article: SECTION 1. SHORT TITLE. This Act may be cited as the ``527 Reform Act of 2004''. SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS. (a) Definition of Political Committee.--Section 301(4)(A) of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(4)(A)) is amended to read as follows: ``(A) any committee, club, association, or other group of persons that-- ``(i) during one calendar year, receives contributions aggregating in excess of $1,000 or makes expenditures aggregating in excess of $1,000; and ``(ii) has as its major purpose the nomination or election of one or more candidates;''. (b) Definition of Major Purpose for Section 527 Organizations.-- Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the following new section: ``SEC. 325. DEFINITIONS AND RULES FOR DETERMINING ORGANIZATIONS AND DISBURSEMENTS INFLUENCING FEDERAL ELECTIONS. ``(a) Major Purpose of Section 527 Organizations.--For purposes of section 301(4)(A)-- ``(1) In general.--A committee, club, association, or group of persons that-- ``(A) is an organization described in section 527 of the Internal Revenue Code of 1986, and ``(B) is not described in paragraph (2), has as its major purpose the nomination or election of one or more candidates. ``(2) Excepted organizations.--Subject to paragraph (3), a committee, club, association, or other group of persons described in this paragraph is-- ``(A) an organization described in section 527(i)(5) of the Internal Revenue Code of 1986, or ``(B) any other organization which is one of the following: ``(i) A committee, club, association, or other group of persons whose election or nomination activities relate exclusively to elections where no candidate for Federal office appears on the ballot. ``(ii) A committee, club, association, or other group of persons that is organized, operated, and makes disbursements exclusively for one or more of the following purposes: ``(I) Influencing the selection, nomination, election, or appointment of one or more candidates to non-Federal offices. ``(II) Influencing one or more State or local ballot initiatives, State or local referenda, State or local constitutional amendments, State or local bond issues, or other State or local ballot issues. ``(III) Influencing the selection, appointment, nomination, or confirmation of one or more individuals to non-elected offices. ``(IV) Paying expenses described in the last sentence of section 527(e)(2) of the Internal Revenue Code of 1986 or expenses of a newsletter fund described in section 527(g) of such Code. ``(3) Section 527 organizations making certain disbursements.--A committee, club, association, or other group of persons described in paragraph (2)(B) shall not be considered to be described in such paragraph for purposes of paragraph (1)(B) if it makes disbursements for a public communication that promotes, supports, attacks, or opposes a clearly identified candidate for Federal office during the period beginning on the first day of the calendar year preceding the calendar year in which the general election for the office sought by the clearly identified candidate occurs and ending on the date of the general election.''. SEC. 3. CERTAIN EXPENSES BY MAJOR PURPOSE ORGANIZATIONS TREATED AS EXPENDITURES. (a) In General.--Section 301(9)(A)(i) of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(9)(A)(i)) is amended by inserting ``, including any amount described in section 325(b)'' after ``office''. (b) Applicable Communications.--Section 325 of the Federal Election Campaign Act of 1971 (as added by section 2(b)) is amended by adding at the end the following new subsection: ``(b) Certain Expenditures for Major Purpose Organizations.-- ``(1) In general.--Subject to paragraph (2), a purchase, payment, distribution, loan, advance, deposit, or gift of money or anything of value for-- ``(A) a public communication that refers to a clearly identified candidate for Federal office or to a political party (regardless of whether a candidate for State or local office is also mentioned or identified) and that promotes, supports, attacks, or opposes a candidate for that office or a political party (regardless of whether the communication expressly advocates a vote for or against a candidate), or ``(B) voter registration activity, voter identification, get-out-the-vote activity, or generic campaign activity conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for State or local office also appears on the ballot), shall be an expenditure under section 301(9)(A)(i) if made by, or on behalf of, a political committee (as defined in section 301(4)) or a committee, club, association, or other group of persons for which the nomination or election of one or more candidates is its major purpose. ``(2) Exception.--Any funds used for purposes described in paragraph (1) that, in accordance with allocation rules set forth in section 325(c), are disbursed from a non-Federal account shall not be treated as expenditures.''. SEC. 4. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON- FEDERAL ACTIVITIES. Section 325 of the Federal Election Campaign Act of 1971 (as added by section 2(b) and amended by section 3) is amended by adding at the end the following: ``(c) Allocation and Funding Rules for Expenses of Separate Segregated Funds and Nonconnected Committees Relating to Federal and Non-Federal Activities.-- ``(1) In general.--In the case of any disbursements by any separate segregated fund or nonconnected committee for which allocation rules are provided under paragraph (2)-- ``(A) the disbursements shall be allocated between Federal and non-Federal accounts in accordance with this subsection and regulations prescribed by the Commission, and ``(B) in the case of disbursements allocated to non-Federal accounts, may be paid only from a qualified non-Federal account. ``(2) Costs to be allocated and allocation rules.