[House Report 106-702]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-702

======================================================================



 
        FULL AND FAIR POLITICAL ACTIVITY DISCLOSURE ACT OF 2000

                                _______
                                

 June 27, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4717]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4717) to amend the Internal Revenue Code of 1986 to 
require 527 organizations and certain other tax-exempt 
organizations to disclose their political activities, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background...........................................8
          A. Purpose and Summary.................................     8
          B. Background and Need for Legislation.................     9
          C. Legislative History.................................     9
 II. Explanation of the Bill..........................................9
          A. Present Law.........................................     9
          B. Reasons for Change..................................    12
          C. Explanation of Provisions...........................    15
III. Votes of the Committee..........................................22
 IV. Budget Effects of the Bill......................................23
          A. Committee Estimates of Budgetary Effects............    23
          B. Budget Authority and Tax Expenditures...............    24
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    24
  V. Other Matters To Be Discussed Under the Rules of the House......26
          A. Committee Oversight Findings and Recommendations....    26
          B. Summary of Findings and Recommendations of the 
              Committee on Government Reform and Oversight.......    26
          C. Constitutional Authority Statement..................    26
          D. Information Relating to Unfunded Mandates...........    26
          E. Applicability of House Rule XXI5(b).................    26
          F. Tax Complexity Analysis.............................    26
 VI. Changes in Existing Law Made by the Bill as Reported............27
VII. Dissenting Views................................................40
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Full and Fair Political Activity 
Disclosure Act of 2000''.

SEC. 2. INCREASED REPORTING OF POLITICAL ACTIVITIES.

  (a) In General.--Subpart A of part III of subchapter A of chapter 61 
of the Internal Revenue Code of 1986 (relating to information 
concerning persons subject to special provisions) is amended by 
inserting after section 6033 the following new section:

``SEC. 6033A. RETURNS RELATING TO POLITICAL ACTIVITIES.

