527 ORGANIZATIONS: HOW THE DIFFERENCES IN TAX AND ELECTION LAWS PERMIT CERTAIN ORGANIZATIONS TO ENGAGE IN ISSUE ADVOCACY WITHOUT PUBLIC DISCLOSURE AND PROPOSALS FOR CHANGE
CRS Report for Congress
527 Organizations: How the Differences in Tax
and Election Laws Permit Certain Organizations
to Engage in Issue Advocacy without Public
Disclosure and Proposals for Change
Updated September 7, 2000
Marie B. Morris
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress
527 Organizations: How the Differences in Tax and Election
Laws Permitted Certain Organizations to Engage in Issue
Advocacy without Public Disclosure and Proposals for
Change
Summary
Virtually all political organizations are “section 527” political organizations.
While most 527 organizations report to the Federal Election Commission (FEC) and,
if they have taxable income, to the Internal Revenue Service (IRS), prior to the
enactment of P.L. 106-230, political activists had formed 527 organizations which did
not have to disclose their activities to either the FEC or the IRS. By structuring their
activities so that they did not engage in express advocacy, these organizations did not
meet Federal Election Campaign Act (FECA) criteria for political committees. The
lack of federal oversight of certain 527 organizations’ political activities attracted
those who want to participate anonymously in the political process, while it alarmed
those who believed that there should be full disclosure of all political activities. In the
106th Congress, there were a number of proposals to increase public disclosure of
non-reporting 527 organizations’ political activities.
This report compares the tax and election laws relating to political organizations
and political committees prior to the enactment of P.L. 106-230 in an attempt to
highlight the differences between them, and discusses some of the proposals in the
106th Congress to require additional reporting by organizations engaging in political
activities. This report does not address the taxation of other tax-exempt organizations
making political expenditures taxable under IRC § 527. For developments after the
enactment of P.L. 106-230, please see CRS Report RS20650, 527 Organizations:
Reporting Requirements Imposed on Political Organizations after the Enactment of
P.L. 106-230.
Contents
Background .................................................... 1
Comparison of IRC § 527 and FECA ................................2
Breadth of definitions.....................................5
Organizations covered....................................5
Candidates covered......................................5
Reporting requirements...................................6
Use of 527 Organizations to Funnel Soft Money........................6
Proposals for Change.............................................7
House bills.................................................7
H.R. 3688, the “Campaign Integrity Act of 2000”...............7
H.R. 4168, the “Underground Campaign Disclosure Act of 2000"...7
H.R. 4621, the “Accountability and Disclosure Act of 2000".......8
H.R. 4717, the “Full and Fair Political Activity
Disclosure Act of 2000”...............................8
H.R. 4762.............................................9
House actions..............................................9
Senate bills................................................10
S. 79, the “Advancing Truth and Accountability in Campaign
Communications Act”................................10
S. 2582..............................................10
S. 2583..............................................10
Senate actions.............................................11
List of Tables
Comparison of Political Committees and Political Organizations............2
527 Organizations: How the Differences in Tax
and Election Laws Permitted Certain
Organizations to Engage in Issue Advocacy
without Public Disclosure and Proposals for
Change
Section 527 of the Internal Revenue Code defines “political organization” and
specifies how political organizations and other tax-exempt organizations which make
political expenditures are taxed. The Federal Election Campaign Act (FECA), 2
U.S.C. §§ 431, et seq., was enacted to regulate federal elections by imposing certain
contribution limits and reporting and disclosure requirements on various persons.
FECA defines “political committee” and specifies the reporting and disclosure
requirements that these committees must follow. For tax purposes, virtually all
political organizations are “section 527” political organizations. While most 527
organizations report to the Federal Election Commission (FEC), prior to the
enactment of P.L. 106-230, only those with taxable income reported to the Internal
Revenue Service (IRS). In recent years, political activists formed 527 organizations
which did not have to disclose their activities to either the FEC or the IRS. By
structuring their activities so that they did not engage in express advocacy and had no
taxable income, these organizations did not meet FECA criteria for political
committees and did not trigger the return requirements of the Internal Revenue Code.
