[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5596 Enrolled Bill (ENR)]
H.R.5596
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the twenty-third day of January, two thousand and two
An Act
To amend section 527 of the Internal Revenue Code of 1986 to eliminate
notification and return requirements for State and local party
committees and candidate committees and avoid duplicate reporting by
certain State and local political committees of information required to
be reported and made publicly available under State law, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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FROM NOTIFICATION REQUIREMENTS.
(a) Exemption From Notification Requirements.--Paragraph (5) of
section 527(i) of the Internal Revenue Code of 1986 (relating to
organizations must notify Secretary that they are section 527
organizations) is amended by striking ``or'' at the end of subparagraph
(A), by striking the period at the end of subparagraph (B) and
inserting ``, or'', and by adding at the end the following:
``(C) which is a political committee of a State or local
candidate or which is a State or local committee of a political
party.''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect as if included in the amendments made by Public Law 106-
230.

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REPORTING REQUIREMENTS.
(a) In General.--Section 527(j)(5) of the Internal Revenue Code of
1986 (relating to coordination with other requirements) is amended by
redesignating subparagraphs (C), (D), and (E) as subparagraphs (D),
(E), and (F), respectively, and by inserting after subparagraph (B) the
following new subparagraph:
``(C) to any organization which is a qualified State or
local political organization,''.
(b) Qualified State or Local Political Organization.--Subsection
(e) of section 527 of the Internal Revenue Code of 1986 (relating to
other definitions) is amended by adding at the end the following new
paragraph:
``(5) Qualified state or local political organization.--
``(A) In general.--The term `qualified State or local
political organization' means a political organization--
``(i) all the exempt functions of which are solely for
the purposes of influencing or attempting to influence the
selection, nomination, election, or appointment of any
individual to any State or local public office or office in
a State or local political organization,
``(ii) which is subject to State law that requires the
organization to report (and it so reports)--
``(I) information regarding each separate
expenditure from and contribution to such organization,
and
``(II) information regarding the person who makes
such contribution or receives such expenditure,
which would otherwise be required to be reported under this
section, and
``(iii) with respect to which the reports referred to
in clause (ii) are (I) made public by the agency with which
such reports are filed, and (II) made publicly available
for inspection by the organization in the manner described
in section 6104(d).
``(B) Certain state law differences disregarded.--An
organization shall not be treated as failing to meet the
requirements of subparagraph (A)(ii) solely by reason of 1 or
more of the following:
``(i) The minimum amount of any expenditure or
contribution required to be reported under State law is not
more than $300 greater than the minimum amount required to
be reported under subsection (j).
``(ii) The State law does not require the organization
to identify 1 or more of the following:
``(I) The employer of any person who makes
contributions to the organization.
``(II) The occupation of any person who makes
contributions to the organization.
``(III) The employer of any person who receives
expenditures from the organization.
``(IV) The occupation of any person who receives
expenditures from the organization.
``(V) The purpose of any expenditure of the
organization.
``(VI) The date any contribution was made to the
organization.
``(VII) The date of any expenditure of the
organization.
``(C) De minimis errors.--An organization shall not fail to
be treated as a qualified State or local political organization
solely because such organization makes de minimis errors in
complying with the State reporting requirements and the public
inspection requirements described in subparagraph (A) as long
as the organization corrects such errors within a reasonable
period after the organization becomes aware of such errors.
``(D) Participation of federal candidate or office
holder.--The term `qualified State or local political
organization' shall not include any organization otherwise
described in subparagraph (A) if a candidate for nomination or
election to Federal elective public office or an individual who
holds such office--
``(i) controls or materially participates in the
direction of the organization,
``(ii) solicits contributions to the organization
(unless the Secretary determines that such solicitations
resulted in de minimis contributions and were made without
the prior knowledge and consent, whether explicit or
implicit, of the organization or its officers, directors,
agents, or employees), or
``(iii) directs, in whole or in part, disbursements by
the organization.''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by Public Law 106-230.