  ``(a) General Reporting Requirements.--
          ``(1) In general.--Every organization to which this 
        subsection applies for a reporting period shall submit a return 
        to the Secretary for such period. Such return shall include--
                  ``(A) a detailed description of such organization's 
                disclosable activities during the reporting period and 
                the purpose and intended results for the major 
                categories of expenditures for such activities, 
                including the candidates intended to be affected,
                  ``(B) a list identifying--
                          ``(i) each expenditure made for a disclosable 
                        activity during the reporting period in an 
                        amount in excess of the threshold amount, and
                          ``(ii) the name and address of each person to 
                        whom the organization made any expenditure 
                        required to be reported under clause (i), and
                  ``(C) in the case of a reportable contributor--
                          ``(i) the name and address of the contributor 
                        (and, if the contributor is an individual, the 
                        contributor's occupation and employer),
                          ``(ii) the aggregate amount of contributions 
                        made by such contributor,
                          ``(iii) the name and address of the person 
                        (if any) on whose behalf the contributor made 
                        any payment to such organization, and
                          ``(iv) if any payment by the contributor was 
                        designated for a beneficiary other than such 
                        organization (including amounts which are in 
                        any way earmarked or otherwise directed through 
                        an intermediary), the name and address of the 
                        intended beneficiary.
        The information required under the preceding sentence for any 
        reporting period shall be set forth separately for such period 
        and in the aggregate for such period and preceding reporting 
        periods during the calendar year.
          ``(2) Organizations to which subsection applies.--This 
        subsection shall apply to any organization described in or 
        subject to section 527 if--
                  ``(A) such organization is described in paragraph 
                (4), (5), or (6) of section 501(c), or
                  ``(B) such organization is a 527 organization.
          ``(3) Exception for non-527 organizations having aggregate 
        disclosable expenditures of less than $10,000.--This subsection 
        shall not apply to an organization described in paragraph 
        (2)(A) for any reporting period if the aggregate expenditures 
        of the organization for disclosable activities during the 
        period beginning on January 1 of the calendar year in which the 
        reporting period begins and ending on the last day of the 
        reporting period are less than $10,000.
          ``(4) Reportable contributor.--
                  ``(A) In general.--For purposes of paragraph (1), the 
                term `reportable contributor' means any person if the 
                aggregate of the contributions and membership dues, 
                fees, and assessments (within the meaning of section 
                527) received by the organization from such person 
                during the testing period exceeds the threshold amount.
                  ``(B) Exception for dues not attributable to 
                disclosable activities.--
                          ``(i) In general.--At the election of the 
                        organization, the only dues taken into account 
                        under subparagraph (A) shall be dues 
                        attributable to expenditures for disclosable 
                        activities.
                          ``(ii) Portion of dues attributable to 
                        disclosable activities.--For purposes of clause 
                        (i), the portion of dues attributable to 
                        expenditures for disclosable activities of an 
                        organization is the amount which bears the same 
                        ratio to the total amount of dues as the 
                        expenditures of the organization which are 
                        disclosable under paragraph (1) for the testing 
                        period bears to the total expenditures of the 
                        organization for such period.
                  ``(C) Testing period.--For purposes of this 
                paragraph, the term `testing period' means, with 
                respect to any reporting period, the period--
                          ``(i) beginning on January 1 of the calendar 
                        year in which the reporting period begins, and
                          ``(ii) ending on the last day of the 
                        reporting period.
          ``(5) Special rule for earmarked contributions deposited into 
        a segregated disclosable activities fund.--
                  ``(A) In general.--In the case of an organization 
                described in paragraph (4), (5), or (6) of section 
                501(c), paragraph (1)(C) shall apply only with respect 
                to amounts received which are earmarked for a 
                disclosable activity if the organization elects--
                          ``(i) to maintain a segregated disclosable 
                        activities fund,
                          ``(ii) to deposit into such fund only and all 
                        amounts received by such organization which are 
                        earmarked by the contributor for a disclosable 
                        activity, and
                          ``(iii) to make no expenditures for 
                        disclosable activities other than from such 
                        fund.
                In the case of such a fund, subsection (d) shall not 
                apply and the threshold amount shall be $1,000.
                  ``(B) Noncompliance.--In the case of an organization 
                with respect to which an election is in effect under 
                subparagraph (A) and which fails to comply with a 
                requirement in subparagraph (A) during any reporting 
                period, subparagraph (A) shall not apply to such period 
                or any subsequent reporting period during the calendar 
                year in which such period begins.
                  ``(C) De minimis expenditures.--Failures to meet the 
                requirement of subparagraph (A)(iii) with respect to de 
                minimis amounts shall not be treated as a failure to 
                comply with such requirement.
          ``(6) Threshold amount.--For purposes of this section, the 
        term `threshold amount' means--
                  ``(A) $200 in the case of a 527 organization, and
                  ``(B) $1,000 in any other case.
  ``(b) Disclosable Activities.--For purposes of this section--
          ``(1) 527 organizations.--In the case of a 527 organization, 
        the term `disclosable activities' means all activities of the 
        organization.
          ``(2) Other organizations.--In the case of an organization 
        described in paragraph (4), (5), or (6) of section 501(c), the 
        term `disclosable activities' means--
                  ``(A) a 527-type activity,
                  ``(B) establishing, administering, or soliciting 
                contributions to a 527 organization,
                  ``(C) contributing directly or indirectly to a 527 
                organization,
                  ``(D) contributing directly or indirectly to an 
                organization which is described in paragraph (4), (5), 
                or (6) of section 501(c) and which is required to file 
                a return under this section for the year in which the 
                contribution is received or for any of the 3 preceding 
                years (or would be required to file such a return had 
                this section been in effect for such years), and
                  ``(E) any mass media communication (including any 
                mass mailing) which is not a 527-type activity and 
                which--
                          ``(i) mentions a clearly identified candidate 
                        for election for Federal office (including any 
                        individual who has formed an exploratory 
                        committee for such election) or the political 
                        party of such candidate, or
                          ``(ii) contains the picture or other likeness 
                        of such candidate.
          ``(3) Exception for communication with members.--Subparagraph 
        (E) of paragraph (2) shall not apply to communication with bona 
        fide members of the organization unless such communication 
        urges such members to communicate with another person or to 
        take an action as a result of such communication.
  ``(c) Additional Information From 527 Organizations.--
          ``(1) Statement of organization.--
                  ``(A) In general.--Every 527 organization shall file 
                a statement of organization with the Secretary (in such 
                form and manner as the Secretary shall prescribe) which 
                contains the information described in subparagraph (B). 
                Such statement shall be filed not later than 10 days 
                after the date that such organization is established 
                (or, in the case of an organization in existence on the 
                date of the enactment of this section, not later than 
                10 days after such date of enactment).
                  ``(B) Statement of organization.--The information 
                described in this subparagraph is--
                          ``(i) the name and address of the 527 
                        organization,
                          ``(ii) the name, address, relationship, and 
                        type of any person which is directly or 
                        indirectly related to or affiliated with such 
                        527 organization,
                          ``(iii) the name, address, and position of 
                        the custodian of books and accounts of the 527 
                        organization,
                          ``(iv) the name and address of the treasurer 
                        of the 527 organization, and
                          ``(v) a listing of all banks, safety deposit 
                        boxes, and other depositories used by the 527 
                        organization.
                  ``(C) Changes in information.--If there is a change 
                in circumstances such that the most recent statement 
                filed under this paragraph is no longer accurate, the 
                527 organization shall file a corrected statement with 
                the Secretary (in such manner as the Secretary shall 
                prescribe) not later than 10 days after the date that 
                the statement first ceased to be accurate.
                  ``(D) Related and affiliated persons.--For purposes 
                of subparagraph (B)(ii), a person is directly or 
                indirectly related to or affiliated with a 527 
                organization if such person, at any time during the 3-
                year period ending on the date such statement is 
                submitted to the Secretary--
                          ``(i) was in a position to exercise 
                        substantial direct or indirect influence over 
                        the process of collecting or disbursing the 
                        exempt purpose funds of such organization, or
                          ``(ii) was in a position to exercise 
                        substantial, overall direct or indirect 
                        influence over the activities of such 
                        organization.
          ``(2) Other information.--
                  ``(A) In general.--In addition to the information 
                required by subsection (a), every 527 organization 
                shall include the information described in subparagraph 
                (B) on the return required under subsection (a).
                  ``(B) Information described.--The information 
                described in this subparagraph is--
                          ``(i) a certification, under penalty of 
                        perjury, whether such expenditure is made in 
                        cooperation, consultation, or concert with, or 
                        at the request or suggestion of, any candidate 
                        for public office or any authorized committee 
                        of such candidate or agent of such committee or 
                        candidate,
                          ``(ii) the name, address, and business 
                        purpose of any entity, as well as whether the 
                        entity purports to be exempt from tax under 
                        this title and (if so) the provision under 
                        which the entity purports to be so exempt, 
                        which made (in the aggregate for the reporting 
                        period) a contribution in excess of the 
                        threshold amount to the 527 organization, and
                          ``(iii) the original source and the intended 
                        ultimate recipient of all contributions made by 
                        a person, either directly or indirectly, on 
                        behalf of any particular person, including 
                        contributions which are in any way earmarked or 
                        otherwise directed through any intermediary.
  ``(d) Reporting Periods and Due Dates for Returns and Statements.--
          ``(1) In general.--The reporting periods and deadlines for 
        filing returns and statements required by this section shall 
        be--
                  ``(A) determined under paragraph (2), (3), or (4), 
                whichever is selected by the reporting organization, 
                and
                  ``(B) in the case of disclosable activities which are 
                independent expenditures, determined under paragraph 
                (5).
          ``(2) Quarterly reports, etc.--
                  ``(A) Calendar years having a regularly scheduled 
                election.--In the case of a calendar year in which a 
                regularly scheduled election is held--
                          ``(i) Quarterly reports.--
                                  ``(I) Period.--The reporting periods 
                                shall be the calendar quarters 
                                beginning with the first quarter of the 
                                calendar year in which a contribution 
                                is accepted or expenditure is made for 
                                a disclosable activity.
                                  ``(II) Filing deadline.--Reports 
                                under this clause shall be filed not 
                                later than the 15th day after the last 
                                day of each calendar quarter; except 
                                that the report for the quarter ending 
                                on December 31 of such calendar year 
                                shall be filed not later than January 
                                31 of the following calendar year.
                          ``(ii) Pre-election report.--
                                  ``(I) Period.--A pre-election report 
                                with respect to an election shall be 
                                filed for the period ending on the 20th 
                                day before the election and beginning 
                                on the first day of the calendar 
                                quarter which includes such 20th day.
                                  ``(II) Filing deadline.--A pre-
                                election report shall be filed not 
                                later than the 12th day before (or 
                                posted by registered or certified mail 
                                not later than the 15th day before) any 
                                election with respect to which the 
                                organization makes a contribution or 
                                expenditure for a disclosable activity.
                          ``(iii) Post-general election report.--
                                  ``(I) Period.--A post-general 
                                election report with respect to an 
                                election shall be filed for the period 
                                ending on the 20th day after the 
                                election and beginning on the first 
                                day of the calendar quarter which 
                                includes such 20th day.
                                  ``(II) Filing deadline.--A post-
                                general election report shall be filed 
                                not later than the 30th day after the 
                                general election.
                  ``(B) Other calendar years.--In the case of any other 
                calendar year--
                          ``(i) Semiannual reports.--The reporting 
                        periods shall be--
                                  ``(I) the 1st 6 months of the 
                                calendar year, and
                                  ``(II) the 2d 6 months of such year.
                          ``(ii) Filing deadlines.--The report for the 
                        period described in clause (i)(I) shall be 
                        filed no later than July 31, and the report for 
                        the period described in clause (i)(II) shall be 
                        filed no later than January 31 of the following 
                        calendar year.
                  ``(C) Special elections.--The Secretary shall set 
                filing dates for reports to be filed with respect to 
                organizations filing under this paragraph with respect 
                to special elections. The Secretary shall require no 
                more than one pre-election report for each election and 
                one post-election report for the election which fills 
                the vacancy. The Secretary may waive any reporting 
                obligation of organizations required to file for 
                special elections if any report required by this 
                paragraph is required to be filed within 10 days of a 
                report required under this subparagraph. The Secretary 
                shall establish the reporting dates within 5 days of 
                the setting of such election.
                  ``(D) Exception from quarterly report.--The 
                requirement to file a quarterly report under 
                subparagraph (A)(i) for a calendar quarter shall be 
                waived if the organization is required to file a pre-
                election report under subparagraph (A)(ii) during the 
                period beginning on the 5th day after the close of the 
                calendar quarter and ending on the 15th day after the 
                close of the calendar quarter.
          ``(3) Monthly reports, etc.--
                  ``(A) Period.--The reporting periods shall be monthly 
                for all calendar years beginning with the first month 
                of the calendar year in which a contribution is 
                accepted or expenditure is made for a disclosable 
                activity.
                  ``(B) Filing deadline.--Reports under this paragraph 
                shall be filed not later than the 20th day after the 
                last day of the month.
                  ``(C) Reports in lieu of november and december 
                reports during election years.--In lieu of filing the 
                reports otherwise due under this paragraph in November 
                and December of any year in which a regularly scheduled 
                general election is held--
                          ``(i) a pre-general election report shall be 
                        filed in accordance with paragraph (2)(A)(ii),
                          ``(ii) a post-general election report shall 
                        be filed in accordance with paragraph 
                        (2)(A)(iii), and
                          ``(iii) a year-end report shall be filed not 
                        later than January 31 of the following calendar 
                        year.
          ``(4) Certain organizations file annually.--
                  ``(A) In general.--In the case of a 527 organization 
                described in subparagraph (B)--
                          ``(i) the reporting period shall be such 
                        organization's taxable year, and
                          ``(ii) the due date for the returns and 
                        statements required by this section shall be 
                        the due date (without regard to extensions) for 
                        filing the return of tax for such year, whether 
                        or not such organization is required to file a 
                        return for such taxable year.
                  ``(B) Organization described.--An organization is 
                described in this subparagraph if such organization is 
                a 527 organization which is organized and operated 
                exclusively for the purpose of securing the nomination, 
                election, or appointment of a clearly identified 
                candidate for State, local, or judicial office.
          ``(5) Reporting of independent expenditures.--
                  ``(A) In general.--In the case of a disclosable 
                activity which is an independent expenditure by an 
                organization to which subsection (a) applies, the 
                organization shall file the statement described in 
                subparagraph (B).
                  ``(B) Statement.--The statement described in this 
                subparagraph is a statement (filed in accordance with 
                paragraph (1)(A) unless subparagraph (C) applies) which 
                includes the information required under subsection 
                (a)(1) with respect to such independent expenditure.
                  ``(C) Separate reporting with respect to independent 
                expenditures made within 20 days of election.--The 
                statement required by subparagraph (B) in the case of a 
                disclosable activity which is an independent 
                expenditure described in subparagraph (A) aggregating 
                $1,000 or more made after the 20th day, but more than 
                24 hours, before any election shall be filed within 24 
                hours after such independent expenditure is made. Such 
                statement shall be filed with the Secretary.
  ``(e) Definitions.--For purposes of this section--
          ``(1) 527 organization.--The term `527 organization' means 
        any political organization (as defined by section 527(e)(1)).
          ``(2) 527-type activity.--The term `527-type activity' means 
        influencing or attempting to influence the selection, 
        nomination, election, or appointment of any individual to any 
        Federal, State, or local public office or office in a political 
        organization, or the election of Presidential or Vice-
        Presidential electors, whether or not such individual or 
        electors are selected, nominated, elected, or appointed. Such 
        term includes the making of expenditures relating to an office 
        described in the preceding sentence which, if incurred by the 
        individual, would be allowable as a deduction under section 
        162(a).
          ``(3) Contributions.--The term `contributions' has the 
        meaning given to such term by section 271(b)(2).
          ``(4) Expenditures.--The term `expenditures' has the meaning 
        given to such term by section 271(b)(3).
  ``(f) Special Rules.--
          ``(1) Electronic filing.--The Secretary shall develop 
        procedures for submission in electronic form of returns and 
        statements required to be filed under this section.
          ``(2) Paperwork and burden reduction for organizations 
        otherwise disclosing information.--An organization shall not be 
        required to file any return or statement under this section for 
        any period if, with respect to such period, such organization 
        submits to the Secretary, under penalty of perjury, a certified 
        statement that the organization has made a filing, which is 
        publicly available, with another Federal agency which includes 
        all of the information required to be included in such return 
        or statement and which specifies the public location where such 
        information may be found.''.
  (b) Public Inspection of Returns and Statements.--
          (1) In general.--Section 6104 of such Code (relating to 
        publicity of information required from certain exempt 
        organizations and certain trusts) is amended by adding at the 
        end the following new subsection:
  ``(e) Inspection of Documents Relating to Political Activities of 
Certain 501(c) Organizations and 527 Organizations.--
          ``(1) In general.--In the case of any organization required 
        to submit a document under section 6033A--
                  ``(A) a copy of such document shall be made available 
                by such organization for inspection during regular 
                business hours by any individual at the principal 
                office of such organization and, if such organization 
                regularly maintains 1 or more regional or district 
                offices having 3 or more employees, at each such 
                regional or district office, and
                  ``(B) upon request of an individual made at such 
                principal office or such a regional or district office, 
                a copy of such document shall be provided to such 
                individual without charge other than a reasonable fee 
                for any reproduction and mailing costs.
        The request described in subparagraph (B) must be made in 
        person or in writing. If such request is made in person, such 
        copy shall be provided immediately and, if made in writing, 
        shall be provided within 30 days.
          ``(2) Annual income tax returns of 527 organizations.--In the 
        case of an organization required to file a return under section 
        6012(a)(6), the requirements of paragraph (1) shall also apply 
        to such return.
          ``(3) Timely availability.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), documents required to be available under this 
                subsection shall be available no later than 2 business 
                days after being filed.
                  ``(B) Exception.--Subparagraph (A) shall not apply 
                to--
                          ``(i) any document filed under section 6033A 
                        with respect to an annual period, and
                          ``(ii) any return filed under section 
                        6012(a)(6).
          ``(4) 3-year limitation on inspection documents.--Paragraphs 
        (1) and (2) shall apply to any document only during the 3-year 
        period beginning on the last day prescribed for its filing 
        (determined with regard to any extension of time for filing).
          ``(5) Limitation on providing copies.--A rule similar to the 
        rule of subsection (d)(4) shall apply for purposes of this 
        subsection.''.
          (2) Inspection of information returns and income tax returns 
        of political organizations.--Subsection (b) of section 6104 of 
        such Code (relating to inspection of annual information 
        returns) is amended to read as follows:
  ``(b) Inspection of Information Returns and Income Tax Returns of 
Political Organizations.--
          ``(1) In general.--The information required to be furnished 
        by sections 6033, 6033A, 6034, and 6058 (together with the 
        names and addresses of such organizations and trusts) and 
        returns filed under section 6012(a)(6) shall be made available 
        to the public at such times and in such places as the Secretary 
        may prescribe.
          ``(2) Exceptions.--
                  ``(A) Nondisclosure of names and addresses of 
                contributors.--
                          ``(i) In general.--Nothing in this subsection 
                        shall authorize the Secretary to disclose the 
                        name or address of any contributor to any 
                        organization or trust which is required to 
                        furnish such information.
                          ``(ii) Exception.--Clause (i) shall not apply 
                        to a private foundation (as defined in section 
                        509(a)), a 527 organization (as defined in 
                        section 6033A(e)), or information on a return 
                        under section 6033A(a) of an organization 
                        described in paragraph (4), (5) or (6) of 
                        section 501(c).
                  ``(B) Religious and apostolic organizations.--In the 
                case of an organization described in section 501(d), 
                this subsection shall not apply to copies referred to 
                in section 6031(b) with respect to such organization.
          ``(3) Special rules for information under section 6033a.--
                  ``(A) Timely availability.--Documents filed under 
                section 6033A (other than with respect to an annual 
                period) shall be available under paragraph (1) no later 
                than 2 business days after being filed.
                  ``(B) Availability on world wide web.--To the extent 
                practicable, documents filed under section 6033A shall 
                also be made available to the public on the world wide 
                web.
          ``(4) Cooperation with other federal agencies.--The Secretary 
        may cooperate with another Federal agency to carry out the 
        requirements of this subsection with respect to returns and 
        statements required to be filed under section 6033A.''.
  (c) Penalties for Failure To File Documents or Provide Public 
Inspection of Documents.--
          (1) Penalty for failure to report disclosable activities.--
        Subsection (c) of section 6652 of such Code is amended by 
        redesignating paragraphs (2), (3), and (4) as paragraphs (3), 
        (4), and (5), respectively, and by inserting after paragraph 
        (1) the following new paragraph:
          ``(2) Information under section 6033a.--
                  ``(A) In general.--In the case of--
                          ``(i) a failure to file a document required 
                        under section 6033A (relating to returns 
                        relating to political activities) at the time 
                        and in the manner prescribed therefor 
                        (determined without regard to any extension of 
                        time for filing), or
                          ``(ii) a failure to include any of the 
                        information required to be shown on such a 
                        return or statement or to show the correct 
                        information,
                there shall be paid by the organization an amount equal 
                to the rate of tax specified in section 527(b)(1) 
                multiplied by the amount to which the failure relates.
                  ``(B) Public inspection.--In the case of a failure to 
                comply with the requirements of section 6104(e) at the 
                time and in the manner prescribed therefor (determined 
                without regard to any extension of time for filing), 
                there shall be paid by the person failing to meet such 
                requirements $20 for each day during which such failure 
                continues. The maximum penalty imposed under this 
                subparagraph on all persons for failures with respect 
                to any 1 statement shall not exceed $10,000.
                  ``(C) Additional penalty on managers of 527 
                organizations.--
                          ``(i) In general.--The Secretary may make a 
                        written demand on any 527 organization subject 
                        to penalty under subparagraph (A) specifying 
                        therein a reasonable future date by which the 
                        return or statement shall be filed (or the 
                        information furnished) for purposes of this 
                        subparagraph.
                          ``(ii) Failure to comply with demand.--If any 
                        person fails to comply with any demand under 
                        clause (i) on or before the date specified in 
                        such demand, there shall be paid by the person 
                        failing to so comply $10 for each day after the 
                        expiration of the time specified in such demand 
                        during which such failure continues. The 
                        maximum penalty imposed under this subparagraph 
                        on all persons for failures with respect to any 
                        1 statement shall not exceed $5,000.''.
          (2) Other penalties.--
                  (A) Section 6685 of such Code (relating to assessable 
                penalty with respect to public inspection requirements 
                for certain tax-exempt organizations) is amended--
                          (i) by striking ``subsection (d)'' and 
                        inserting ``subsection (d) or (e)'', and
                          (ii) by striking ``return or application'' 
                        each place it appears and inserting ``return, 
                        application, or statement''.
                  (B) Section 7207 of such Code (relating to fraudulent 
                returns, statements, and other documents) is amended by 
                striking ``subsection (d)'' and inserting ``subsection 
                (d) or (e)''.
  (d) Conforming Amendments.--
          (1) Section 527 of such Code is amended by adding at the end 
        the following new subsection:
  ``(i) Cross References.--

                  ``(1) For reporting and inspection requirements, see 
sections 6033A and 6104.
                  ``(2) For penalties for failure to file returns and 
statements, see sections 6652, 6685, and 7207.''.

          (2) The table of sections for subpart A of part III of 
        subchapter A of chapter 61 of such Code is amended by inserting 
        after the item relating to section 6033 the following new item:

                              ``Sec. 6033A. Returns relating to 
                                        political activities.''.

  (e) Effective Dates.--
          (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to----
                  (A) expenditures made and contributions received with 
                respect to disclosable activities in reporting periods 
                beginning after the date of the enactment of this Act, 
                and
                  (B) expenditures made and contributions received in 
                annual reporting periods ending after the date of the 
                enactment of this Act, except that only expenditures 
                and contributions described in subparagraph (A) shall 
                be taken into account.
          (2) Statement of organization.--Paragraph (1) of section 
        6033A(c) of the Internal Revenue Code of 1986 (as added by this 
        section) shall take effect on the date of the enactment of this 
        Act.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary


Purpose

    The bill, H.R. 4717, as amended (``The Full and Fair 
Political Activity Disclosure Act of 2000'') requires increased 
reporting and disclosure by section 527 organizations and by 
certain other tax-exempt organizations with respect to their 
political activities.
    The bill has a negligible effect on Federal fiscal year 
budget receipts over the fiscal years 2001-2005.