The first section of this report compares the prior tax law and election law definitions
and disclosure requirements of “political organization” and “political committee” to
illustrate how organizations engaging in issue advocacy could avoid reporting to
either the FEC or the IRS. The second section of the report summarizes the
proposals to increase public disclosure of the activities of and contributors to these
organizations.
Background
Section 527 of the Internal Revenue Code was enacted in 1975 by P.L. 93-625
to clarify the tax treatment of “political organizations.” Section 527 covers the tax
treatment of all political organizations, whether they are at the federal, state, or local
level, whether they are parties, PACs, or candidate committees. The Federal Election
Campaign Act of 1971, P.L. 92-225, was enacted in 1972. FECA is intended to
prevent corruption in federal elections. Section 301(d) of FECA defines “political
committee” for purposes of regulating federal elections. Although the concepts are
similar, the definitions of “political organization” and “political committee” are not
identical. The congressional reports associated with the enactment of IRC § 527 did
not mention FECA.1 The only concern was how the Internal Revenue Service should
treat political organizations.
The prior law version of IRC § 527 treated political organizations as tax-exempt
for purposes of any federal law referring to tax-exempt organizations. It provided that
as long as their money was only used for political purposes, 527 organizations were
not taxed on contributions of money or property; membership dues, fees, or
assessments; proceeds from political fundraising or entertainment events; proceeds
from sales of political campaign materials (providing the organization is not in the
business of conducting such events or selling such materials); and proceeds from
conducting bingo games. Political organizations were (and are) taxed on investment
income, capital gains, and on any expenditures which are not for political purposes.
IRC § 2501(a)(5) provides that transfers of money or other property to a political
organization are not subject to gift taxes.
Unlike 527 organizations, organizations exempt under IRC § 501(a) which make
political expenditures of more than $100 per year are taxed on the lesser of their net
investment income or their political expenditures. This provision gives exempt
organizations an impetus to make political expenditures through a 527 organization.
Comparison of IRC § 527 and FECA
The first part of this report compares the definitions and reporting requirements
of political organizations under the prior version of IRC § 527 and political
committees under FECA in a chart form. Following the chart is a discussion of some
of the provisions.
Comparison of Political Committees and Political Organizations
Federal Election CampaignInternal Revenue Code
Act [FECA][IRC]
Statute2 U.S.C. §§ 431, et seq.26 U.S.C. § 527
PurposeRegulate federal electionTax political organizations
campaigns, reporting andwith investment income and
disclosure.other tax-exempt entities with
political expenditures.
OrganizationPolitical committee.Political organization.
called
1 S.Rept. 93-1357; H.Rept. 93-1642 (1974).
Federal Election CampaignInternal Revenue Code
Act [FECA][IRC]
DefinitionUnincorporated groups ofIncorporated or
includespersons, a committee, a club,unincorporated organization,
ana committee, an association, a
association; fund;
A separate segregated fund;A separate segregated fund;
A “local committee of aA party;
political party.” Newsletter funds of
officeholders.
What theReceives “contributions” orAccepts contributions or
organizationmakes “expenditures” makes expenditures for
doesaggregating greater thaninfluencing or attempting to
$1,000 during a calendar year;influence the selection,
exists as a separatenomination, election, or
segregated fund; or (if a localappointment
committee of a political party)of an individual
collects or spends overto any federal, state, or local
$5,000 in one year even if thepublic office.
expenditures fall outside the
statutory definition ofNo de minimis limits.
“contribution” or
“expenditure,” or makes
“contributions” or
“expenditures” of more than
$1,000 in a year.
PurposeInfluencing an election toInfluencing or attempting to
federal office.influence the selection,
nomination, election, or
appointment of an individual
to any federal, state, or local
public office.