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(a) Income Tax Returns Required Only for Political Organization
Taxable Income.--Paragraph (6) of section 6012(a) of the Internal
Revenue Code of 1986 (relating to persons required to make returns of
income) is amended by striking ``or which has'' and all that follows
through ``section)''.
(b) Income Tax Returns Not Subject to Disclosure.--
(1) Disclosure by the secretary.--Subsection (b) of section
6104 of such Code (relating to disclosure by the Secretary of
annual information returns) is amended by striking ``6012(a)(6),''.
(2) Public inspection.--Subsection (d) of section 6104 of such
Code (relating to public inspection of certain annual returns) is
amended--
(A) in paragraph (1)(A)(i) by striking ``or section
6012(a)(6) (relating to returns by political organizations)'',
and
(B) in subparagraph (2) by striking ``or section
6012(a)(6)''.
(c) Information Returns.--Subsection (g) of section 6033 of such
Code (relating to returns required by political organizations) is
amended to read as follows:
``(g) Returns Required by Political Organizations.--
``(1) In general.--This section shall apply to a political
organization (as defined by section 527(e)(1)) which has gross
receipts of $25,000 or more for the taxable year. In the case of a
political organization which is a qualified State or local
political organization (as defined in section 527(e)(5)), the
preceding sentence shall be applied by substituting `$100,000' for
`$25,000'.
``(2) Annual returns.--Political organizations described in
paragraph (1) shall file an annual return--
``(A) containing the information required, and complying
with the other requirements, under subsection (a)(1) for
organizations exempt from taxation under section 501(a), with
such modifications as the Secretary considers appropriate to
require only information which is necessary for the purposes of
carrying out section 527, and
``(B) containing such other information as the Secretary
deems necessary to carry out the provisions of this subsection.
``(3) Mandatory exceptions from filing.--Paragraph (2) shall
not apply to an organization--
``(A) which is a State or local committee of a political
party, or political committee of a State or local candidate,
``(B) which is a caucus or association of State or local
officials,
``(C) which is an authorized committee (as defined in
section 301(6) of the Federal Election Campaign Act of 1971) of
a candidate for Federal office,
``(D) which is a national committee (as defined in section
301(14) of the Federal Election Campaign Act of 1971) of a
political party,
``(E) which is a United States House of Representatives or
United States Senate campaign committee of a political party
committee,
``(F) which is required to report under the Federal
Election Campaign Act of 1971 as a political committee (as
defined in section 301(4) of such Act), or
``(G) to which section 527 applies for the taxable year
solely by reason of subsection (f)(1) of such section.
``(4) Discretionary exception.--The Secretary may relieve any
organization required under paragraph (2) to file an information
return from filing such a return if the Secretary determines that
such filing is not necessary to the efficient administration of the
internal revenue laws.''.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in the amendments made by Public Law 106-230.

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(a) In General.--The Secretary of the Treasury, in consultation
with the Federal Election Commission, shall publicize--
(1) the effect of the amendments made by this Act, and
(2) the interaction of requirements to file a notification or
report under section 527 of the Internal Revenue Code of 1986 and
reports under the Federal Election Campaign Act of 1971.
(b) Information.--Information provided under subsection (a) shall
be included in any appropriate form, instruction, notice, or other
guidance issued to the public by the Secretary of the Treasury or the
Federal Election Commission regarding reporting requirements of
political organizations (as defined in section 527 of the Internal
Revenue Code of 1986) or reporting requirements under the Federal
Election Campaign Act of 1971.

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(a) Waiver of Filing Amounts.--Section 527 of the Internal Revenue
Code of 1986 is amended by adding at the end the following:
``(k) Authority To Waive.--The Secretary may waive all or any
portion of the--
``(1) tax assessed on an organization by reason of the failure
of the organization to comply with the requirements of subsection
(i), or
``(2) amount imposed under subsection (j) for a failure to
comply with the requirements thereof,
on a showing that such failure was due to reasonable cause and not due
to willful neglect.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to any tax assessed or amount imposed after June 30, 2000.

