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Public Law 107-276
107th Congress
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. <<NOTE: Nov. 2, 2002 - [H.R. 5596]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES
FROM NOTIFICATION REQUIREMENTS.
(a) Exemption From Notification Requirements.--Paragraph (5) of
section 527(i) <<NOTE: 26 USC 527.>> 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 <<NOTE: 26 USC 527 note.>> amendments made
by subsection (a) shall take effect as if included in the amendments
made by Public Law 106-230.
SEC. 2. EXEMPTION FOR CERTAIN STATE AND LOCAL POLITICAL COMMITTEES FROM
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
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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,
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``(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 <<NOTE: 26 USC 527 note.>> amendments made
by this section shall take effect as if included in the amendments made
by Public Law 106-230.
SEC. 3. EXEMPTION FROM ANNUAL RETURN REQUIREMENTS.
(a) Income Tax Returns Required Only for Political Organization
Taxable Income.--Paragraph (6) of section 6012(a) of the Internal
Revenue Code of 1986 <<NOTE: 26 USC 6012.>> (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 <<NOTE: 26 USC 6104.>> (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 <<NOTE: 26 USC 6033.>> (relating to returns required by political
organizations) is amended to read as follows:
``(g) Returns Required by Political Organizations.--
``(1) In general.--This <<NOTE: Applicability.>> 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,
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``(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 <<NOTE: 26 USC 6012 note.>> amendments made
by this section shall take effect as if included in the amendments made
by Public Law 106-230.
SEC. 4. <<NOTE: Public information. 26 USC 527 note.>> NOTIFICATION OF
INTERACTION OF REPORTING REQUIREMENTS.
(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.
SEC. 5. WAIVER OF FILING AMOUNTS.
(a) Waiver of Filing Amounts.--Section 527 of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 527.>> 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 <<NOTE: 26 USC 527 note.>> amendment made
by subsection (a) shall apply to any tax assessed or amount imposed
after June 30, 2000.
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SEC. 6. MODIFICATIONS TO SECTION 527 ORGANIZATION DISCLOSURE PROVISIONS.
(a) Unsegregated Funds Not To Avoid Tax.--Paragraph (4) of section
527(i) of the Internal Revenue Code of 1986 <<NOTE: 26 USC
527.>> (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 <<NOTE: 26 USC 7207.>> (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
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