Definition of2 U.S.C. § 431(2): “an26 U.S.C. 527(g)(3): “with
candidateindividual who seeksrespect to any Federal, State,
nomination for election, oror local elective public office,
election, to Federal office,an individual who— (A)
and . . . an individual shall bepublicly announced that he is
deemed to seek nominationa candidate for nomination or
for election, or election— (A)election to such office, and
if such individual has received(B) meets the qualifications
contributions aggregating inprescribed by law to hold
excess of $5,000 or has madesuch office.”
expenditure aggregating in
excess of $5,000; or (B) if
[another person has received
contributions or made
expenditures of more than
Federal Election CampaignInternal Revenue Code
Act [FECA][IRC]
$5,000 with the consent of
the individual].”
Definition of2 U.S.C. § 431 (8)(A): “any26 U.S.C. § 271(b)(2): “a
contributiongift, subscription, loan,gift, subscription, loan,
advance, or deposit of moneyadvance, or deposit, of
or anything of value made bymoney, or anything of value,
any person for the purpose ofand includes a contract,
influencing an election forpromise, or agreement to
Federal office; or the paymentmake a contribution, whether
by any person ofor not legally enforceable.”
compensation for the personal
services of another person
which are rendered to a
political committee without
charge for any purpose.”
[Long list of exceptions]
[No statutory exceptions]
Definition of2 U.S.C. § 431(9)(A): “any26 U.S.C. § 271(b)(3): “a
expenditurepurchase, payment,payment, distribution, loan,
distribution, loan, advance,advance, deposit, or gift, of
deposit, or gift of money ormoney, or anything of value,
anything of value, made byand includes a contract,
any person for the purpose ofpromise, or agreement to
influencing any election formake an expenditure, whether
Federal office; and or not legally enforceable.”
a written contract, promise,
or agreement to make an
expenditure.”
[No statutory exceptions]
[Long list of exceptions]
Reporting2 U.S.C. § 434(4)26 U.S.C. § 6012(a)(6)
requirementsPolitical committees file either Political organizations with
(A) quarterly reports intaxable income of more than
election years, plus a pre-$100 and newsletter funds
election, and post-electionwith any taxable income must
report and semiannual reportsfile an annual return 1120-
in non-election years; or (B)POL due 15th day of the 3rd
monthly reports in all calendarmonth after the end of the
years except that thetaxable year (e.g., March 15
November and Decemberfor calendar year
reports in election yearsorganizations).
follow the schedule for the
pre- and post-election reports
under (A).
Federal Election CampaignInternal Revenue Code
Act [FECA][IRC]
ReportName, address, FECName, address, employer
containsidentification number ofidentification number of
organization, summary oforganization, taxable income
cash on hand and(i.e., dividends, interest, rent,
disbursements, debts;royalties, capital gain
itemized list of contributors,income), deductions, taxable
showing name, address,income, foreign bank
occupation, employer, andaccounts, foreign trust
amount of contribution; otherincome, date of formation of
receipts; disbursements,organization, name and
including independentaddress of bookkeeper,
expenditures, operatingcandidate’s name, telephone
expenditures, refunds,number.
transfers.
PublicForm 3X is public.Form 1120-POL is
disclosure confidential.
Breadth of definitions. The first striking difference between political
organizations and political committees is that the tax law definition is much broader
than the election law definition. FECA only applies to federal elections. IRC § 527
applies to federal, state, and local elections, as well as to the selection, nomination,
or appointment of an individual to federal, state, or local public office. Groups which
want to influence the selection of federal and state judges and groups that want to
encourage a state governor to select particular individuals to the state cabinet could
be political organizations under the tax laws even though these activities are not
covered by FECA.
Organizations covered. Both definitions encompass a “separate segregated
fund,” which could be an organization as informal as a separate bank account. A
political organization includes a party or any of its subdivisions. The political
committee definition only refers to “a local committee of a political party.” This
appears to be because a political party is separately defined in 2 U.S.C. § 431(16).
