(4).''.
(c) Failure To File Initial Notification.--Section 6652(c)
of such Code is amended by redesignating paragraphs (4), (5),
and (6) as paragraphs (5), (6), and (7), respectively, and by
inserting after paragraph (3) the following new paragraph:
``(4) Notices under section 506.--
``(A) Penalty on organization.--In the case of a failure to
submit a notice required under section 506(a) (relating to
organizations required to notify Secretary of intent to
operate as 501(c)(4)) on the date and in the manner
prescribed therefor, there shall be paid by the organization
failing to so submit $20 for each day during which such
failure continues, but the total amount imposed under this
subparagraph on any organization for failure to submit any
one notice shall not exceed $5,000.
``(B) Managers.--The Secretary may make written demand on
an organization subject to penalty under subparagraph (A)
specifying in such demand a reasonable future date by which
the notice shall be submitted for purposes of this
subparagraph. If such notice is not submitted on or before
such date, there shall be paid by the person failing to so
submit $20 for each day after the expiration of the time
specified in the written demand during which such failure
continues, but the total amount imposed under this
subparagraph on all persons for failure to submit any one
notice shall not exceed $5,000.''.
(d) Clerical Amendment.--The table of sections for part I
of subchapter F of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 506. Organizations required to notify Secretary of intent to
operate as 501(c)(4).''.
(e) Limitation.--Notwithstanding any other provision of
law, any fees collected pursuant to section 506(e) of the
Internal Revenue Code of 1986, as added by subsection (a),
shall not be expended by the Secretary of the Treasury or the
Secretary's delegate unless provided by an appropriations
Act.
(f) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to organizations which are described in section
501(c)(4) of the Internal Revenue Code of 1986 and organized
after the date of the enactment of this Act.
(2) Certain existing organizations.--In the case of any
other organization described in section 501(c)(4) of such
Code, the amendments made by this section shall apply to such
organization only if, on or before the date of the enactment
of this Act--
(A) such organization has not applied for a written
determination of recognition as an organization described in
section 501(c)(4) of such Code, and
(B) such organization has not filed at least one annual
return or notice required under subsection (a)(1) or (i) (as
the case may be) of section 6033 of such Code.
In the case of any organization to which the amendments made
by this section apply by reason of the preceding sentence,
such organization
[[Page H2237]]
shall submit the notice required by section 506(a) of such
Code, as added by this Act, not later than 180 days after the
date of the enactment of this Act.
SEC. 3. DECLARATORY JUDGMENTS FOR 501(C)(4) ORGANIZATIONS.
(a) In General.--Section 7428(a)(1) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
subparagraph (C) and by inserting after subparagraph (D) the
following new subparagraph:
``(E) with respect to the initial classification or
continuing classification of an organization described in
section 501(c)(4) which is exempt from tax under section
501(a), or''.
(b) Effective Date.--The amendments made by this section
shall apply to pleadings filed after the date of the
enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Ryan) and the gentleman from Georgia (Mr. Lewis) each
will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin.
General Leave
Mr. RYAN of Wisconsin. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks and include extraneous material on H.R. 1295, currently
under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. RYAN of Wisconsin. Mr. Speaker, I would like to thank Mr. Holding
for bringing this bill to the floor, bringing it through committee.
I would like to thank the ranking member from Georgia as well for his
support.
Mr. Speaker, I yield such time as he may consume to the gentleman
from North Carolina (Mr. Holding) for the purpose of describing his
bill.
Mr. HOLDING. Mr. Speaker, I thank the chairman.
H.R. 1295, the IRS Bureaucracy Reduction and Judicial Review Act, has
two simple goals. First, it will provide newly formed 501(c)(4)
organizations with a mandatory yet simple process for registering with
the IRS. Within 60 days of establishment, a new 501(c)(4) will be
required to provide notice of formation and intent to the IRS. The IRS,
in return, must issue an acknowledgement of receipt to the notifying
organization.
Second, this legislation would offer 501(c)(4)s the ability to seek
judicial review should the IRS deny their application for recognition,
fail to act on the application, or inform an organization that it is
considering revoking or adversely modifying its tax-exempt status. This
would be conducted under the 7428 declaratory judgment procedure that
is currently afforded to other tax-exempt organizations.
Mr. Speaker, it is important to note that this legislation does not
change the requirement for 501(c)(4)s to file an annual 990 or alter
any of the other reporting requirements currently mandated for
501(c)(4)s.
Now, thanks to the efforts of Chairman Roskam of the Oversight
Subcommittee, leading a team of us, we know that last year the IRS
spent nearly 10,000 hours reviewing 501(c)(4)s. So this legislation
before us would simplify the review process for the IRS and allow them
to better focus their resources on the thousands--thousands, Mr.
