[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5997 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 5997
To amend the Internal Revenue Code of 1986 to prohibit 501(c)(4)
entities from using more than 10 percent of total expenditures on
certain political expenditures, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 17, 2021
Mr. Golden (for himself, Mrs. Demings, Ms. Norton, and Mr. DeSaulnier)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to prohibit 501(c)(4)
entities from using more than 10 percent of total expenditures on
certain political expenditures, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Crack Down on Dark Money Act''.
SEC. 2. LIMITATION ON COVERED POLITICAL EXPENDITURES BY SOCIAL WELFARE
ORGANIZATIONS.
(a) In General.--Section 501(c)(4) of the Internal Revenue Code of
1986 is amended by adding at the end the following:
``(C)(i) Subparagraph (A) shall not apply to an
entity for a taxable year if more than 10 percent of
the total expenditures for the taxable year are covered
political expenditures.
``(ii) For purposes of this subparagraph, the term
`covered political expenditures' means direct or
indirect expenditures for an exempt function described
in section 527(e)(2).
``(iii) The Secretary shall prescribe such
regulations as may be necessary or appropriate to
prevent the avoidance of clause (i), including
regulations relating to a direct or indirect transfer
of all or part of the assets of an entity to an entity
controlled (directly or indirectly) by the same person
or persons who control the transferor entity.''.
(b) Expansion of Political Organization Definition.--Section
527(e)(1) of such Code is amended by striking ``organized and operated
primarily for the purpose of'' and inserting ``, unless such
organization is not established under this section,''.
(c) Political Intervention Added to Exempt Function Definition.--
Section 527(e) of such Code is amended--
(1) in paragraph (2)--
(A) by striking ``includes the making of
expenditures relating to an office described in the
preceding sentence which, if incurred by the
individual, would be allowable as a deduction under
section 162(a).'' and inserting ``includes--
``(A) the making of expenditures relating to an
office described in the preceding sentence which, if
incurred by the individual, would be allowable as a
deduction under section 162(a), and
``(B) political intervention.'', and
(B) by adding at the end the following new
paragraph:
``(6) Political intervention.--The term `political
intervention' has the meaning given to such term by section
4956.''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2021.
SEC. 3. POLITICAL INTERVENTION.
(a) Disclosure Requirement.--Section 6104(d)(3) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
subparagraph:
``(C) Certain 501(c)(4) organizations must disclose
certain donors.--In the case of an organization
described in section 501(c)(4) that spends funds on
political intervention (as defined in section 4956),
such organization shall be required to disclose the
name and address of any contributor donating $5,000 or
more to such organization, and such information shall
be made open to public inspection in the manner
described in subsection (a)(1)(A).''.
(b) Political Intervention Defined.--Subchapter C of chapter 42 of
subtitle D of the Internal Revenue Code of 1986 is amended by adding at
the end the following new section:
``SEC. 4956. POLITICAL INTERVENTION.
``(a) Political Intervention Defined.--For purposes of this
section, the term `political intervention' means (except as provided in
subsection (b)), with respect to activities conducted by an
organization in relation to Federal, state, local, and foreign election
campaigns of candidates for public office--
``(1) express advocation--
``(A) for the election, defeat, nomination, or
recall of a political candidate,
``(B) for the election or defeat of candidates
affiliated with a specific political party,
``(C) that voters select candidates for support or
opposition based on one or more criteria that clearly
distinguish certain candidates from other candidates,
or
``(D) the making of contributions to a candidate's
campaign, a political party, or (unless the
contribution is restricted so that it must not be used
to support political intervention) any other political
organization within the meaning of section 527(e)(1),
``(2) communication to any part of the electorate, other
than an express advocacy communication within the meaning of
clause (i), if the communication--
``(A) refers to a political candidate, and
``(B) reflects a view on such candidate, and
``(3) political use of resources.
``(b) Exceptions.--A communication described in subsection (a)
shall not constitute political intervention if--
``(1) it does not consist of paid mass media advertising,
and
``(2) it falls under one of the following exceptions:
``(A) Communications to influence official
action.--Commentary on a public official that has a
direct, limited, and reasonable relationship to
specific actions the official may yet perform within
his or her current term of office without mention of
any election or voting in an election, or of the
official's candidacy or opponent.
``(B) Voter education.--Voter education activities
or the dissemination of materials that compare two or
more candidates for an office, including materials
disclosing the views of the organization on political
issues, if the communication consists solely of content
in which the time, text, or space is offered in equal
shares to each of the participating candidates, and the
organization's share of content is no greater than the
share available to any of the participating candidates.
