article: SECTION 1. MODIFICATIONS OF REPORTING REQUIREMENTS FOR CERTAIN STATE AND LOCAL POLITICAL ORGANIZATIONS. (a) Notification.--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 a local committee of a political party, as defined by State law.''. (b) Exemption for Certain State and Local Political Committees From Reporting Requirements.-- (1) In general.--Paragraph (5) of section 527(j) of such Code (relating to required disclosures of expenditures and contributions) 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 an exempt State or local political organization,''. (2) Exempt state or local political organization.-- Subsection (e) of section 527 of such Code (relating to other definitions) is amended by adding at the end the following new paragraph: ``(5) Exempt state or local political organization.-- ``(A) In general.--The term `exempt State or local political organization' means a political organization-- ``(i) which does not engage in any exempt function other than to influence or to attempt 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 or local requirements to submit reports containing information-- ``(I) regarding individual expenditures from and contributions to such organization, and ``(II) regarding the person who makes such contributions or receives such expenditures, which is substantially similar to the information 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 made public by the agency with which such reports are filed and are publicly available for inspection in a manner similar to that required by section 6104(d)(1). ``(B) Participation of federal candidate or office holder.--The term `exempt 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 office or an individual who holds such office-- ``(i) controls or materially participates in the direction of the organization, or ``(ii) directs, in whole or in part, expenditures or fundraising activities of the organization.''. (c) Annual Return Requirements.-- (1) Income tax returns required only where political organization taxable income.--Paragraph (6) of section 6012(a) of such Code (relating to general rule of persons required to make returns of income) is amended by striking ``or which has gross receipts of $25,000 or more for the taxable year (other than an organization to which section 527 applies solely by reason of subsection (f)(1) of such section)''. (2) 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.--Every political organization (within the meaning of section 527(e)(1)), and every fund treated under section 527(g) as if it constituted a political organization, which has gross receipts of $25,000 or more for the taxable year shall file a 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), and ``(B) containing such other information as the Secretary deems necessary to carry out the provisions of this subsection. ``(2) Exceptions from filing.-- ``(A) Mandatory exceptions.--Paragraph (1) shall not apply to an organization-- ``(i) which is an exempt State or local political organization (as defined in section 527(e)(5)), ``(ii) which is a State or local committee of a political party, or political committee of a State or local candidate, as defined by State law, ``(iii) which is a caucus or association of State or local elected officials, ``(iv) which is a national association of State or local officials, ``(v) 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, ``(vi) which is a national committee (as defined in section 301(14) of the Federal Election Campaign Act of 1971) of a political party, or ``(vii) to which section 527 applies for the taxable year solely by reason of subsection (f)(1) of such section. ``(B) Discretionary exception.--The Secretary may relieve any organization required under paragraph (1) to file an information return from filing such a return where he determines that such filing is not necessary to the efficient administration of the internal revenue laws.''. (d) Waiver of Penalties.--Section 527 of such Code 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 give notice under subsection (i), or ``(2) penalty imposed under subsection (j) for a failure to file a report, on a showing that such failure was due to reasonable cause and not due to willful neglect.''. (e) Effective Date.--The amendments made by this section shall take effect as if included in the amendments made by Public Law 106-230. SEC. 2. NOTIFICATION OF INTERACTION OF REPORTING REQUIREMENTS. (a) In General.--The Secretary of the Treasury, in consultation with the Federal Election Commission, shall publicize information on-- (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. 3. TECHNICAL CORRECTIONS 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 (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 Penalty.--Paragraph (1) of section 527(j) of such Code (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 penalty imposed by this paragraph shall be assessed and collected in the same manner as penalties imposed by section 6652(c).''. (c) Application of Fraud Penalty.--Section 7207 of such Code (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''. (d) Duplicate Electronic and Written Filings Not Required.-- (1) Subparagraph (A) of section 527(i)(1) of such Code is amended by striking ``, electronically and in writing,''. (2) Subsection (i) of section 527 of such Code is amended by adding at the end the following new paragraph: ``(7) Electronic filing.--The Secretary shall develop procedures for submission in electronic form of notices required to be filed under this subsection and reports required to be filed under subsection (j).''. (e) 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) Subsections (c) and (d).--The amendments made by subsections (c) and (d) shall take effect as if included in the amendments made by Public Law 106-230.
summary: Amends the Internal Revenue Code to: (1) exempt State and local candidate committees, as well as local committees of political parties, from specified notification requirements; (2) exempt certain State and local political organizations from specified reporting requirements; (3) remove language dictating that certain political organizations with gross receipts of $25,000 or more for a taxable year and specified political newsletter funds with such receipts shall file income tax returns; (4) mandate that, with certain designated exceptions, every political organization with gross receipts of $25,000 or more for a taxable year and specified political newsletter funds with such receipts file information returns with specified information including income, receipts and disbursements, as well as facts deemed necessary by the Secretary of the Treasury; (5) authorize the Secretary to waive certain related penalties; and (6) amend related penalty provisions.