Under the tax law, a newsletter fund of a federal, state, or local officeholder can be
a political organization. Newsletter funds are not specifically mentioned by FECA.
Newsletter funds of federal officeholders who are candidates for reelection could
come within the definition of political committee if certain monetary thresholds are
met, but newsletter funds of state or local officeholders would not be covered by
FECA.
Candidates covered. Both statutes contemplate a candidate for public office.
Only candidates for elective federal public offices are covered by FECA. The tax
code covers candidates for elective and appointive, state, local, and federal offices.
The FECA definition of candidate status turns on having collected or spent a certain
amount of money. The tax definition is triggered by an individual’s public
announcement of candidacy for the office, providing the individual meets the
qualifications for the office. Under the tax law, there is no minimum monetary limit
in order to be a political organization or to be a candidate.
Reporting requirements. The information collected under the two reporting
requirements was almost mutually exclusive. Under the campaign laws, political
committees report contributions and expenditures to the Federal Election
Commission. Under the tax laws, a political organization did not report contributions
and expenditures for an “exempt function” (i.e., influencing the selection, nomination,
election, or appointment of an individual to a public or political office) to the Internal
Revenue Service. Only investment income and expenses were reported and taxed.
Political organizations which spent their contributions as fast as they were collected
or which parked their contributions in non-interest-bearing checking accounts may not
have had any taxable income. Only organizations with taxable income were required
to file with the IRS on Form 1120-POL. Reports to the FEC on Form 3X are public
information. IRS Form 1120-POL was confidential. Political committees which
escape FEC reporting requirements, either because their activities do not cross the
dollar thresholds or because their activities are not aimed at federal elections, could
avoid public disclosure of their contributions and expenditures.
Use of 527 Organizations to Funnel Soft Money2
In December 1996 the IRS published the first of a series of private letter rulings3
which provided a blueprint for setting up an entity which would qualify as a political
organization under IRC § 527, but would not have any expenditures or activities
prohibited by or reportable under FECA. Basically, the activities that the
organizations seeking the letter rulings planned to engage in were voter education
activities which were intended to influence the outcome of an election, but which did
not expressly advocate the election of a particular candidate, and grassroots lobbying
on particular legislative issues. FEC Regulations, 11 CFR § 114.4(c)(4) and (5)
permit the preparation, publicizing, and distribution of congressional voting records
and voter guides on federal elected officials and candidates. The IRS rulings deemed
enough of these activities to be for “an exempt function” (i.e., a political function) to
qualify the organization as a political organization under IRC § 527, but the FEC does
not deem these reportable activities. 11 CFR § 114.5(e).
After these rulings became public, tax and election law advisers realized that 527
organizations could be used to collect unlimited amounts of soft money for issue
advertising in connection with elections; that the names of contributors to 527
organizations with no reportable activities under the election laws could remain
secret; and that donors could transfer an unlimited amount of money to 527
organizations free of gift taxes. For these reasons, 527 organizations were superior
to 501(c)(4) organizations as soft money vehicles. These three facts contributed to
2 For an explanation of soft money, see CRS Issue Brief IB98025, Campaign Finance:
Constitutional and Legal Issues of Soft Money; and CRS Report 97-91, Soft and Hard Money
in Contemporary Elections: What Federal Law Does and Does Not Regulate. In this report,
“soft money” is used to describe money that is not subject to the FECA contribution,
expenditure, or disclosure limits.
3 PLR 9652026, PLR 9725036, PLR 9808037, and 199925051.
a rapid acceleration of the use of 527 organizations to finance soft money activities.
Proposals for Change
On January 28, 2000, the Staff of the Joint Committee on Taxation released its
three-volume Study of Present-Law Taxpayer Confidentiality and Disclosure
Provisions as Required by Section 3802 of the Internal Revenue Service
Restructuring and Reform Act of 1998. JCS-1-00. In Volume II, Study of Disclosure
Provisions Relating to Tax-Exempt Organizations,
[http://www.house.gov/jct/pubs00.html] (particularly pages 94-98), the staff
recommended that IRC § 6104 be amended to require political organizations to
disclose their 1120-POLs and annual returns, if any; that political organizations be
required to file an annual return even if they had no taxable income; that the annual
return be revised to include more information about the organization’s activities; and
that Form 990 be amended to gather more information about the transfer of funds
among various exempt organizations so that the public and the IRS can better assess
whether contributions to exempt organizations are being used to fund political
activities.