The opportunity to participate, including a full
description of the opportunity and of the
organization's share of the content, if any, must be
given to all candidates meeting an objective threshold
of viability for nomination or election to the office
at least 72 hours in advance of the final preparation
of the communication.
``(C) Self-defense communications.--A response by
the organization to a public or publicly-reported
statement by a candidate or candidates that either (i)
attacks the organization itself, or (ii) comments upon
a specific public policy position that the organization
has taken publicly in furtherance of its exempt purpose
within the prior year, or (iii) results in press
inquiries to the organization that were not solicited
subsequent to the candidate's statement by the
organization. The response by the organization must be
educational, limited topically to addressing the
candidate's statement, and as to (i) or (ii),
disseminated in a manner commensurate in medium and
scale, and proximate in time, to the publicity of the
candidate's statement, and as to (iii), limited to
dissemination to the requesting press organization.
``(D) Personal, oral remarks at official
meetings.--Oral remarks made by anyone other than a
candidate who is present in person at an official
meeting of an organization held in a single room or
location, so long as--
``(i) no announcement of the meeting refers
to any candidate, party, election, or voting,
and
``(ii) a disclaimer is made to those in
attendance, stating that remarks are the
speaker's personal opinion and are not made on
behalf of the organization.
This exception covers only oral remarks made by and to
persons in attendance, and not any other form of
communication or redistribution of those remarks,
whether written, electronic, recorded, broadcast, or
otherwise transmitted.
``(c) Definitions.--For purposes of this section--
``(1) Candidate.--The term `candidate' means a person who
offers himself or herself for election to public office or
whose election the person conducting the activity or making the
expenditure in question expressly proposes, supports, or
opposes.
``(2) Election.--The term `election' means a process
culminating in a vote by the public to determine whether a
candidate will serve in a public office, including primary,
general, special, and runoff elections, nominations by caucus,
convention, or other means, and recall and confirmation votes.
``(3) Paid mass media advertising.--
``(A) In general.--The term `paid mass media
advertising' means communication to the general public
placed for a fee on one of the following media operated
by another person: a broadcast, cable, or satellite
facility, newspaper, magazine, outdoor advertising
facility, mass mailing service, telephone bank, or
another person's web site or internet communications
service.
``(B) Mass mailing.--The term `mass mailing'
means--
``(i) a mailing by United States mail or
facsimile,
``(ii) of more than 500 pieces of mail
matter of an identical or substantially similar
nature within any 30-day period, and
``(iii) that is not voter education
materials.
``(4) Political use of resources.--The term `political use
of resources'--
``(A) means--
``(i) the provision any of an
organization's resources, tangible or
intangible, including monetary or in-kind,
goods, services, or facilities, by gift, loan,
sale, rental, or any other method of transfer
to another person or entity, if--
``(I) the transferee uses such
resources to support or oppose any
candidate's election to public office,
``(II) such use is reasonably
foreseeable, and
``(III) if the transferor has not
taken reasonable steps to prevent such
use,
``(ii) any other transfer that is a
reportable contribution related to one or more
candidates for elective public office, to a
political party, or (unless the transfer is
restricted so that it must not be used to
support political intervention) to any other
political organization within the meaning of
section 527(e)(1), and
``(iii) any other use of an organization's
resources in support of or opposition to a
candidate, if not specifically allowed under a
Revenue Ruling or other Federal tax authority,
and
``(B) does not include a transfer that is--
``(i) made in a transaction in which the
fair market value of goods or services provided
by the organization does not exceed the value
of the consideration received in exchange,
``(ii) similar to other transactions
conducted by the organization, and
``(iii) without preference for or against
any candidate.
``(d) Regulations.--The Secretary shall prescribe such regulations
and other guidance as may be appropriate or necessary to carry out the
purposes of this section.''.
(c) Conforming Amendments.--
(1) The heading for subchapter C of chapter 42 of such Code
is amended by adding at the end the following: ``; Political
Intervention''.
(2) The table of sections for such subchapter C is amended
by adding at the end the following:
``Sec. 4956. Political intervention.''.
(3) The item in the table of subchapters of such chapter 42
relating to subchapter C is amended to read as follows:
``subchapter c. political expenditures of section 501(c)(3)
organizations; political intervention.''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2021.
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