Summary

    The bill adopts reporting and disclosure requirements 
applicable to the political activities of section 527 
organizations and certain other tax-exempt organizations. Under 
the bill, section 527 organizations and civic leagues and 
social welfare organizations (described in section 501(c)(4)), 
labor, agricultural, and horticultural organizations (described 
in section 501(c)(5)), and business leagues, chambers of 
commerce, trade associations, and professional football leagues 
(described in section 501(c)(6)) generally are required to file 
returns with the Secretary of the Treasury to report 
contributions and expenditures relating to their political 
activities. These returns are required to be made available to 
the public by the organization and by the Internal Revenue 
Service (``IRS''). In addition, section 527 organizations are 
required to file a statement of organization with the Secretary 
of the Treasury.

                 B. Background and Need for Legislation

    The provisions approved by the Committee reflect the need 
for increased reporting of activities by section 527 
organizations and certain other tax-exempt organizations with 
respect to political activities.

                         C. Legislative History


Subcommittee hearing

    The Subcommittee on Oversight held a hearing on June 20, 
2000, with respect to the political activities of tax-exempt 
organizations and section 527 political organizations.

Committee action

    The bill, H.R. 4717, was introduced by Mr. Houghton on June 
22, 2000. The Committee on Ways and Means marked up the bill on 
June 22, 2000, and approved the bill with a Chairman's 
amendment in the nature of a substitute, by a roll call vote of 
23 yeas and 14 nays, with a quorum present.

                      II. EXPLANATION OF THE BILL


                             A. Present Law


Overview

    Present-law section 501(c) provides for twenty-seven 
different categories of nonprofit organizations that generally 
are exempt from Federal income tax. Among the types of 
organizations described in section 501(c) are: civic leagues 
and social welfare organizations (described in section 
501(c)(4)); labor, agricultural, and horticultural 
organizations (described in section 501(c)(5)); and business 
leagues, chambers of commerce, trade associations, and 
professional football leagues (described in section 501(c)(6)).
    Section 527 provides a limited tax-exempt status to 
``political organizations,'' meaning a party, committee, 
association, fund, account, or other organization (whether or 
not incorporated) organized and operated primarily for the 
purpose of directly or indirectly accepting contributions or 
making expenditures (or both) for an ``exempt function.'' These 
organizations are generally exempt from Federal income tax on 
contributions they receive, but are subject to tax on their net 
investment income and certain other income at the highest 
corporate income tax rate (currently 35 percent). Donors are 
exempt from gift tax on their contributions to such 
organizations. For purposes of section 527, the term ``exempt 
function'' means: the function of influencing or attempting to 
influence the selection, nomination, election or appointment of 
any individual to any Federal, State, or local public office or 
office in a political organization, or the election of 
Presidential or Vice-Presidential electors, whether or not such 
individual or electors are selected, nominated, elected, or 
appointed. Thus, by definition, the purpose of a section 527 
organization is to accept contributions or make expenditures 
for political campaign (and similar) activities.

Present-law rules governing political activities of tax-exempt 
        organizations

    The Federal tax rules applicable to political activities of 
tax-exempt organizations depend on the nature of the 
organization and the nature and extent of the activities. There 
is no bright-line test for determining whether particular 
activities are political campaign activities, lobbying 
activities, or other activities (e.g., educational activity).
    Tax-exempt organizations other than those described in 
section 501(c)(3) generally are permitted to engage in 
political activities. For many of these organizations, 
political activities are inconsistent with the purpose for 
which the particular organization was established; thus, most 
such organizations do not engage in any significant political 
activities. However, for those organizations (such as civic 
leagues and social welfare organizations (described in section 
501(c)(4)), labor, agricultural, and horticultural 
organizations (described in section 501(c)(5)), and business 
leagues, chambers of commerce, trade associations, and 
professional football leagues (described in section 501(c)(6))) 
that do engage in significant political activities, such 
activities cannot be the primary activities of such an 
organization.
    Even though a non-501(c)(3) tax-exempt organization that 
engages in political activities will generally retain its tax-
exempt status so long as such activities are not the primary 
means of accomplishing its purposes, such activities will 
result in the organization being subject to tax under section 
527(f) on the lesser of the amount of its investment income or 
the amount expended on political activities. However, a non-
501(c)(3) organization may establish a separate segregated 
fund, which may be treated as a separate organization under 
section 527(f)(3), so that the expenditures and net investment 
income of the fund will not be attributed to the sponsoring 
organization.

Present-law filing and disclosure requirements

            Recognition of tax-exempt status
    Most non-section 501(c)(3) organizations are not required 
to notify the IRS that they are seeking recognition of their 
tax-exempt status. Such organizations may voluntarily file 
exemption applications in order to establish their 
qualifications for tax exemption with the IRS.
    Section 527 organizations are subject to no notification 
requirement when they are formed and there is no separate 
application for recognition of status as a section 527 
organization. However, an organization wishing to receive 
confirmation of its status as a section 527 organization may 
request a written determination from the IRS in the form of a 
private letter ruling.
            Annual filing requirements
    Tax-exempt organizations generally are required to file an 
annual information return with the IRS. An organization that 
has not received a determination of its tax-exempt status, but 
that claims tax-exempt status under section 501(a), is subject 
to the same annual reporting requirements and exceptions as 
organizations that have received a tax-exemption determination.
    Most tax-exempt organizations are required to file annually 
Form 990 (Return of Organization Exempt From Income Tax). 
Section 501(c) organizations are required to disclose on their 
Form 990 for each year the total amount of direct or indirect 
political expenditures made by the organization during the 
year. No detailed accounting of such expenditures is required. 
In addition, the Form 990 requires tax-exempt organizations to 
report the total amount of dues and contributions received by 
the organization during the taxable year. Tax-exempt 
organizations generally are required to report with the Form 
990 a list of major contributors (i.e., generally persons 
making gifts of $5,000 or more during the year).
    Section 527 political organizations are not required to 
file Form 990. If a section 527 political organization has 
taxable income, it is required annually to file Form 1120-POL 
(U.S. Income Tax Return for Certain Political Organizations); 
however, if the political organization does not have taxable 
income, the Form 1120-POL is not required to be filed. A tax-
exempt organization (other than a section 501(c)(3) 
organization) also is required to file Form 1120-POL if the 
organization's political expenditures and net investment income 
both exceed $100 for the year and must disclose on the Form 990 
the fact that it has filed the Form 1120-POL. If such atax-
exempt organization establishes and maintains a section 527(f)(3) 
separate segregated fund, the fund may be required to file Form 1120-
POL if the fund has taxable income.
    Because it is an income tax return, the Form 1120-POL 
requires information related to the amount of income and 
deductible expenses of the filing organization (or separate 
segregated fund) for the year. The Form 1120-POL does not 
contain information relating to the political activities of the 
organization or contributors to the organization and does not 
require such organizations to report even their total expenses 
relating to political activities. Thus, the Form 1120-POL does 
not contain information relating to contributors to the 
organization or the specific activities of the organization (or 
fund).
            Disclosure requirements
    Under present law, section 501(c) organizations are 
required to make a copy of their application for recognition of 
tax-exempt status (and certain related documents) and their 
annual information return (Form 990) available for inspection 
by any individual during regular business hours at the 
organization's principal office or any regional or district 
office that has three or more employees. All tax-exempt 
organizations are required to comply with requests made in 
person or in writing by individuals who seek a copy of the 
organization's Form 990 for any of the organization's three 
most recent taxable years. Upon such a request, the 
organization is required to supply copies without charge other 
than a reasonable fee for reproduction and mailing costs. If 
the request for copies is made in person, then the organization 
must provide such copies immediately. If the request for copies 
is made in writing, then copies must be provided within 30 
days. An organization is not required to supply copies if its 
application or Form 990 is widely available, such as on the 
World Wide Web.
    Upon written request to the IRS, members of the general 
public also are permitted to inspect annual information returns 
of tax-exempt organizations and applications for recognition of 
tax-exempt status (and related documents). A person making such 
a written request is notified by the IRS when the material is 
available for inspection, and where notes may be taken of the 
material open for inspection, photographs taken with the 
person's own equipment, or copies of such material obtained 
from the IRS for a fee. Annual information returns must be made 
available for a three-year period beginning with the due date 
for the return (including any extension of time for filing).
    Tax-exempt organizations described in section 501(c) and 
section 527 organizations are not required to disclose their 
Forms 1120-POL to the general public. In addition, most tax-
exempt organizations are not required to disclose to the 
general public the names of contributors.

Separability clause

    Under present law, if any provision of the Internal Revenue 
Code or the application of any such provision to any person or 
circumstance is held invalid, the remainder of the Internal 
Revenue Code and its application to any other person or 
circumstance is not affected.

                         B. Reasons for Change

    Recent press reports have focused on the use of section 527 
political organizations to fund political activities that are 
not disclosed to the public under either the Federal tax law or 
under the Federal election laws. These reports make clear that 
section 527 organizations are being used in ways that were not 
necessarily contemplated when section 527 was enacted in 1975. 
Based on recent IRS rulings, the Committee believes that the 
activities of many of these organizations are being limited to 
ensure that the organizations are not engaged in express 
advocacy that would be reported and disclosed under the Federal 
election laws. Thus, the Committee finds that section 527 
organizations are being used to exploit the lack of information 
reporting and disclosure under the present-law Federal tax 
rules. This finding is supported by the fact that IRS 
Statistics of Income data show a clear trend toward increased 
use of section 527 organizations in recent years and by the 
fact that the IRS has been asked to rule on a number of 
occasions with respect to section 527 organizations that, by 
their charter, cannot engage in express advocacy.
    In addition, the Committee believes that the use of tax-
exempt organizations generally to engage in political 
activities is substantial and increasing. For example, an 
Associated Press story (reporting that the National Education 
Association, the nation's largest teachers union, spent 
millions of dollars to ``help elect `pro-education candidates', 
produce political training guides, and gather teachers' voting 
records,'' but reported no expenditures for political 
activities to the Internal Revenue Service) was cited during 
the Committee's markup on the issue of political activities by 
tax-exempt organizations.\1\ Thus, the Committee believes that 
any solution to the present-law problems relating to the lack 
of disclosure of information by section 527 organizations must 
also address the growing use of certain other tax-exempt 
organizations to engage in significant political activities and 
the limited disclosure that is required with respect to such 
activities under present law.
---------------------------------------------------------------------------
    \1\ Margasak, Larry and Solomon, John AP, 6/22/2000.
---------------------------------------------------------------------------
    The Committee understands that there is no bright-line test 
under present law for determining when the activities of a tax-
exempt organization are political activities or educational 
activities. The IRS determines whether an organization is 
participating or intervening, directly or indirectly, in a 
political campaign based upon all of the facts and 
circumstances of each case. Unlike a bright-line test, the 
facts and circumstances test of present law permits the 
definition of political activity to be flexible to address a 
changing political environment. The Committee believes that the 
IRS is, in fact, administering the law in this area through its 
ruling process. The Committee understands that more than 100 
rulings (or other forms of guidance) have been issued on the 
issue of whether any particular activities of a tax-exempt 
organization are political, lobbying, or educational 
activities. The Committee urges the IRS to continue to provide 
guidance to tax-exempt organizations to provide clear 
guidelines with respect to the delineation of nonpartisan 
educational activities and partisan political activities.
    Tax-exempt organizations are required under present law to 
report their aggregate political expenditures on their annual 
return (Form 990). In order to satisfy this reporting 
requirement, organizations are required to keep records of such 
political expenditures. Indeed, the Committee is aware that 
tax-exempt organizations are reporting substantial aggregate 
political expenditures on their Form 990s. In 1994, nearly 
1,300 section 501(c)(4), section 501(c)(5), and section 
501(c)(6) organizations reported a total of over $29 million in 
political expenditures on their Form 990s. However, under 
present law, such organizations are not required to provide any 
detailed description or accounting of such activities to the 
IRS or to the public. In addition, there are no substantial 
dollar penalties under present law to encourage proper 
classification and disclosure of such activities. In the 
absence of rules requiring detailed disclosure of their 
political activities with adequate dollar penalties for failure 
to disclose, organizations have no strong incentives to make a 
reasoned determination of whether their activities are 
educational or political and to disclose them accurately.
    The Committee believes that enhancing the information 
reported to the IRS with respect to section 527 organizations 
and section 501(c)(4), section 501(c)(5), and section 501(c)(6) 
organizations would enable the IRS to better monitor whether 
such organizations are complying with the present-law rules 
requiring the organizations to pay tax on the net investment 
income used to engage in political activities. Furthermore, 
requiring additional reporting of activities that appear to be 
political in nature would assist the IRS in its efforts to 
ensure that organizations are not impermissibly characterizing 
certain activities as educational, rather than political.
    In addition, the Committee believes that, given the tax 
benefits conferred under present law (e.g., the benefits of 
tax-exempt status to section 501(c)(4), section 501(c)(5), and 
section 501(c)(6) organizations and the benefits of the gift 
tax exemption for contributions to section 527 organizations), 
the public interest is served by greater public disclosure of 
information relating to the political activities of such 
organizations, including a detailed listing of expenditures for 
political activities and the source of funds (i.e., 
contributions) used for this purpose. Public disclosure of 
information enables the general public to provide oversight of 
the political activities of these organizations.
    These enhanced disclosure and reporting rules are intended 
to make no changes to the present-law substantive rules 
regarding the extent to which tax-exempt organizations are 
permitted to engage in political activities. Thus, the 
Committee bill is not intended to alter the involvement of such 
organizations in the political process, but rather it is 
intended to shed sunlight on these activities so that the 
general public can be informed as to the types and extent of 
activities in which such organizations engage. This increased 
information will assist individuals in determining, for 
example, whether to make a contribution to any specific tax-
exempt organization.
    The Committee understands that some people contend that the 
oversight of political activities in the bill, which merely 
requires reporting of additional information to the IRS and 
making such information public, is unconstitutional. The 
Committee believes that this argument has already been 
considered and rejected by the Supreme Court with respect to 
section 501(c)(3) organizations and that the analysis with 
respect to other tax-subsidized organizations, including 
section 527 organizations, would be the same. The Committee 
notes that the Supreme Court hasheld that, when Congress 
chooses simply not to provide a tax subsidy with respect to certain 
activities by a section 501(c)(3) organization, no First Amendment or 
Fifth Amendment rights have been infringed. In its decision in Regan v. 
Taxation With Representation of Washington,\2\ the Supreme Court 
addressed the issue of the rules restricting section 501(c)(3) 
organizations from engaging in any substantial lobbying activities. The 
Court stated that tax exemptions and tax deductions are subsidies that 
are administered through the Federal tax system. The Court noted that 
tax exemption has much the same effect as a cash grant to an 
organization of the amount of tax it would have to pay if it were not 
tax exempt. The Court held that a legislature's decision not to 
subsidize the exercise of a fundamental right does not infringe that 
right and, therefore, is not subject to strict scrutiny by the courts. 
The Court also noted that the organization in the Taxation With 
Representation \3\ case had the ability to reorganize itself to avoid 
the proscription on substantial lobbying by section 501(c)(3) 
organizations. The Committee believes that, because the Committee's 
bill does not change the present-law rules relating to the ability of 
section 501(c)(4), section 501(c)(5), and section 501(c)(6) 
organizations and section 527 organizations to engage in certain 
activities, the analysis of the Supreme Court in Taxation With 
Representation \4\ should apply. It is difficult to imagine that the 
Supreme Court would conclude that it is constitutional to eliminate a 
tax subsidy for certain activities, but not constitutional to require 
that organizations comply with reporting requirements with respect to 
those activities so that the IRS can monitor compliance with the law.
---------------------------------------------------------------------------
    \2\ 461 U.S. 540 (1983).
    \3\ Id.
    \4\ Id.
---------------------------------------------------------------------------
    The Committee notes that section 501(c)(4), section 
501(c)(5), and section 501(c)(6) organizations can avoid the 
reporting and disclosure requirements of the bill by using a 
special rule for earmarked contributions deposited into a 
segregated disclosable activities fund. This point addresses 
the argument made by some that requiring an organization to 
report its contributors denies such contributors their right to 
free association and free speech. The Committee finds that, by 
permitting organizations to earmark contributions for political 
activities and to deposit such contributions in a segregated 
fund, contributors need only be disclosed if they earmark their 
contributions for political activities.
    The Committee understands that some believe that the bill 
is unconstitutional under the rationale found in Buckley v. 
Valeo \5\, which declared certain Federal election laws 
unconstitutional due to, among other things, vagueness. 
However, because the bill does not regulate political 
activities, but instead merely requires the disclosure of such 
activities and because the bill relies on present-law section 
527, which has not been constitutionally challenged, the 
Committee does not believe that this criticism has merit.
---------------------------------------------------------------------------
    \5\ 424 U.S. 1 (1976).
---------------------------------------------------------------------------
    The Committee finally notes that, by establishing 
thresholds above which expenditures and contributors are 
disclosed, the bill focuses reporting and disclosure on 
activities, expenditures, and contributors of more than de 
minimis amounts.
    For the foregoing reasons, the Committee finds it 
appropriate to adopt reporting and disclosure requirements 
applicable to the political activities of and contributors to 
section 527 organizations, to expand the reporting of political 
activity expenditures with respect to section 501(c)(4), 
section 501(c)(5), and section 501(c)(6) organizations, and 
generally to require the reporting of contributors to section 
501(c)(4), section 501(c)(5), and section 501(c)(6) 
organizations.