Speaker--of 501(c)(3) applications which are outstanding and
languishing for review.
So I urge the support of this bill, and I thank the chairman.
Mr. LEWIS. Mr. Speaker, I yield myself as much time as I may consume.
Mr. Speaker, I rise in support of H.R. 1295. I support the
improvements the bill makes to the taxpayers' exempt process for social
welfare organizations.
Under current law, social welfare organizations are not required to
file for tax-exempt status with the Internal Revenue Service, although
many organizations do apply for greater certainty. From 2009 to 2012,
the number of social welfare organizations applying for tax-exempt
status nearly doubled, from 1,800 to 3,400 requests.
But for an organization that simply starts operating as a social
welfare organization without applying for tax exemption, the agency
does not have any information on the organization until it files its
annual information return. This return, known as Form 990, may not be
due until more than a year after the organization has already been
operating.
This bill, which I think is a good bill, is a commonsense bill,
requires all social welfare organizations to file a notice of formation
with the agency no later than 60 days after the organization is
established. The intent is to provide the agency with certain key
information.
I believe this bill could have done more. Currently, social welfare
organizations are permitted to engage in political campaigns. However,
an organization's primary work cannot be engaging in political
activities.
I am concerned that the information required to be provided to the
agency under this bill, and in the first annual information return, may
not be sufficient. It is important that the agency can clearly identify
all cases in which the organizations engage in an inappropriate amount
of political activity.
To address this concern, the bill should require these organizations
to indicate whether they engage or intend to engage in political
activity.
Although this bill does not go far enough, I support the improvement
it makes. I urge all of my colleagues on both sides of the aisle to
vote ``yes'' for H.R. 1295.
Mr. Speaker, I reserve the balance of my time.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield 3 minutes to the
gentleman from Illinois (Mr. Roskam), the chairman of the subcommittee.
Mr. ROSKAM. Mr. Speaker, I thank Chairman Ryan for yielding.
Congressman Holding's idea is a great idea, and we should enact it
with dispatch and get it done with. And the reason is, according to the
IRS, their 2014 data book--this is published by the Internal Revenue
Service--they have said that they have spent 10,000 hours reviewing
4,000 applications for 501(c)(4) organizations, which sounds sort of
interesting.
Except there is a plot trap. And you know what the plot trap is? They
only said ``no'' to eight of them.
So, said another way, the way Peter Roskam thinks about the world,
that is 10,000 hours of a complete waste of time. That is 10,000 hours
from an organization that is saying, Oh, we are just begging for mercy,
and we are not able to meet these claims, and we are not able to make
these calls.
Now, I have got an email here that the Commissioner sent out to all
the IRS employees at the beginning of this year. It is January 13,
2015. And you know how normally, around a dinner table, when people
say, Hey, you know, it is getting really tough out there. We are going
to have to do what? We are going to have do more with less.
That is what we do, as Americans, don't we? We do more with less.
That is who we are as a people.
But that is not the Internal Revenue Service. Oh, no, no, no, no, no.
They don't disappoint. You know what the Internal Revenue Service says?
We are going to do less with less. We are going to do less with less.
So this is an organization, now, that has spent 10,000 hours of
taxpayer time, completely squandering it. Stay tuned next week, and
come to the Oversight Subcommittee, where you are not going to be
disappointed when you learn more things about the IRS budget and some
of the things that we are going to be discussing.
But my point is this: Representative Holding's concept says, this is
a complete waste of time. Let's clean this up. Let's free up 10,000
hours so that we can do more with less and reject the IRS notion that
the best that they can do is to do less with less.
Mr. LEWIS. Mr. Speaker, I yield back the balance of my time.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield the balance of my time to
the gentleman from North Carolina (Mr. Holding) for the purpose of
closing on his bill.
Mr. HOLDING. Mr. Speaker, I want to thank the distinguished gentleman
from Georgia for the support of this bill.
I thank the chairman, Mr. Roskam, of the subcommittee, for the
support of this bill because, by streamlining the registration process
for newly formed 501(c)(4)s with the IRS and providing them with the
ability to seek judicial review similar to such review that other tax-
exempt organizations have, we can have a process, Mr. Speaker, that is
both simpler and fairer for the folks who want to get involved in their
communities and across the Nation.
[[Page H2238]]
Civic engagement should not require jumping over hurdles or a long,
drawn-out review process by the IRS. If you play by the rules, the IRS
should not be a hindrance to your activities.
So, once again, I urge support of this bill.
Mr. RYAN of Wisconsin. Mr. Speaker, I yield back the balance of my
time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Ryan) that the House suspend the rules
and pass the bill, H.R. 1295, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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