On April 7, 2000, Common Cause released a report, Under the Radar: The
Attack of the “Stealth PACs” on our Nation’s Elections,
[http://www.commoncause.org/publications/utr/] recommending that all 527
organizations register as political committees with the FEC, and that, at a minimum,
Congress require disclosure of each 527's existence, officers, and major contributors.
The report also endorsed the recommendations of the staff of the Joint Committee on
Taxation.
House bills
H.R. 3688, the “Campaign Integrity Act of 2000”. The bill would amend IRC
§ 527 to require political organizations to file with the FEC within 10 days of
receiving or spending $5,000 for a political purpose as defined under IRC § 527(e)(2).
The filing would include the name, address, type of organization, the name, address,
and relationship of any connected or affiliated organization; and the names, addresses,
and titles of the custodian of books and accounts and the head of the organization.
Organizations would be required to file a report of receipts and disbursements, and
the names and addresses of contributors or recipients of over $200 in a calendar year
on the same schedule as political committees. Information would be publicly
available. Organizations which only attempt to influence state or local elections,
appointments to state or federal offices, or the selection of individuals to offices in a
political organization; and groups which accept contributions or make expenditures
of less than $5,000 per calendar year would be exempt from these requirements.
Groups which do not meet this criteria or which place advertisements which mention
a clearly identified candidate or which contain the likeness of a candidate would not
be exempt.
H.R. 4168, the “Underground Campaign Disclosure Act of 2000". H.R.
IRS within 10 days of formation (or within 10 days of enactment of the bill). The
report would include the name and address of the organization; the name, address and
relationship of any affiliated person; and the name, address, and title of the custodian
of the books and the treasurer; and a listing of all banks and depositories used by the
organization. Any changes would have to be reported within 10 days. Reports about
contributions and disbursements, contributors, and recipients of greater than $200 per
year would be filed with the IRS on the same schedule as required of political
committees under FECA. Organizations which are not involved with federal elections
would only be required to file annually. The filings would be open to public
inspection on similar terms as returns of tax-exempt organizations, including $100 per
day penalties on the organization and $10 per day penalties on the organization
managers for failure to file or furnish the required documents to the IRS; and $20 per
day penalties for failure to permit public inspection of the documents.
The exemption from the gift tax of transfers to political organizations in excess
of $10,000 per year would only apply to organizations in compliance with the
reporting requirements.
H.R. 4621, the “Accountability and Disclosure Act of 2000". H.R. 4621
would amend FECA and the Communications Act of 1934 to require “any person”
(i.e., the bill applies to more than just 527 organizations) who spend $10,000 or more
in a year for advertisements that mention a federal officeholder or federal candidate
by name or by picture to disclose the names of contributors of at least $1,000. The
FECA amendments apply to non-broadcast communications. When the reporting
thresholds are triggered, the entity must include in the advertisement, its name,
address, and telephone number or its internet site, which must contain the same
information. Upon request, the entity must provide the following information within
24 hours of the request: name, address, and telephone number of officers and
directors, if any; otherwise the same information about the person responsible for the
communication; the name of each person who provided at least $1,000 to the entity
during the calendar year, along with the amount provided. Penalties are not specified
in the bill, but existing penalties in 2 U.S.C. § 437g would apply. Potential civil and
criminal penalties are similar to those described below.
The Communications Act amendments would apply similar requirements to
broadcast communications, video programmers and multi-channel video program
distributors, and require that the entity furnish similar information about itself and its
contributors to the broadcast station, and that the station post the information on its
internet site. The Communications Act violations would be enforced by civil money
penalties up to the greater of $5,000 or the amount spent on the advertisement.