                      C. Explanation of Provisions


In general

    The bill adopts reporting and disclosure requirements 
applicable to the political activities of and contributors to 
section 527 organizations, expands the reporting of political 
activity expenditures with respect to civic leagues and social 
welfare organizations (described in section 501(c)(4)), labor, 
agricultural, and horticultural organizations (described in 
section 501(c)(5)), and business leagues, chambers or commerce, 
trade associations, and professional football leagues 
(described in section 501(c)(6)), and generally requires the 
reporting of contributors to section 501(c)(4), section 
501(c)(5), and section 501(c)(6) organizations. Under the bill, 
section 527 organizations and section 501(c)(4), section 
501(c)(5), and section 501(c)(6) organizations generally are 
required to file returns with the Secretary of the Treasury to 
report contributions and expenditures relating to their 
disclosable activities. In addition, section 527 organizations 
are required to file a statement of organization with the 
Secretary of the Treasury.

Information required to be disclosed

    Under the bill, a section 501(c)(4), section 501(c)(5), or 
section 501(c)(6) organization or a section 527 organization 
subject to the reporting and disclosure requirements is 
required to include the following information in its return 
reports:
          (1) a detailed description of the organization's 
        disclosable activities during the reporting period and 
        the purpose and intended results for the major 
        categories of expenditures for such disclosable 
        activities, including the candidates intended to be 
        affected by the expenditures;
          (2) a list containing each expenditure made for a 
        disclosable activity during the reporting period in 
        excess of $200 (in the case of expenditures by section 
        527 organizations) and $1,000 (in the case of 
        expenditures by section 501(c)(4), section 501(c)(5), 
        and section 501(c)(6) organizations subject to the 
        reporting and disclosure requirement);
          (3) a list containing the name and address of each 
        person to whom the organization made any expenditure 
        during the reporting period in an aggregate amount in 
        excess of $200 (in the case of expenditures by section 
        527 organizations) and $1,000 (in the case of 
        expenditures by section 501(c)(4), section 501(c)(5), 
        and section 501(c)(6) organizations subject to the 
        reporting and disclosure requirement); and
          (4) in the case of a reportable contributor,
                  (a) the name and address of the contributor 
                (and, if the contributor is an individual, the 
                contributor's occupation and employer),
                  (b) the aggregate amount of contributions 
                made by such contributor,
                  (c) the name and address (if any) of the 
                person on whose behalf the contributor made a 
                payment to the organization, and
                  (d) the name and address of any intended 
                beneficiary of a payment that was designated 
                for a beneficiary other than the organization 
                to which the payment was made (including 
                amounts earmarked or otherwise directed through 
                an intermediary).
    In the case of a section 527 organization, the following 
additional information is required to be included on the 
return:
          (1) a certification, under penalty of perjury, 
        whether an expenditure is made in cooperation, 
        consultation, or concert with, or at the request or 
        suggestion of, any candidate for public office or any 
        authorized committee or agent of such a candidate;
          (2) the name, address, and business purpose of any 
        entity that is a reportable contributor during the 
        reporting period;
          (3) in the case of an entity described in (2), 
        whether the entity claims to be exempt from tax and the 
        basis for the tax-exempt status; and
          (4) the original source and the intended ultimate 
        recipient of all contributions made by a person 
        directly or indirectly, including contributions that 
        are earmarked or otherwise directed through an 
        intermediary.
    Under the bill, this information must be provided for the 
applicable reporting period and cumulatively for the calendar 
year.
    The bill defines the term contribution to include a gift, 
subscription, loan, advance, or deposit of money, or anything 
or value, and includes a contract, promise, or agreement to 
make a contribution, whether or not legally enforceable. It is 
assumed that such term includes all grants and transfers of 
money. In addition, the term expenditure includes a payment, 
distribution, loan, advance, deposit, or gift of money, or 
anything of value, and includes a contract, promise, or 
agreement to make an expenditure, whether or not legally 
enforceable.

Reporting periods and due dates

    Under the bill, the reporting periods and deadlines 
generally are the same as those required for reports under 2 
U.S.C. 434(a) codifying the Federal Election Campaign Act of 
1971 (``FECA''). In general, the FECA specifies different 
reporting periods and deadlines depending upon whether it is an 
election or non-election year and the nature of the 
organization (i.e., principal campaign committee of a candidate 
for the House of Representatives or Senate, principal campaign 
committee of a candidate for the office of President, or a 
political committee other than an authorized committee of a 
candidate). Under the FECA, reporting can be required monthly, 
quarterly, or semi-annually and special pre- and post-general 
election reports are required.
    As under the FECA, there is separate reporting of 
independent expenditures made within 20 days of an election. 
For this purpose, the term ``independent expenditure'' is 
intended to bedefined by reference to mass media communications 
as described in the definition of disclosable activities, below.
    In the case of a section 501(c)(4), a section 501(c)(5), or 
a section 501(c)(6) organization, the reporting and disclosure 
requirements do not apply for any reporting period if the 
aggregate expenditures of the organization for disclosable 
activities are less than $10,000 for the period beginning 
January 1 of the calendar year through the end of the reporting 
period.
    Under the bill, in the case of a section 527 organization 
organized and operated exclusively for the purpose of securing 
the nomination, election, or appointment of a candidate for 
State, local, or judicial office, the reporting period is the 
organization's taxable year and the deadline for reporting is 
the due date for the organization's annual return, whether or 
not the organization is required to file an annual return.

Definition of reportable contributor

    Under the bill, a reportable contributor means any person 
if the aggregate of such person's contributions and membership 
dues, fees, and assessments (as defined in section 527) 
received by the organization from the person exceed $200 (in 
the case of a section 527 organization) or $1,000 (in the case 
of a section 501(c)(4) organization, a section 501(c)(5) 
organization, or a section 501(c)(6) organization subject to 
the reporting and disclosure requirements) during the period 
beginning January 1 and ending on the last day of the 
applicable reporting period.
    In determining the amount of dues of any person, an 
organization may elect under the bill only to take into account 
dues that are attributable to the disclosable activities of the 
organization. For purposes of this election, the portion of 
dues attributable to expenditures for disclosable activities is 
the amount that bears the same ratio to the total amount of the 
dues of the organization as the expenditures for disclosable 
activities bears to the total expenditures of the organization 
for the period.
    In addition, the bill provides a special election for 
earmarked contributions deposited into a segregated disclosable 
activities fund by a section 501(c)(4) organization, a section 
501(c)(5) organization, or a section 501(c)(6) organization. 
Under the election, an organization may limit the rule 
requiring disclosure of reportable contributors to those 
persons contributing to the segregated disclosable activities 
fund. This election is available only if the organization (1) 
maintains a separate, segregated fund for such contributions, 
(2) deposits into such fund only and all amounts received by 
the organization that are earmarked for a disclosable activity, 
and (3) makes expenditures for disclosable activities only from 
such separate fund. If the organization makes the election to 
use this special rule, but fails to satisfy all of the 
requirements for the election during a reporting period, the 
exception to the general rule on reportable contributors does 
not apply for the reporting period or for any subsequent 
reporting period during the calendar year. However, under the 
bill, failure to meet the requirement of (3), above, with 
respect to de minimis amounts is not treated as a failure to 
satisfy all of the requirements for the election. If an 
organization makes this election, the segregated disclosable 
activities fund is not treated as a section 527 organization 
solely for purposes of the reporting and disclosure 
requirements. Thus, the applicable dollar threshold amount is 
$1,000, rather than $200 in such a case.