-- Disbursements by any separate segregated fund or nonconnected committee in connection with Federal and non-Federal elections for any of the following categories of activity shall be allocated as follows: ``(A) At least 50 percent of any administrative expenses, including rent, utilities, office supplies, and salaries not attributable to a clearly identified candidate shall be paid with funds from a Federal account, except that for a separate segregated fund such expenses may be paid instead by its connected organization. ``(B) At least 50 percent of the direct costs of a fundraising program or event, including disbursements for solicitation of funds and for planning and administration of actual fundraising events, where Federal and non-Federal funds are collected through such program or event shall be paid with funds from a Federal account, except that for a separate segregated fund such costs may be paid instead by its connected organization. ``(C) At least 50 percent of the expenses for public communications or voter drive activities that refer to a political party, but do not refer to any clearly identified Federal or non-Federal candidate, shall be paid with funds from a Federal account. ``(D) 100 percent of the expenses for public communications or voter drive activities that refer to a political party, and refer to one or more clearly identified Federal candidates, but do not refer to any clearly identified non-Federal candidates, shall be paid with funds from a Federal account. ``(E) At least 50 percent of the expenses for public communications or voter drive activities that refer to a political party, and refer to one or more clearly identified non-Federal candidates, but do not refer to any clearly identified Federal candidates, shall be paid with funds from a Federal account, except that this subparagraph shall not apply to communications or activities that relate exclusively to elections where no candidate for Federal office appears on the ballot. ``(F) At least 50 percent of the expenses for public communications and voter drive activities that refer to one or more clearly identified candidates for Federal office and one or more clearly defined non- Federal candidates, without regard to whether the communication refers to a political party, shall be paid with funds from a Federal account. ``(3) Qualified non-federal account.--For purposes of this subsection-- ``(A) In general.--The term `qualified non-Federal account' means an account which consists solely of amounts-- ``(i) that, subject to the limitations of subparagraphs (B) and (C), are raised by the separate segregated fund or nonconnected committee only from individuals, and ``(ii) with respect to which all other requirements of Federal, State, or local law are met. ``(B) Limitation on individual donations.-- ``(i) In general.--A separate segregated fund or nonconnected committee may not accept more than $25,000 in funds for its qualified non-Federal account from any one individual in any calendar year. ``(ii) Affiliation.--For purposes of this subparagraph, all qualified non-Federal accounts of separate segregated funds or nonconnected committees which are directly or indirectly established, financed, maintained, or controlled by the same person or persons shall be treated as one account. ``(C) Fundraising limitation.--No donation to a qualified non-Federal account may be solicited, received, directed, transferred, or spent by or in the name of any person described in subsection (a) or (e) of section 323. ``(4) Voter drive activity and federal account defined.-- For purposes of this subsection-- ``(A) Voter drive activity.--The term `voter drive activity' means any of the following activities conducted in connection with an election in which a candidate for Federal office appears on the ballot (regardless of whether a candidate for State or local office also appears on the ballot): ``(i) Voter registration activity. ``(ii) Voter identification. ``(iii) Get-out-the-vote activity. ``(iv) Generic campaign activity. ``(B) Federal account.--The term `Federal account' means an account which consists solely of contributions subject to the limitations, prohibitions, and reporting requirements of this Act. Nothing in this subsection or in section 323(b)(2)(B)(iii) shall be construed to infer that a limit other than the limit under section 315(a)(1)(C) applies to contributions to the account.''. SEC. 5. CONSTRUCTION. No provision of this Act, or amendment made by this Act, shall be construed-- (1) as approving, ratifying, or endorsing a regulation promulgated by the Federal Election Commission, or (2) as establishing, modifying, or otherwise affecting the definition of political organization for purposes of the Internal Revenue Code of 1986. SEC. 6. EFFECTIVE DATE. The amendments made by this Act shall take effect on January 1, 2005.
summary: 527 Reform Act of 2004 - Amends the Federal Election Campaign Act of 1971 to revise the definition of political committee to include any committee, club, association, or other group of persons that has as its major purpose the nomination or election of one or more candidates ("Section 527 Organizations" or major purpose organizations). Treats certain expenses by major purpose organizations as expenditures subject to the limitations and reporting requirements of such Act. Provides that any disbursement by separate segregated fund or nonconnected committee shall be allocated between Federal and non-Federal accounts in accordance with this Act and regulations prescribed by the Federal Election Commission. States that disbursements allocated to non-Federal accounts may be paid only from a qualified non-Federal account. Prohibits a separate segregated fund or nonconnected committee from accepting more than $25,000 in funds for its qualified non-Federal account from any one individual in any calendar year.