Willful violations would result in double penalties, and possible criminal action which
could result in a fine of up to $25,000 or 300% of the amount spent on the
advertisement and/or imprisonment for up to one year.
H.R. 4717, the “Full and Fair Political Activity Disclosure Act of 2000”.
H.R. 4717, as reported by the Committee on Ways and Means, would require newly
formed 527 organizations to notify the IRS notice within 10 days of their formation.
The information would be the same as is currently reported to the FEC by newly
formed political committees. In addition, 527 organizations, social welfare
[501(c)(4)] organizations, labor unions [501(c)(5)], and trade associations [501(c)(6)]
would be required to report to the IRS expenditures for “disclosable activities” and
receipts from “reportable contributors.” Organizations with activities related to
federal elections would report on the same schedule as political committees report to
the FEC. Organizations whose only activities involve state or local elections or
appointive offices would report annually. All reports, including names of
contributors, would be subject to public disclosure.
Any activity conducted by a 527 organization would be disclosable. For
organizations described in 501(c)(4), (5), or (6) of the Internal Revenue Code,
disclosable activities would include “527-type” activities (i.e., any activity intended
to influence the nomination or election of a candidate for public office); establishing,
administering, or soliciting contributions to a 527 organization; contributing directly
or indirectly to a 527 organization; contributing directly or indirectly to an exempt
organization which had disclosable activities within the past 3 years; or any mass
media communication or mass mailing which mentions or contains a picture of a
clearly identified candidate for election to federal office, an individual who has formed
an exploratory committee for election, or the political party of such a candidate. Non-
527 organizations with total expenditures of less than $10,000 would not be required
to report.
Reportable contributors would be those who gave more than $200 to a 527
organization and those who gave (whether as donations, dues, fees, or assessments)
more than $1,000 to a 501(c)(4), (5), or (6) organization. If the organization set up
a segregated fund to conduct 527-type activities and made no expenditures for
disclosable activities other than from the fund, then only earmarked contributions to
the fund would have to be reported.
H.R. 4762. As introduced, the bill contained 3 section which would require 527
organizations to disclose their political activities. Section 1 would require 527
organizations to notify the IRS of their 527 status within 24 hours of formation,
unless the organization reasonably anticipates having annual gross receipts of less than
$25,000 or the organization reports to the FEC as a political committee. Section 2
would require 527 organizations to disclose contributions of $200 or more and
expenditures of $500 or more, including the name, address, occupation, and employer
of the contributor or recipient on a schedule consistent with the schedule for reporting
under FECA. Excepted from this requirement would be those reporting to the FEC,
any state or local committee of a political party or a political committee of a state or
local candidate, organizations anticipating receipts of less than $25,000, organizations
exempt under other provisions of the Internal Revenue Code, and independent
expenditures. Section 3 of the bill would require all 527 organizations, except those
with gross receipts under $25,000, to file an annual return and make such
information, including contributor information, public. All the information proposed
to be collected by the IRS would be subject to public disclosure.
House actions
H.R. 4168 was proposed as an amendment to the Taxpayer Bill of Rights
legislation (H.R. 4163) being considered by the Committee on Ways and Means on
April 5, but the amendment was defeated. On May 25, a motion to recommit the
telephone excise tax repeal bill with instructions to add additional reporting
requirements for 527 organizations was defeated in the House (Cong. Rec. pp.
H3851-53). On June 9, an attempt was made to recommit the estate tax repeal bill,
H.R. 8, with instructions to include a provision similar to H.R. 4168. The motion to
recommit was defeated (Cong. Rec. pp.H4160-63). On June 14, a petition to
discharge H.R. 3688 was filed in the House. A Ways and Means Oversight
Subcommittee hearing on proposals to strengthen public disclosure for 527
organizations was held on June 20. On June 22, the Committee on Ways and Means
marked up H.R. 4717. House consideration of H.R. 4717 is expected on June 27 or
28. H.R. 4762 was introduced on June 27 and called up under a suspension of the
rules. The bill was considered under a suspension of the rules and passed in the early
morning hours of June 28.
