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Limited Nonprofit Political Disclosure Legislation Passes Congress

Update: On July 1st, President Clinton signed this bill into law.

In a early-morning vote on June 28, a pared-down version of legislation requiring disclosure of contributors and expenditures to 527 organizations passed the House overwhelmingly (385-39). This morning,June 29, the Senate took up the House bill, which passed 92-6. It will now be sent to the President, who is expected to sign the bill.

The bill (H.R. 4762), which only covers political organizations organized under section 527 of the Internal Revenue Code, requires disclosure of contributors who give $200 or more in a year, and expenditures over $500 in a year.

This legislation would require all 527 organizations that have annual receipts of $25,000 or more to:

• Notify the IRS of their existence within 24 hours of establishment. This notification must include the name and address of the organization, the purpose of the organization, as well as the names and addresses of its officers, "highly compensated employees," contact person, record keeper and Board of Directors. Additionally, the organization must provide the name and address of any related entities (such as affiated charities) as well as a description of the nature of the relationship. If an organization fails to notify the IRS or its establishment, it will lose its tax exemption until it does so. 527 organizations already in existence have 30 days from the enactment of the legislation to register.



• Disclose expenditures and contributions to the IRS. A rather complex system is outlined where an organization can either give constant monthly reports; or semi-annual reports in non-election years, and quarterly reports in election years, along with pre- and post-election reports. These reports are to contain the amount of each expenditure made in the report period if the total amount of expenditures to that entity exceeds $500 in the year, as well as the name and address of the entity (and, in the case of an individual, the name of the person's employer and occupation). The reports must also include the name and address of all contributors who made contributions during the report period, if their contributions total $200 or more during the calendar year, and the amount of the contribution (and, in the case of an individual, the name of the person's employer and occupation).

Additionally, the IRS must make available, both at IRS offices and via the internet, a list of all 527 organizations that have filed with the IRS. This list must include the name address and e-mail address of all organizations as well as the names of the contact person and the record keeper. The tax return filed by the 527 group will also be made public by the IRS.

This legislation is almost exactly the same as legislation sponsored by Sens. John McCain (R-AZ) and Joseph Lieberman (D-CT) that passed the Senate earlier this month.

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