Definition of disclosable activities

    Under the bill, in the case of a section 527 organization, 
disclosable activities include all activities of the 
organization.
    In the case of an organization described in section 
501(c)(4), section 501(c)(5), or section 501(c)(6), disclosable 
activities are:
          (1) section 527-type activities (i.e., activities to 
        influence or attempt to influence the selection, 
        nomination, election, or appointment of any individual 
        to any Federal, State, or local public office or office 
        in a political organization, or the election of 
        Presidential or Vice-Presidential electors, as defined 
        in section 527);
          (2) establishing, administering, or soliciting 
        contributions to a section 527 organization;
          (3) contributing directly or indirectly to a section 
        527 organization;
          (4) contributing directly or indirectly to a section 
        501(c)(4), section 501(c)(5), or section 501(c)(6) 
        organization that is required, by reason of its 
        disclosable activities, to file a return for the year 
        for which the contribution is made or for any of the 
        preceding three years (or would have been required to 
        file a return if the bill had been in effect in the 
        preceding three years); and
          (5) any mass media communication (including any mass 
        mailing) that is not a section 527-type activity and 
        that mentions a clearly identified candidate for 
        election for Federal office (including an individual 
        who has formed an exploratory committee for such an 
        election) or the political party of such a candidate or 
        any mass media communication (including any mass 
        mailing) that contains the picture or other likeness of 
        such an individual or candidate.
    The definition contained in (4), above, is intended to 
exempt from the definition of a disclosable activity any 
contribution to a section 501(c)(4), section 501(c)(5), or 
section 501(c)(6) organization if the ultimate transferee 
organization does not itself engage in disclosable activities. 
Thus, for example, if a section 501(c)(4) organization, which 
does not directly engage in any disclosable activities, 
transfers contributions to another section 501(c)(4), which 
does not engage in any disclosable activities for the current 
(and has not done so for the three preceding years), the 
contributing organization is not required to report the 
transfer as a disclosable activity. On the other hand, if a 
section 501(c)(4) organization, which does not engage in any 
otherwise disclosable activities during the year, makes a 
contribution to a section 501(c)(4) organization that does 
engage in such activities (or has engaged in such activities 
during any of the preceding three years), then the transferor 
organization is required to treat the transfer as a disclosable 
activity under the bill and, if the amount transferred is at 
least $10,000 (the applicable threshold at which the reporting 
requirements apply), the organization is subject to the 
reporting and disclosure requirements under the bill. This rule 
is intended to ensure that section 501(c)(4), section 
501(c)(5), and section 501(c)(6) organizations do not avoid the 
reporting and disclosure requirements by making transfers to 
other such organizations.
    For purposes of the rule treating a mass media 
communication as a disclosable activity (i.e., an activity 
described in (5), above), the term ``mass media'' includes mass 
media as described in Treasury regulations section 56.4911-
2(b)(5)(iii) relating to the definition of grass roots 
lobbying. In addition, an activity described in (5), above, is 
not treated as a disclosable activity if the activity relates 
solely to bona fide members of the organization. Thus, 
communications with bona fide members of an organization 
generally are not treated as disclosable activities. However, 
this exception does not apply to any communication that urges 
the members of the organization to communicate with another 
person or urges such members to take an action as a result of 
the communication. In addition, an activity described in (5), 
above, that otherwise is treated as a 527-type activity in (1), 
above, is not treated as a disclosable activity under (5), 
above, but rather is described in (1), above. Thus, the 
exception for activities relating to bona fide members of the 
organization does not apply to a 527-type activity as under the 
present-law tax rules.

Statement of organization by section 527 organization

    Under the bill, every 527 organization is required to file 
a statement of organization with the Secretary of the Treasury 
no later than 10 days after the date that the organization is 
established or, in the case of an organization in existence on 
the date of enactment of the bill, no later than 10 days after 
the date of enactment.
    The statement of organization is required to contain the 
following information:
          (1) the name and address of the organization;
          (2) the name, address, relationship, and type of any 
        person that is directly or indirectly related to or 
        affiliated with the organization;
          (3) the name, address, and position of the custodian 
        of books and accounts of the organization;
          (4) the name and address of the treasurer of the 
        organization;
          (5) a listing of all banks, safety deposit boxes, and 
        other depositories used by the organization.
    In addition, under the bill, if the information contained 
in the statement of organization ceases to be accurate, the 
organization is required to file a corrected statement with the 
Secretary of the Treasury no later than 10 days after the 
information ceases to be accurate.
    For purposes of the statement of organization, a person is 
considered directly or indirectly related to or affiliated with 
a political organization if, at any time during the 3-year 
period ending on the date of the statement, the person was in a 
position to exercise substantial direct or indirect influence 
(whether or not as a officer of the organization) over the 
process of collecting or disbursing the exempt purpose funds of 
the organization or was in a position to exercise substantial, 
overall direct or indirect influence over the activities of the 
organization.

Filing procedures

    Under the bill, the Secretary of the Treasury is directed 
to develop procedures for submission in electronic form of the 
returns and statements required under the bill. In addition, 
the bill provides that an organization is not required to file 
any return or statement for any period, if the organization 
submits to the Secretary of the Treasury, under penalty of 
perjury, a certified statement that the organization has made a 
filing for such period that is publicly available with another 
Federal agency and that such filing includes all of the 
information otherwise required to be filed under the bill and 
specifies the public location where such information may be 
found. Thus, for example, a section 527 organization that is 
subject to reporting and disclosure requirements under the 
Federal election law may file a certified statement with the 
Secretary if all of the information that is otherwise required 
to be disclosed under the bill is disclosed in the filing under 
the Federal election law.

Public inspection of statements and returns

    Under the bill, the present-law public inspection 
requirements of section 6104 are extended to the returns 
required to be filed under the bill and to the statement of 
organization required to be filed for section 527 
organizations. In addition, under the bill, the income tax 
return (Form 1120-POL) filed by a section 527 organization (or 
a segregated fund of another tax-exempt organization that is 
treated as a section 527 organization) is subject to the public 
inspection requirements. Thus, a copy of the return or 
statement of organization is required to be made available by 
the organization for inspection during regular business hours 
at the principal office of the organization and, if the 
organization maintains at least one regional or district office 
with 3 or more employees, at each such regional or district 
office. In addition, an individual is permitted to request in 
person or in writing a copy of such statement of organization 
and the organization is required to provide such a copy without 
charge other than a reasonable fee for any reproduction and 
mailing costs. If such a request is made in person, it must be 
provided immediately. If the request is made in writing, it 
must be provided within 30 days. As under present law, the 
public disclosure requirement may be satisfied by making the 
information widely available, such as on the World Wide Web.
    The bill generally requires documents that are required to 
be made publicly available to be available no later than 2 
business days after being filed. However, this rule does not 
apply to the annual returns required by the bill or to the Form 
1120-POL. In addition, the public disclosure requirement 
applies to any document during the 3-year period beginning on 
the last date prescribed for its filing.
    The bill also provides that the present-law rules 
permitting public disclosure by the Secretary of the Treasury 
of the Form 990 filed by tax-exempt organizations also applies 
(1) to any returns and statements required to be filed under 
the bill and (2) the Form 1120-POL. Thus, such information 
shall be made available to the public at such times and in such 
places as the Secretary may prescribe. Under the bill, such 
information is required to be made available publicly no later 
than two business days after the return containing such 
information is filed and, to the extent practicable, will be 
made available to the public on the World Wide Web. The 
present-law rule that prohibits the Secretary from disclosing 
the names and address of contributors does not apply to any 
section 527 organization or to any section 501(c)(4), 
501(c)(5), or 501(c)(6) organization required to provide such 
information on returns required to be filed under the bill. The 
Secretary of the Treasury is permitted to cooperate with 
another Federal agency to carry out the requirements with 
respect to public inspection of returns and statements required 
to be filed under the bill. Thus, for example, the Secretary 
could arrange for the Federal Election Commission to process 
the reports required by this bill and make them available to 
the public.

Penalties

    The penalty for failure to file properly the returns or 
statements required under the bill is an amount equal to the 
tax rate applicable to section 527 organizations (i.e., 35 
percent) multiplied by the amount to which the failure relates. 
In the case of the failure to report an expenditure or 
contribution as required under the bill, the amount to which 
the failure relates is the amount of the expenditure or 
contribution required to be disclosed. In the case of a failure 
to provide full information (for example, the name and address 
of a contributor) with respect to an expenditure or 
contribution, the amount to which the failure relates is the 
amount of such expenditure or contribution. If an organization 
fails to file a return as required, the amount to which the 
failure relates is the total amount of expenditures and 
contributions that should have been reported on the return.
    The bill permits the Secretary of Treasury to make a 
written demand of a section 527 organization of a reasonable 
future date by which a return or statement will be filed. Any 
person who fails to comply with such a written demand is 
subject to a penalty of $10 per day for each day after the 
expiration of the time specified in the demand for filing, up 
to a maximum penalty with respect to such statement of $5,000.
    The penalty for failure to satisfy the public inspection 
requirements with respect to a statement of organization is $20 
for each day during which such failure continues up to a 
maximum of $10,000 with respect to each failure.

Separability clause

    The bill does not modify the present-law separability 
clause contained in the Internal Revenue Code. Thus, if any 
portion of the bill is held invalid, any portions of the bill 
not found to be invalid remain in effect.

Effective date

    The bill is generally effective for expenditures made and 
contributions received with respect to disclosable activities 
taking place in reporting periods beginning after the date of 
enactment and expenditures made and contributions received with 
respect to disclosable activities taking place after the date 
of enactment in annual reporting periods ending after the date 
of enactment. The statement of organization required to be 
filed by section 527 organizations is effective on the date of 
enactment. The Committee intends that, within five days after 
the date of enactment. the Secretary shall issue guidance on 
the manner in which these organizations can comply with the 
required disclosures.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 4717.

                       Motion to Report the bill

    The bill, H.R. 4717, as amended, was ordered favorably 
reported by a roll call vote of 23 yeas to 14 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................        X   ........  .........  Mr. Rangel.......  ........  ........  .........
Mr. Crane......................        X   ........  .........  Mr. Stark........  ........  ........  .........
Mr. Thomas.....................        X   ........  .........  Mr. Matsui.......  ........        X   .........
Mr. Shaw.......................        X   ........  .........  Mr. Coyne........  ........        X   .........
Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Houghton...................        X   ........  .........  Mr. Cardin.......  ........        X   .........
Mr. Herger.....................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. McCrery....................        X   ........  .........  Mr. Kleczka......  ........        X   .........
Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........        X   .........
Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Nussle.....................        X   ........  .........  Mr. McNulty......  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........        X   .........
Ms. Dunn.......................        X   ........  .........  Mr. Tanner.......  ........        X   .........
Mr. Collins....................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Portman....................        X   ........  .........  Mrs. Thurman.....  ........        X   .........
Mr. English....................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Watkins....................        X   ........  .........
Mr. Hayworth...................        X   ........  .........
Mr. Weller.....................        X   ........  .........
Mr. Hulshof....................        X   ........  .........
Mr. McInnis....................        X   ........  .........
Mr. Lewis (KY).................        X   ........  .........
Mr. Foley......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                          Votes on Amendments

    A roll call vote was conducted on the following amendment 
to the Chairman's amendment in the nature of a substitute.
    A substitute amendment by Mr. Coyne, was defeated by a roll 
call vote of 14 yeas to 23 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representatives             Yea       Nay     Present     Representatives      Yea       Nay    Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer......................  ........        X   .........  Mr. Rangel........  ........  ........  .......
Mr. Crane.......................  ........        X   .........  Mr. Stark.........  ........  ........  .......
Mr. Thomas......................  ........        X   .........  Mr. Matsui........        X   ........  .......
Mr. Shaw........................  ........        X   .........  Mr. Coyne.........        X   ........  .......
Mrs. Johnson....................  ........        X   .........  Mr. Levin.........        X   ........  .......
Mr. Houghton....................  ........        X   .........  Mr. Cardin........        X   ........  .......
Mr. Herger......................  ........        X   .........  Mr. McDermott.....        X   ........  .......
Mr. McCrery.....................  ........        X   .........  Mr. Kleczka.......        X   ........  .......
Mr. Camp........................  ........        X   .........  Mr. Lewis (GA)....        X   ........  .......
Mr. Ramstad.....................  ........        X   .........  Mr. Neal..........        X   ........  .......
Mr. Nussle......................  ........        X   .........  Mr. McNulty.......        X   ........  .......
Mr. Johnson.....................  ........        X   .........  Mr. Jefferson.....        X   ........  .......
Ms. Dunn........................  ........        X   .........  Mr. Tanner........        X   ........  .......
Mr. Collins.....................  ........        X   .........  Mr. Becerra.......        X   ........  .......
Mr. Portman.....................  ........        X   .........  Mrs. Thurman......        X   ........  .......
Mr. English.....................  ........        X   .........  Mr. Doggett.......        X   ........  .......
Mr. Watkins.....................  ........        X   .........
Mr. Hayworth....................  ........        X   .........
Mr. Weller......................  ........        X   .........
Mr. Hulshof.....................  ........        X   .........
Mr. McInnis.....................  ........        X   .........
Mr. Lewis (KY)..................  ........        X   .........
Mr. Foley.......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of Rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of the revenue 
provisions of the bill, H. R. 4717, as reported.
    The bill is estimated to have the following effects on 
budget receipts for fiscal years 2000-2005:

   ESTIMATED BUDGET EFFECTS OF H.R. 4717, THE ``FULL AND FAIR POLITICAL ACTIVITY DISCLOSURE ACT OF 2000,'' AS
                       REPORTED BY THE COMMITTEE ON WAYS AND MEANS--FISCAL YEARS 2001-2005
                                              [Millions of Dollars)
----------------------------------------------------------------------------------------------------------------
                      Provision                       Effective   2001    2002    2003    2004    2005   2001-05
----------------------------------------------------------------------------------------------------------------
Require Section 527 Organizations and Certain Tax-          [1]              Negligible Revenue Effect
 Exempt Organizations to Disclose Their Political
 Activities and Contributors........................
----------------------------------------------------------------------------------------------------------------
[1] Effective for expenditures made and contributions received in reporting periods beginning after the date of
  enactment and for expenditures made and contributions received in annual reporting periods ending after the
  date of enactment. The general reporting requirements of disclosable activities are effective on the date of
  enactment.

Source: Joint Committee on Taxation.