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PROVISIONS.
(a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of section
527(i) of the Internal Revenue Code of 1986 (relating to failure to
notify) is amended by adding at the end the following new sentence:
``For purposes of the preceding sentence, the term `exempt function
income' means any amount described in a subparagraph of subsection
(c)(3), whether or not segregated for use for an exempt function.''.
(b) Procedures for Assessment and Collection of Amounts.--Paragraph
(1) of section 527(j) of the Internal Revenue Code of 1986 (relating to
required disclosure of expenditures and contributions) is amended by
adding at the end the following new sentence: ``For purposes of
subtitle F, the amount imposed by this paragraph shall be assessed and
collected in the same manner as penalties imposed by section
6652(c).''.
(c) Duplicate Written Filings Not Required.--Subparagraph (A) of
section 527(i)(1) of the Internal Revenue Code of 1986 is amended by
striking ``, electronically and in writing,'' and inserting
``electronically''.
(d) Application of Fraud Penalty.--Section 7207 of the Internal
Revenue Code of 1986 (relating to fraudulent returns, statements, and
other documents) is amended by striking ``pursuant to subsection (b) of
section 6047 or pursuant to subsection (d) of section 6104'' and
inserting ``pursuant to section 6047(b), section 6104(d), or subsection
(i) or (j) of section 527''.
(e) Contents and Filing of Report.--
(1) Contents.--Section 527(j)(3) of the Internal Revenue Code
of 1986 (relating to contents of report) is amended--
(A) by inserting ``, date, and purpose'' after ``The
amount'' in subparagraph (A), and
(B) by inserting ``and date'' after ``the amount'' in
subparagraph (B).
(2) Electronic filing.--Section 527(j) of such Code is amended
by adding at the end the following new paragraph:
``(7) Electronic filing.--Any report required under paragraph
(2) with respect to any calendar year shall be filed in electronic
form if the organization has, or has reason to expect to have,
contributions exceeding $50,000 or expenditures exceeding $50,000
in such calendar year.''.
(3) Electronic filing and access of required disclosures.--
Section 527 of such Code, as amended by section 5(a), is amended by
redesignating subsection (k) as subsection (l) and by inserting
after subsection (j) the following new subsection:
``(k) Public Availability of Notices and Reports.--
``(1) In general.--The Secretary shall make any notice
described in subsection (i)(1) or report described in subsection
(j)(7) available for public inspection on the Internet not later
than 48 hours after such notice or report has been filed (in
addition to such public availability as may be made under section
6104(d)(7)).
``(2) Access.--The Secretary shall make the entire database of
notices and reports which are made available to the public under
paragraph (1) searchable by the following items (to the extent the
items are required to be included in the notices and reports):
``(A) Names, States, zip codes, custodians of records,
directors, and general purposes of the organizations.
``(B) Entities related to the organizations.
``(C) Contributors to the organizations.
``(D) Employers of such contributors.
``(E) Recipients of expenditures by the organizations.
``(F) Ranges of contributions and expenditures.
``(G) Time periods of the notices and reports.
Such database shall be downloadable.''.
(f) Contents of Notice.--Section 527(i)(3) of the Internal Revenue
Code of 1986 (relating to contents of notice) is amended by striking
``and'' at the end of subparagraph (D), by redesignating subparagraph
(E) as subparagraph (F), and by inserting after subparagraph (D) the
following new subparagraph:
``(E) whether the organization intends to claim an
exemption from the requirements of subsection (j) or section
6033, and''.
(g) Timing of Notice in Case of Material Change.--
(1) In general.--Subparagraph (B) of section 527(i)(1) of the
Internal Revenue Code of 1986 (relating to general notification
requirement) is amended by inserting ``or, in the case of any
material change in the information required under paragraph (3),
for the period beginning on the date on which the material change
occurs and ending on the date on which such notice is given'' after
``given''.
(2) Time to give notice.--Section 527(i)(2) of the Internal
Revenue Code of 1986 (relating to time to give notice) is amended
by inserting ``or, in the case of any material change in the
information required under paragraph (3), not later than 30 days
after such material change'' after ``established''.
(3) Effect of failure.--Paragraph (4) of section 527(i) of the
Internal Revenue Code of 1986 (relating to effect of failure) is
amended by inserting before the period at the end the following:
``or, in the case of a failure relating to a material change, by
taking into account such income and deductions only during the
period beginning on the date on which the material change occurs
and ending on the date on which notice is given under this
subsection''.
(h) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to failures occurring on or
after the date of the enactment of this Act.
(2) Subsection (c).--The amendments made by subsection (c)
shall take effect as if included in the amendments made by Public
Law 106-230.
(3) Subsection (d).--The amendment made by subsection (d) shall
apply to reports and notices required to be filed on or after the
date of the enactment of this Act.
(4) Subsections (e)(1) and (f).--The amendments made by
subsections (e)(1) and (f) shall apply to reports and notices
required to be filed more than 30 days after the date of the
enactment of this Act.
(5) Subsections (e)(2) and (e)(3).--The amendments made by
subsections (e)(2) and (e)(3) shall apply to reports required to be
filed on or after June 30, 2003.
(6) Subsection (g).--
(A) In general.--The amendments made by subsection (g)
shall apply to material changes on or after the date of the
enactment of this Act.
(B) Transition rule.--In the case of a material change
occurring during the 30-day period beginning on the date of the
enactment of this Act, a notice under section 527(i) of the
Internal Revenue Code of 1986 (as amended by this Act) shall
not be required to be filed under such section before the later
of--
(i) 30 days after the date of such material change, or
(ii) 45 days after the date of the enactment of this
Act.

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Notices, reports, or returns that were required to be filed with
the Secretary of the Treasury before the date of the enactment of the
amendments made by this Act and that were disclosed by the Secretary of
the Treasury consistent with the law in effect at the time of
disclosure shall remain subject on and after such date to the
disclosure provisions of section 6104 of the Internal Revenue Code of
1986.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

293cd18f3a9233ebb8bb7fada399e1d940323e69dc306e507e02f8cab9a4f8fe

To amend section 527 of the Internal Revenue Code of 1986 to eliminate notification and return requirements for State and local party committees and candidate committees and avoid duplicate reporting by certain State and local political committees of information required to be reported and made publicly available under State law, and for other purposes.

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