Senate bills
S. 79, the “Advancing Truth and Accountability in Campaign
Communications Act”. S. 79 does not specifically address 527 organizations.
Instead it would require every person who makes a disbursement for an electioneering
communication in excess of $10,000 per calendar year to report to the FEC within 24
hours of making the disbursement. In addition to identifying information about the
organization, the payee, and the candidate supported, contributors of $500 or more
would be disclosed. Corporations (except for certain 501(c)(4) organizations) and
labor unions would be prohibited from making electioneering communications.
S. 2582. S. 2582 would require most 527 organizations to be political
committees under FECA Entities involved with state and local elections, selections,
nominations, or appointments, with appointments to federal office, or with selections
to office in political organizations would not be subject to the FECA registration
requirement. (This could have the effect of denying 527 status to “issue advocacy”
organizations which focus on federal issues.)
S. 2583. S. 2583 would increase public disclosure about 527 organizations by
requiring 3 types of reports to be filed with the IRS. First, S. 2583 would require 527
organizations which are not required to register under FECA to notify the IRS within
24 hours of their formation. (Organizations already in existence would have 30 days
after enactment to comply.) Organizations which do not anticipate having gross
receipts of at least $25,000 and organizations exempt under 501(a) and described in
Failure to do so would mean the organization could not be treated as a 527
organization until such time as it gave the IRS proper notice. The notice would
contain the name, addresses, including e-mail address, and purpose of the
organization; the names and addresses of its officers, highly compensated employees,
contact person, custodian of records, and board members; the names and addresses
of any related entities; and any other information the IRS may require. For any period
an organization failed to give the IRS proper notice, the organization’s “exempt
function” income (e.g. political contributions and fundraising income) would be
subject to tax. The organization would be permitted to deduct any expenses in
connection with producing the income.
The notice would be subject to public inspection under the same terms as other
tax-exempt organizations’ returns are subject to public disclosure. In addition, the IRS
would be required to post a list of all political organizations which have filed notices
with the IRS, along with the name, address, e-mail address, custodian of records, and
contact person for each organization, on the internet.
Second, S. 2583 would require a 527 organization to file with the IRS either
quarterly reports, plus pre- and post-election reports in election years and semiannual
reports in non-election years, or monthly reports every year, plus pre- and post-
election reports in election years. The report would include expenditures of $500 or
more, including the name and address, occupation and employer, if any, of each
recipient. The report would also include a list of contributors of $200 or more, along
with the name, address, occupation, and employer, if any, of each contributor.
Organizations which file with the FEC as political committees, state or local
committees of political parties, political committees of state or local candidates,
organizations with gross receipts of less than $25,000 per year, tax-exempt
organizations with political expenditures, and independent expenditures would not be
subject to the reporting requirement. These reports, including the names and
addresses of contributors, would be subject to public disclosure.
Third, most 527 organizations would be required to file an annual return similar
to that filed by other tax-exempt organizations. The IRS would be given authority to
add to or subtract from these requirements. The returns would be subject to public
disclosure on the same terms, including penalties, as other tax-exempt organizations’
returns.
Senate actions
On June 8, the Senate agreed to add amendment no. 3214, (see text at Cong.
Rec. pp. S4715-16) which is identical to S. 2583, to the National Defense
Authorizations bill (S. 2549) (vote on Cong. Rec. pp. S4808-09). Sen. Lott has
proposed moving the amendment from S. 2549 to a tax bill that originated in the
House, H.R. 3619, the telephone excise tax repeal bill. On June 28, the Senate
received H.R. 4762. H.R. 4762 passed the Senate without amendment on June 29.
The measure was cleared for the White House the same day. The bill was presented
to the President on June 30 and signed on July 1, 2000, becoming Public Law 106-