    B. Statement Regarding New Budget Authority and Tax Expenditures


Budget authority

    In compliance with clause 3(c)(2) of Rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

Tax expenditures

    In compliance with clause 2(c)(2) of Rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill does not involve increased tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the Congressional Budget Office (``CBO''), the 
following statement by CBO is provided.
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 27, 2000.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4717, the Full and 
Fair Political Activity Disclosure Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

H.R. 4717.--Full and Fair Political Activity Disclosure Act of 2000

    H.R. 4717 would require certain private, nonprofit 
organizations to disclose their political expenditures and 
contributions to the Internal Revenue Service (IRS). Political 
organizations, as defined by section 527 of the tax code, would 
be required to report any contributions or expenditures of $200 
or more. The bill would require certain tax-exempt 
organizations that spend more than $10,000 on election-related 
activities--such as civic and business groups and labor and 
agriculture organizations--to disclose contributions and 
expenditures of $1,000 or more. H.R. 4717 would require that 
these organizations and the IRS both make the reported 
information available to the public.
    The bill would require the IRS to make the reported 
information available within two business days of its filing. 
The IRS also would be responsible for issuing regulations and 
ensuring that organizations comply with the bill's provisions, 
although it is possible that the bill would allow the IRS to 
enter into an interagency agreement to have the Federal 
Election Commission (FEC) perform such work on its behalf.
    Implementing H.R. 4717 would increase administrative costs 
of the IRS, but CBO has not had sufficient time to estimate the 
amount of such higher costs, which would be subject to the 
availability of appropriated funds. If implementing the bill 
would require that the IRS develop new systems to accept, 
catalogue, and make available the reported information within 
two days, the costs could be substantial. Alternately, if the 
IRS were able to enter into an interagency agreement with the 
FEC to accept and post the information on the IRS's behalf, the 
costs would likely be significantly less since the FEC already 
performs such work for political candidates and parties.
    Because the bill would create new penalties for violating 
campaign finance disclosure laws, pay-as-you-go procedures 
would apply. However, CBO estimates that additional payments to 
the federal government from such penalties, which are 
classified as governmental receipts (revenues), would total 
less than $500,000 a year.
    The Joint Committee on Taxation (JCT) has determined that 
the bill's requirements on section 527 organizations and 
certain tax-exempt organizations to disclose their political 
activities and contributions would be private-sector mandates 
as defined in the Unfunded Mandates Reform Act (UMRA). JCT 
estimates that the aggregate cost to the private-sector to 
comply with these mandates would not exceed the threshold 
established in UMRA ($109 million in 2000, adjusted annually 
for inflation) in any of the first five fiscal years after 
enactment. The bill contains no intergovernmental mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    The CBO staff contact is John R. Righter. This estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

                 V. OTHER MATTERS TO BE DISCUSSED UNDER


                         THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the reporting of information by 
tax-exempt organizations that the Committee concluded that it 
is appropriate and timely to enact the provisions included in 
the bill as reported.

    B. Summary of Findings and Recommendations of the Committee on 
                           Government Reform

    With respect to clause 3(c)(4) of rule XII of the Rules of 
the House of Representatives, the Committee advises that no 
oversight findings or recommendations have been submitted to 
this Committee by the Committee on Government Reform with 
respect to the provisions contained in the bill.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives (relating to Constitutional 
Authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have Power To lay 
and collect Taxes, Duties, Imposts and Excises * * * ''), and 
from the 16th Amendment to the Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the provisions of the 
bill contain Federal private sector mandates. The estimated 
aggregate amounts that the private sector will be required to 
spend in order to comply with the Federal private sector 
mandate is less than $100 million in any of the first five 
fiscal years. The Committee has determined that the bill does 
not impose a Federal intergovernmental mandate on State, local, 
and tribal governments.

                E. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``No bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase shall be considered as passed or agreed to unless 
determined by a vote of not less than three-fifths of the 
Members.'' The Committee has carefully reviewed the provisions 
of the bill, and states that the provisions of the bill do not 
involve any Federal income tax rate increase within the meaning 
of the rule.

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the 
Joint Committee on Taxation (in consultation with the Internal 
Revenue Service and the Department of the Treasury) to provide 
a tax complexity analysis. The complexity analysis is required 
for all legislation reported by the House Committee on Ways and 
Means, the Senate Committee on Finance, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
``widespread applicability'' to individuals or small 
businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1968


                        Subtitle A--Income Taxes

           *       *       *       *       *       *       *


                 CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


                  Subchapter F--Exempt organizations

           *       *       *       *       *       *       *


                  PART VI--POLITICAL ORGANIZATIONS

           *       *       *       *       *       *       *


SEC. 527. POLITICAL ORGANIZATIONS.

  (a) * * *

           *       *       *       *       *       *       *

  (i) Cross References.--

          (1) For reporting and inspection requirements, see sections 
        6033A and 6104.
          (2) For penalties for failure to file returns and statements, 
        see sections 6652, 6685, and 7207.

           *       *       *       *       *       *       *


                Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *


                  CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *


                   Subchapter A--Returns and Records

           *       *       *       *       *       *       *


                    PART III--INFORMATIONAL RETURNS

           *       *       *       *       *       *       *


Subpart A--Information Concerning Persons Subject to Special Provisions

        Sec. 6031. Return of partnership income.
     * * * * * * *
        Sec. 6033A. Returns relating to political activities.

           *       *       *       *       *       *       *


SEC. 6033A. RETURNS RELATING TO POLITICAL ACTIVITIES.

  (a) General Reporting Requirements.--
          (1) In general.--Every organization to which this 
        subsection applies for a reporting period shall submit 
        a return to the Secretary for such period. Such return 
        shall include--
                  (A) a detailed description of such 
                organization's disclosable activities during 
                the reporting period and the purpose and 
                intended results for the major categories of 
                expenditures for such activities, including the 
                candidates intended to be affected,
                  (B) a list identifying--
                          (i) each expenditure made for a 
                        disclosable activity during the 
                        reporting period in an amount in excess 
                        of the threshold amount, and
                          (ii) the name and address of each 
                        person to whom the organization made 
                        any expenditure required to be reported 
                        under clause (i), and
                  (C) in the case of a reportable contributor--
                          (i) the name and address of the 
                        contributor (and, if the contributor is 
                        an individual, the contributor's 
                        occupation and employer),
                          (ii) the aggregate amount of 
                        contributions made by such contributor,
                          (iii) the name and address of the 
                        person (if any) on whose behalf the 
                        contributor made any payment to such 
                        organization, and
                          (iv) if any payment by the 
                        contributor was designated for a 
                        beneficiary other than such 
                        organization (including amounts which 
                        are in any way earmarked or otherwise 
                        directed through an intermediary), the 
                        name and address of the intended 
                        beneficiary.
        The information required under the preceding sentence 
        for any reporting period shall be set forth separately 
        for such period and in the aggregate for such period 
        and preceding reporting periods during the calendar 
        year.
          (2) Organizations to which subsection applies.--This 
        subsection shall apply to any organization described in 
        or subject to section 527 if--
                  (A) such organization is described in 
                paragraph (4), (5), or (6) of section 501(c), 
                or
                  (B) such organization is a 527 organization.
          (3) Exception for non-527 organizations having 
        aggregate disclosable expenditures of less than 
        $10,000.--This subsection shall not apply to an 
        organization described in paragraph (2)(A) for any 
        reporting period if the aggregate expenditures of the 
        organization for disclosable activities during the 
        period beginning on January 1 of the calendar year in 
        which the reporting period begins and ending on the last 
        day of the reporting period are less than $10,000.
          (4) Reportable contributor.--
                  (A) In general.--For purposes of paragraph 
                (1), the term ``reportable contributor'' means 
                any person if the aggregate of the 
                contributions and membership dues, fees, and 
                assessments (within the meaning of section 527) 
                received by the organization from such person 
                during the testing period exceeds the threshold 
                amount.
                  (B) Exception for dues not attributable to 
                disclosable activities.--
                          (i) In general.--At the election of 
                        the organization, the only dues taken 
                        into account under subparagraph (A) 
                        shall be dues attributable to 
                        expenditures for disclosable 
                        activities.
                          (ii) Portion of dues attributable to 
                        disclosable activities.--For purposes 
                        of clause (i), the portion of dues 
                        attributable to expenditures for 
                        disclosable activities of an 
                        organization is the amount which bears 
                        the same ratio to the total amount of 
                        dues as the expenditures of the 
                        organization which are disclosable 
                        under paragraph (1) for the testing 
                        period bears to the total expenditures 
                        of the organization for such period.
                  (C) Testing period.--For purposes of this 
                paragraph, the term ``testing period'' means, 
                with respect to any reporting period, the 
                period--
                          (i) beginning on January 1 of the 
                        calendar year in which the reporting 
                        period begins, and
                          (ii) ending on the last day of the 
                        reporting period.
          (5) Special rule for earmarked contributions 
        deposited into a segregated disclosable activities 
        fund.--
                  (A) In general.--In the case of an 
                organization described in paragraph (4), (5), 
                or (6) of section 501(c), paragraph (1)(C) 
                shall apply only with respect to amounts 
                received which are earmarked for a disclosable 
                activity if the organization elects--
                          (i) to maintain a segregated 
                        disclosable activities fund,
                          (ii) to deposit into such fund only 
                        and all amounts received by such 
                        organization which are earmarked by the 
                        contributor for a disclosable activity, 
                        and
                          (iii) to make no expenditures for 
                        disclosable activities other than from 
                        such fund.
                In the case of such a fund, subsection (d) 
                shall not apply and the threshold amount shall 
                be $1,000.
                  (B) Noncompliance.--In the case of an 
                organization with respect to which an election 
                is in effect under subparagraph (A) and which 
                fails to comply with a requirement in 
                subparagraph (A) during any reporting period, 
                subparagraph (A) shall not apply to such period 
                or any subsequent reporting period during the 
                calendar year in which such period begins.
                  (C) De minimis expenditures.--Failures to 
                meet the requirement of subparagraph (A)(iii) 
                with respect to de minimis amounts shall not be 
                treated as a failure to comply with such 
                requirement.
          (6) Threshold amount.--For purposes of this section, 
        the term ``threshold amount'' means--
                  (A) $200 in the case of a 527 organization, 
                and
                  (B) $1,000 in any other case.
  (b) Disclosable Activities.--For purposes of this section--
          (1) 527 organizations.--In the case of a 527 
        organization, the term ``disclosable activities'' means 
        all activities of the organization.
          (2) Other organizations.--In the case of an 
        organization described in paragraph (4), (5), or (6) of 
        section 501(c), the term ``disclosable activities'' 
        means--
                  (A) a 527-type activity,
                  (B) establishing, administering, or 
                soliciting contributions to a 527 organization,
                  (C) contributing directly or indirectly to a 
                527 organization,
                  (D) contributing directly or indirectly to an 
                organization which is described in paragraph 
                (4), (5), or (6) of section 501(c) and which is 
                required to file a return under this section 
                for the year in which the contribution is 
                received or for any of the 3 preceding years 
                (or would be required to file such a return had 
                this section been in effect for such years), 
                and
                  (E) any mass media communication (including 
                any mass mailing) which is not a 527-type 
                activity and which--
                          (i) mentions a clearly identified 
                        candidate for election for Federal 
                        office (including any individual who 
                        has formed an exploratory committee for 
                        such election) or the political party 
                        of such candidate, or
                          (ii) contains the picture or other 
                        likeness of such candidate.
          (3) Exception for communication with members.--
        Subparagraph (E) of paragraph (2) shall not apply to 
        communication with bona fide members of the 
        organization unless such communication urges such 
        members to communicate with another person or to take 
        an action as a result of such communication.
  (c) Additional Information From 527 Organizations.--
          (1) Statement of organization.--
                  (A) In general.--Every 527 organization shall 
                file a statement of organization with the 
                Secretary (in such form and manner as the 
                Secretary shall prescribe) which contains the 
                information described in subparagraph (B). Such 
                statement shall be filed not later than 10 days 
                after the date that such organization is 
                established (or, in the case of an organization 
                in existence on the date of the enactment of 
                this section, not later than 10 days after such 
                date of enactment).
                  (B) Statement of organization.--The 
                information described in this subparagraph is--
                          (i) the name and address of the 527 
                        organization,
                          (ii) the name, address, relationship, 
                        and type of any person which is 
                        directly or indirectly related to or 
                        affiliated with such 527 organization,
                          (iii) the name, address, and position 
                        of the custodian of books and accounts 
                        of the 527 organization,
                          (iv) the name and address of the 
                        treasurer of the 527 organization, and
                          (v) a listing of all banks, safety 
                        deposit boxes, and other depositories 
                        used by the 527 organization.
                  (C) Changes in information.--If there is a 
                change in circumstances such that the most 
                recent statement filed under this paragraph is 
                no longer accurate, the 527 organization shall 
                file a corrected statement with the Secretary 
                (in such manner as the Secretary shall 
                prescribe) not later than 10 days after the 
                date that the statement first ceased to be 
                accurate.
                  (D) Related and affiliated persons.--For 
                purposes of subparagraph (B)(ii), a person is 
                directly or indirectly related to or affiliated 
                with a 527 organization if such person, at any 
                time during the 3-year period ending on the 
                date such statement is submitted to the 
                Secretary--
                          (i) was in a position to exercise 
                        substantial direct or indirect 
                        influence over the process of 
                        collecting or disbursing the exempt 
                        purpose funds of such organization, or
                          (ii) was in a position to exercise 
                        substantial, overall direct or indirect 
                        influence over the activities of such 
                        organization.
          (2) Other information.--
                  (A) In general.--In addition to the 
                information required by subsection (a), every 
                527 organization shall include the information 
                described in subparagraph (B) on the return 
                required under subsection (a).
                  (B) Information described.--The information 
                described in this subparagraph is--
                          (i) a certification, under penalty of 
                        perjury, whether such expenditure is 
                        made in cooperation, consultation, or 
                        concert with, or at the request or 
                        suggestion of, any candidate for public 
                        office or any authorized committee of 
                        such candidate or agent of such 
                        committee or candidate,
                          (ii) the name, address, and business 
                        purpose of any entity, as well as 
                        whether the entity purports to be 
                        exempt from tax under this title and 
                        (if so) the provision under which the 
                        entity purports to be so exempt, which 
                        made (in the aggregate for the 
                        reporting period) a contribution in 
                        excess of the threshold amount to the 
                        527 organization, and
                          (iii) the original source and the 
                        intended ultimate recipient of all 
                        contributions made by a person, either 
                        directly or indirectly, on behalf of 
                        any particular person, including 
                        contributions which are in any way 
                        earmarked or otherwise directed through 
                        any intermediary.
  (d) Reporting Periods and Due Dates for Returns and 
Statements.--
          (1) In general.--The reporting periods and deadlines 
        for filing returns and statements required by this 
        section shall be--
                  (A) determined under paragraph (2), (3), or 
                (4), whichever is selected by the reporting 
                organization, and
                  (B) in the case of disclosable activities 
                which are independent expenditures, determined 
                under paragraph (5).
          (2) Quarterly reports, etc.--
                  (A) Calendar years having a regularly 
                scheduled election.--In the case of a calendar 
                year in which a regularly scheduled election is 
                held--
                          (i) Quarterly reports.--
                                  (I) Period.--The reporting 
                                periods shall be the calendar 
                                quarters beginning with the 
                                first quarter of the calendar 
                                year in which a contribution is 
                                accepted or expenditure is made 
                                for a disclosable activity.
                                  (II) Filing deadline.--
                                Reports under this clause shall 
                                be filed not later than the 
                                15th day after the last day of 
                                each calendar quarter; except 
                                that the report for the quarter 
                                ending on December 31 of such 
                                calendar year shall be filed 
                                not later than January 31 of 
                                the following calendar year.
                          (ii) Pre-election report.--
                                  (I) Period.--A pre-election 
                                report with respect to an 
                                election shall be filed for the 
                                period ending on the 20th day 
                                before the election and 
                                beginning on the first day of 
                                the calendar quarter which 
                                includes such 20th day.
                                  (II) Filing deadline.--A pre-
                                election report shall be filed 
                                not later than the 12th day 
                                before (or posted by registered 
                                or certified mail not later 
                                than the 15th day before) any 
                                election with respect to which 
                                the organization makes a 
                                contribution or expenditure for 
                                a disclosable activity.
                          (iii) Post-general election report.--
                                  (I) Period.--A post-general 
                                election report with respect to 
                                an election shall be filed for 
                                the period ending on the 20th 
                                day after the election and 
                                beginning on the first day of 
                                the calendar quarter which 
                                includes such 20th day.
                                  (II) Filing deadline.--A 
                                post-general election report 
                                shall be filed not later than 
                                the 30th day after the general 
                                election.
                  (B) Other calendar years.--In the case of any 
                other calendar year--
                          (i) Semiannual reports.--The 
                        reporting periods shall be--
                                  (I) the 1st 6 months of the 
                                calendar year, and
                                  (II) the 2d 6 months of such 
                                year.
                          (ii) Filing deadlines.--The report 
                        for the period described in clause 
                        (i)(I) shall be filed no later than 
                        July 31, and the report for the period 
                        described in clause (i)(II) shall be 
                        filed no later than January 31 of the 
                        following calendar year.
                  (C) Special elections.--The Secretary shall 
                set filing dates for reports to be filed with 
                respect to organizations filing under this 
                paragraph with respect to special elections. 
                The Secretary shall require no more than one 
                pre-election report for each election and one 
                post-election report for the election which 
                fills the vacancy. The Secretary may waive any 
                reporting obligation of organizations required 
                to file for special elections if any report 
                required by this paragraph is required to be 
                filed within 10 days of a report required under 
                this subparagraph. The Secretary shall 
                establish the reporting dates within 5 days of 
                the setting of such election.
                  (D) Exception from quarterly report.--The 
                requirement to file a quarterly report under 
                subparagraph (A)(i) for a calendar quarter 
                shall be waived if the organization is required 
                to file a pre-election report under 
                subparagraph (A)(ii) during the period 
                beginning on the 5th day after the close of the 
                calendar quarter and ending on the 15th day 
                after the close of the calendar quarter.
          (3) Monthly reports, etc.--
                  (A) Period.--The reporting periods shall be 
                monthly for all calendar years beginning with 
                the first month of the calendar year in which a 
                contribution is accepted or expenditure is made 
                for a disclosable activity.
                  (B) Filing deadline.--Reports under this 
                paragraph shall be filed not later than the 
                20th day after the last day of the month.
                  (C) Reports in lieu of november and december 
                reports during election years.--In lieu of 
                filing the reports otherwise due under this 
                paragraph in November and December of any year 
                in which a regularly scheduled general election 
                is held--
                          (i) a pre-general election report 
                        shall be filed in accordance with 
                        paragraph (2)(A)(ii),
                          (ii) a post-general election report 
                        shall be filed in accordance with 
                        paragraph (2)(A)(iii), and
                          (iii) a year-end report shall be 
                        filed not later than January 31 of the 
                        following calendar year.
          (4) Certain organizations file annually.--
                  (A) In general.--In the case of a 527 
                organization described in subparagraph (B)--
                          (i) the reporting period shall be 
                        such organization's taxable year, and
                          (ii) the due date for the returns and 
                        statements required by this section 
                        shall be the due date (without regard 
                        to extensions) for filing the return of 
                        tax for such year, whether or not such 
                        organization is required to file a 
                        return for such taxable year.
                  (B) Organization described.--An organization 
                is described in this subparagraph if such 
                organization is a 527 organization which is 
                organized and operated exclusively for the 
                purpose of securing the nomination, election, 
                or appointment of a clearly identified 
                candidate for State, local, or judicial office.
          (5) Reporting of independent expenditures.--
                  (A) In general.--In the case of a disclosable 
                activity which is an independent expenditure by 
                an organization to which subsection (a) 
                applies, the organization shall file the 
                statement described in subparagraph (B).
                  (B) Statement.--The statement described in 
                this subparagraph is a statement (filed in 
                accordance with paragraph (1)(A) unless 
                subparagraph (C) applies) which includes the 
                information required under subsection (a)(1) 
                with respect to such independent expenditure.
                  (C) Separate reporting with respect to 
                independent expenditures made within 20 days of 
                election.--The statement required by 
                subparagraph (B) in the case of a disclosable 
                activity which is an independent expenditure 
                described in subparagraph (A) aggregating 
                $1,000 or more made after the 20th day, but 
                more than 24 hours, before any election shall 
                be filed within 24 hours after such independent 
                expenditure is made. Such statement shall be 
                filed with the Secretary.
  (e) Definitions.--For purposes of this section--
          (1) 527 organization.--The term ``527 organization'' 
        means any political organization (as defined by section 
        527(e)(1)).
          (2) 527-type activity.--The term ``527-type 
        activity'' means influencing or attempting to influence 
        the selection, nomination, election, or appointment of 
        any individual to any Federal, State, or local public 
        office or office in a political organization, or the 
        election of Presidential or Vice-Presidential electors, 
        whether or not such individual or electors are 
        selected, nominated, elected, or appointed. Such term 
        includes the making of expenditures relating to an 
        office described in the preceding sentence which, if 
        incurred by the individual, would be allowable as a 
        deduction under section 162(a).
          (3) Contributions.--The term ``contributions'' has 
        the meaning given to such term by section 271(b)(2).
          (4) Expenditures.--The term ``expenditures'' has the 
        meaning given to such term by section 271(b)(3).
  (f) Special Rules.--
          (1) Electronic filing.--The Secretary shall develop 
        procedures for submission in electronic form of returns 
        and statements required to be filed under this section.
          (2) Paperwork and burden reduction for organizations 
        otherwise disclosing information.--An organization 
        shall not be required to file any return or statement 
        under this section for any period if, with respect to 
        such period, such organization submits to the 
        Secretary, under penalty of perjury, a certified 
        statement that the organization has made a filing, 
        which is publicly available, with another Federal 
        agency which includes all of the information required 
        to be included in such return or statement and which 
        specifies the public location where such information 
        may be found.

           *       *       *       *       *       *       *


                Subchapter B--Miscellaneous Provisions

           *       *       *       *       *       *       *


SEC. 6104. PUBLICITY OF INFORMATION REQUIRED FROM CERTAIN EXEMPT 
                    ORGANIZATIONS AND CERTAIN TRUSTS.

  (a) * * *
  [(b) Inspection of Annual Information Returns.--The 
information required to be furnished by sections 6033, 6034, 
and 6058, together with the names and addresses of such 
organizations and trusts, shall be made available to the public 
at such times and in such places as the Secretary may 
prescribe. Nothing in this subsection shall authorize the 
Secretary to disclose the name or address of any contributor to 
any organization or trust (other than a private foundation, as 
defined in section 509(a)) which is required to furnish such 
information. In the case of an organization described in 
section 501(d), this subsection shall not apply to copies 
referred to in section 6031(b) with respect to such 
organization.]
  (b) Inspection of Information Returns and Income Tax Returns 
of Political Organizations.--
          (1) In general.--The information required to be 
        furnished by sections 6033, 6033A, 6034, and 6058 
        (together with the names and addresses of such 
        organizations and trusts) and returns filed under 
        section 6012(a)(6) shall be made available to the 
        public at such times and in such places as the 
        Secretary may prescribe.
          (2) Exceptions.--
                  (A) Nondisclosure of names and addresses of 
                contributors.--
                          (i) In general.--Nothing in this 
                        subsection shall authorize the 
                        Secretary to disclose the name or 
                        address of any contributor to any 
                        organization or trust which is required 
                        to furnish such information.
                          (ii) Exception.--Clause (i) shall not 
                        apply to a private foundation (as 
                        defined in section 509(a)), a 527 
                        organization (as defined in section 
                        6033A(e)), or information on a return 
                        under section 6033A(a) of an 
                        organization described in paragraph 
                        (4), (5) or (6) of section 501(c).
                  (B) Religious and apostolic organizations.--
                In the case of an organization described in 
                section 501(d), this subsection shall not apply 
                to copies referred to in section 6031(b) with 
                respect to such organization.
          (3) Special rules for information under section 
        6033a.--
                  (A) Timely availability.--Documents filed 
                under section 6033A (other than with respect to 
                an annual period) shall be available under 
                paragraph (1) no later than 2 business days 
                after being filed.
                  (B) Availability on world wide web.--To the 
                extent practicable, documents filed under 
                section 6033A shall also be made available to 
                the public on the world wide web.
          (4) Cooperation with other federal agencies.--The 
        Secretary may cooperate with another Federal agency to 
        carry out the requirements of this subsection with 
        respect to returns and statements required to be filed 
        under section 6033A.

           *       *       *       *       *       *       *

  (e) Inspection of Documents Relating to Political 
Activities of Certain 501(c) Organizations and 527 
Organizations.--
          (1) In general.--In the case of any organization 
        required to submit a document under section 6033A--
                  (A) a copy of such document shall be made 
                available by such organization for inspection 
                during regular business hours by any individual 
                at the principal office of such organization 
                and, if such organization regularly maintains 1 
                or more regional or district offices having 3 
                or more employees, at each such regional or 
                district office, and
                  (B) upon request of an individual made at 
                such principal office or such a regional or 
                district office, a copy of such document shall 
                be provided to such individual without charge 
                other than a reasonable fee for any 
                reproduction and mailing costs.
        The request described in subparagraph (B) must be made 
        in person or in writing. If such request is made in 
        person, such copy shall be provided immediately and, if 
        made in writing, shall be provided within 30 days.
          (2) Annual income tax returns of 527 organizations.--
        In the case of an organization required to file a 
        return under section 6012(a)(6), the requirements of 
        paragraph (1) shall also apply to such return.
          (3) Timely availability.--
                  (A) In general.--Except as provided in 
                subparagraph (B), documents required to be 
                available under this subsection shall be 
                available no later than 2 business days after 
                being filed.
                  (B) Exception.--Subparagraph (A) shall not 
                apply to--
                          (i) any document filed under section 
                        6033A with respect to an annual period, 
                        and
                          (ii) any return filed under section 
                        6012(a)(6).
          (4) 3-year limitation on inspection documents.--
        Paragraphs (1) and (2) shall apply to any document only 
        during the 3-year period beginning on the last day 
        prescribed for its filing (determined with regard to 
        any extension of time for filing).
          (5) Limitation on providing copies.--A rule similar 
        to the rule of subsection (d)(4) shall apply for 
        purposes of this subsection.

           *       *       *       *       *       *       *


 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
                               PENALTIES

           *       *       *       *       *       *       *


         Subchapter A--Additions to the Tax, Additional Amounts

           *       *       *       *       *       *       *


                       PART I--GENERAL PROVISIONS


SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS, REGISTRATION 
                    STATEMENTS, ETC.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Returns by Exempt Organizations and by Certain Trusts.--
          (1) * * *
          (2) Information under section 6033a.--
                  (A) In general.--In the case of--
                          (i) a failure to file a document 
                        required under section 6033A (relating 
                        to returns relating to political 
                        activities) at the time and in the 
                        manner prescribed therefor (determined 
                        without regard to any extension of time 
                        for filing), or
                          (ii) a failure to include any of the 
                        information required to be shown on 
                        such a return or statement or to show 
                        the correct information,
                there shall be paid by the organization an 
                amount equal to the rate of tax specified in 
                section 527(b)(1) multiplied by the amount to 
                which the failure relates.
                  (B) Public inspection.--In the case of a 
                failure to comply with the requirements of 
                section 6104(e) at the time and in the manner 
                prescribed therefor (determined without regard 
                to any extension of time for filing), there 
                shall be paid by the person failing to meet 
                such requirements $20 for each day during which 
                such failure continues. The maximum penalty 
                imposed under this subparagraph on all persons 
                for failures with respect to any 1 statement 
                shall not exceed $10,000.
                  (C) Additional penalty on managers of 527 
                organizations.--
                          (i) In general.--The Secretary may 
                        make a written demand on any 527 
                        organization subject to penalty under 
                        subparagraph (A) specifying therein a 
                        reasonable future date by which the 
                        return or statement shall be filed (or 
                        the information furnished) for purposes 
                        of this subparagraph.
                          (ii) Failure to comply with demand.--
                        If any person fails to comply with any 
                        demand under clause (i) on or before 
                        the date specified in such demand, 
                        there shall be paid by the person 
                        failing to so comply $10 for each day 
                        after the expiration of the time 
                        specified in such demand during which 
                        such failure continues. The maximum 
                        penalty imposed under this subparagraph 
                        on all persons for failures with 
                        respect to any 1 statement shall not 
                        exceed $5,000.
          [(2)] (3) Returns under section 6034 or 6043(b).--
                  (A) * * *

           *       *       *       *       *       *       *

          [(3)] (4) Reasonable cause exception.--No penalty 
        shall be imposed under this subsection with respect to 
        any failure if it is shown that such failure is due to 
        reasonable cause.
          [(4)] (5) Other special rules.--
                  (A) * * *

           *       *       *       *       *       *       *


                  Subchapter B--Assessable Penalties

           *       *       *       *       *       *       *


                      PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 6685. ASSESSABLE PENALTY WITH RESPECT TO PUBLIC INSPECTION 
                    REQUIREMENTS FOR CERTAIN TAX-EXEMPT ORGANIZATIONS.

  In addition to the penalty imposed by section 7207 (relating 
to fraudulent returns, statements, or other documents), any 
person who is required to comply with the requirements of 
[subsection (d)] subsection (d) or (e) of section 6104 and who 
fails to so comply with respect to any [return or application] 
return, application, or statement, if such failure is willful, 
shall pay a penalty of $5,000 with respect to each such [return 
or application] return, application, or statement.

           *       *       *       *       *       *       *


          CHAPTER 75--CRIMES, OTHER OFFENSES AND FORFEITURES

           *       *       *       *       *       *       *


                         Subchapter A--Crimes

           *       *       *       *       *       *       *


                     PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 7207. FRAUDULENT RETURNS, STATEMENTS, OR OTHER DOCUMENTS.

  Any person who willfully delivers or discloses to the 
Secretary any list, return, account, statement, or other 
document, known by him to be fraudulent or to be false as to 
any material matter, shall be fined not more than $10,000 
($50,000 in the case of a corporation), or imprisoned not more 
than 1 year, or both. Any person required pursuant to 
subsection (b) of section 6047 or pursuant to [subsection (d)] 
subsection (d) or (e) of section 6104 to furnish any 
information to the Secretary or any other person who willfully 
furnishes to the Secretary or such other person any information 
known by him to be fraudulent or to be false as to any material 
matter shall be fined not more than $10,000 ($50,000 in the 
case of a corporation), or imprisoned not more than 1 year, or 
both.

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

    We sought unsuccessfully to have the Ways and Means 
Committee Members come together, on a bipartisan basis, and 
report legislation to address the election finance abuses 
involving Internal Revenue Code section 527 organizations. 
These organizations do not apply for tax-exempt status with the 
Internal Revenue Service nor file annual returns with the IRS 
describing their activities and contributors. These entities 
often are multi-million dollar ``slush accounts'' set up 
specifically to influence an election. These tax-exempt section 
527's operate in total secrecy outside the view of the public.
    Legislation to require full disclosure of the activities 
and sponsors of section 527 organizations was introduced by 
Congressman Lloyd Doggett months ago. Since that time, the 
substance of his bill, H.R. 4168, was voted down by the 
Republicans twice in Committee, and twice in the House of 
Representatives. It was only after the House Republican 
Leadership learned that identical legislation offered by 
Senator McCain and others passed the Senate, on a bipartisan 
basis, that the House Republicans relented and announced 
``hearings'' and a ``bigger'' bill to be considered by the 
House before the July 4th recess. Unfortunately, this was only 
a way to assure that section 527 disclosure would never be 
enacted into law.
    The ``poison pill'' they planned to add to the section 527 
disclosure bill was well-planned and quite comprehensive. It 
now is contained in the Committee bill. The Republicans faced, 
however, one major problem in keeping a straight face during 
debate on the Republicans' bill in Committee. That is, the 
Oversight Subcommittee hearing testimony two days earlier 
specifically, and repeatedly, argued against exactly what the 
Republicans have now done in their bill. In contrast, the 
Democratic Substitute does exactly what the witnesses urged and 
has bipartisan support.
    The testimony before the Oversight Subcommittee on June 20, 
2000, uniformly urged quick action on disclosure by section 527 
entities. In shutting down the secrecy of section 527 entities, 
witnesses agreed that those intent on hiding their activities 
and funding sources would move, with a little creativity in 
words and methods, to other tax-exempt and taxable entities. In 
developing any broader legislation, the witnesses repeatedly 
said that any expansions beyond section 527 organizations 
should apply fairly to all entities--taxable and tax-exempt. 
Further, the legislation must be narrow in focus, clear in 
definition, and tied in time to the election process so as to 
withstand any First Amendment challenge.
    In the words of Senator McCain, ``Let's not let the perfect 
be the enemy of the good. Greater disclosure is not a black and 
white issue. We can, and should, all agree that greater 
disclosure is better than the status quo as it exists today. 
And, yes, while we work to develop the best bill possible, we 
must also move forward expeditiously.'' He emphasized the 
critical importance of bipartisanship in this very sensitive 
area and recommended targeted and reasonable expansions into 
tax-exempt and taxable activities.
    The Executive Director of the Center for Responsive 
Politics, a well-respected, non-partisan research organization 
that monitors and analyzes campaign contributions in federal 
elections, was clear in his message. He stated, ``The fact is, 
if Saddam Hussein wanted to plunk $100 million into a barrage 
of TV ads the final week before we pick our next president he 
could do it. He could also fly under the radar with direct mail 
pieces, or pre-recorded phone messages, to every mailbox and 
telephone in America. So could the American Trial Lawyers 
Association, the Teamsters Union, Philip Morris, the National 
Rifle Association, the Sierra Club, or Microsoft--all without 
anyone knowing where the money came from or how much was even 
spent. They have found the ultimate loophole in these 527 
committees, which are seen as 100% political by the IRS, and 
100% non-political by the FEC. This legal alchemy has 
effectively rendered their finances 100% invisible.''
    A broad bipartisan group of Members presented a fair and 
reasonable legislative approach to Subcommittee Chairman 
Houghton by letter dated June 15, 2000. The letter sets forth 
principles that could be enacted into law, in short-order on a 
bipartisan basis, and would eliminate the widely-publicized 
abuse of section 527 organizations. First, the legislation 
should contain the provisions contained in Congressman 
Doggett's bill to require disclosure by section 527 
organizations. The Senate already has taken the important first 
step in this process by passing the legislation proposed by 
Senators McCain, Feingold and Lieberman. Second, the disclosure 
requirements outside the context of section 527's must be 
narrowly focused, as in the approach taken in legislation 
authored by Senators Snowe and Jeffords. This, or a version 
similar to this, is the best way to avoid constitutional 
challenges. Third, the disclosure requirements outside the 
context of section 527 must be evenhanded and applicable to all 
types of entities spending significant sums on electioneering 
activities. This letter and the testimony at the hearing are 
totally consistent with the Democratic Substitute.
    The Democratic Substitute: (1) provides for the section 527 
organization reporting and disclosure requirements of the 
Doggett bill; (2) requires reporting by all organizations 
(taxable and nontaxable) which spend more than $10,000 in any 
calendar year on electioneering and related disclosure of 
contributors who provide the organization more than $1,000 in 
any calendar year; (3) clearly defines ``electioneering'' 
activities as any mass media communication (radio, television, 
newspapers and other periodicals of general circulation, 
billboards, paid Internet advertising, and mass mailings to 
non-members) that refers to a clearly identified candidate for 
Federal office or that urges support or opposition to a 
specific political party and which is made 90 days before a 
generalelection or 60 days before a primary; and (4) applies 
the reporting disclosure requirements to all receipts and disbursements 
during calendar year 2000 and subsequent years.
    The Majority of the Committee deliberately chose to 
disregard the Oversight Subcommittee testimony and the 
principles outlined by Members of the House and Senate on a 
bipartisan basis. Instead, they chose to write punitive and 
unconstitutional legislation. An article in the Wall Street 
Journal on Friday, June 23, 2000, stated the underlying motive 
for writing such legislation. A Republican lawmaker, who chose 
not to be identified, is quoted as stating ``this is all about 
self preservation.''
    The legislation reported by the Committee is designed to 
ensure that no restraints on section 527 organizations will be 
enacted this year. The Republican bill exempts all of year 2000 
from the new disclosure rules by considering only expenditures 
and contributions ``received in reportable periods after date 
of enactment.'' Since reportable periods are calendar quarters, 
this means that unlimited political activities with no 
disclosure reporting can occur before October 1, 2000 and, with 
pre-funding, unreported political ads could be run after 
October 1 through the end of this year.
    The Republican legislation reported by the Committee is 
seriously deficient in its failure to impose reporting 
requirements on taxable entities making ``section 527-like'' 
expenditures. There is no rationale for not applying the same 
rules to corporations as the Republicans see fit to apply to 
tax-exempt social welfare groups, business leagues, and unions. 
The shift of hidden electioneering activities from section 527 
entities to other tax-exempt and taxable operations is known, 
and the Republicans have failed to address the latter in any 
way. Instead, they have found it appropriate to apply their 
rules only to tax-exempt groups such as the NAACP, National 
Right to Life Committee, League of Women Voters, environmental 
advocacy groups, unions and trade associations. The Committee 
bill does not in any way require disclosure from taxable 
corporations.
    The Republican legislation reported by the Committee 
subjects tax-exempt organizations to overly broad and uncertain 
disclosure requirements. Organizations would be required to 
disclose all activities intended to influence Federal elections 
with no guidance as to what those uncertain terms mean and what 
conduct is at risk. During the Committee markup, when asked 
whether voter registration drives, voter education efforts, 
``get out the vote'' efforts, or issue advocacy groups fell 
within the Republican's definition of political activity, the 
answer was ``it depends on the facts and circumstances.'' This 
is another way of saying ``your guess is as good as mine.'' The 
Committee bill is extremely vague and does not have a 
meaningful definition of what activities are subject to 
reporting and the disclosure of contributors. This is unfair to 
tax-exempt organizations serving the needs of this country and 
unfair to those wishing to support them.
    Under the Republican bill, if an organization makes the 
wrong guess about whether its activities fall within their 
uncertain definition, the organization and its managers are 
subject to large penalties, which could have a chilling effect 
on organization members exercising their rights of association 
and free speech.
    Further, the Republican bill will require disclosure when 
one organization contributes funds to another organization--
even if the use of those contributions by the recipient 
organization is totally for nonpolitical reasons. For example, 
the national chapter of a gay rights or civil rights 
organization would be required to report expenditures and its 
membership list for transfers of funds to any of its local 
affiliates, even if the transfers had nothing to do with 
influencing an election.
    The disclosure of contributor lists is serious business. 
The Republican bill would require an organization subject to 
the disclosure requirements to list and place in the public 
domain the name, address, occupation and employer of each 
contributor of more than $1,000 to the organization. This is 
not acceptable on a broad scale without a compelling reason. 
Some organizations subject to the broad reach of the Committee 
bill's disclosure requirements are defending unpopular causes. 
Exposure of their contributors creates the potentiality of 
retribution from employers or other individuals who disagree 
with the goals of the organization.
    We oppose the Committee bill because it is wrong. We oppose 
the Committee bill because it is unfair and does not address 
the abuse by covering both tax-exempt and taxable entities 
engaged in political activities. We oppose the Committee bill 
because it is unconstitutionally vague and impinges on 
Americans' freedom of speech and freedom of association. The 
Committee bill is not narrowly focused on the acts of political 
electioneering and not broadly designed to cover all the 
players.

                                   Charles B. Rangel.
                                   Pete Stark.
                                   Richard E. Neal.
                                   Jim McDermott.
                                   John Lewis.
                                   Jerry Kleczka.
                                   Lloyd Doggett.
                                   William J. Coyne.
                                   Karen L. Thurman.
                                   Ben Cardin.
                                   John S. Tanner.
                                   Xavier Becerra.
                                   Wm. J. Jefferson.

                                  
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