Title II — Regulation of independent Federal election-related activity by tax-exempt entities

“H Reporting election-related activity

“4968. Taxes on failure to report certain election-related activity

“(a) In general

“(1) On the organization—There is hereby imposed on each failure to report described in subsection (b) by a covered tax-exempt organization a tax equal to 10 percent of the unreported amount. The tax imposed by this paragraph shall be paid by the organization.

“(2) On the responsible person—Unless a failure to report described in subsection (b) is not due to negligence or intentional disregard, there is hereby imposed on the responsible individual with respect to the organization to which the failure to report relates, a tax equal to 21/2 percent of the amount thereof. The tax imposed by this paragraph shall be paid by the responsible individual.

“(b) Failures To report described in this subsection—A failure to report is described in this subsection if such failure is a failure to report a covered contribution or an independent Federal election-related activity expenditure under section 354 of such Act. For purposes of this section, a failure to accurately report an amount shall be treated as a failure to report such amount to the extent of the difference between the amount required to be reported and the amount so reported.

“(c) Reduction in amount of tax

“(1) Taxes on the organization—The tax imposed under subsection (a)(1) shall be reduced by any amount paid by such organization in connection with the failure to report described in subsection (b)—

“(A) under any conciliation agreement with the Federal Election Commission under section 309 of the Federal Election Campaign Act of 1971, or

“(B) under a civil penalty imposed by the Commission.

“(2) Taxes on the responsible individual—The tax imposed under subsection (a)(2) shall be reduced by any amount paid by such responsible individual in connection with the failure to report described in subsection (b)—

“(A) under any conciliation agreement with the Federal Election Commission under section 309 of the Federal Election Campaign Act of 1971, or

“(B) under a civil penalty imposed by the Commission.

“(d) Other definitions—For purposes of this section—

“(1) Covered tax-exempt organization—The term covered tax-exempt organization means any organization which—

“(A) without regard to any failure described in subsection (b)—

“(i) would be described in section 501(c) and exempt from taxation under section 501(a), or

“(ii) is a political organization (as defined in section 527), and

“(B) is an independent political actor (as defined in section 351(1) of such Act).

“(2) Responsible individual—The term responsible individual means, with respect to any covered tax-exempt organization, the individual designated as a responsible individual under section 352(a) of the Federal Election Campaign Act of 1971.

“(e) Abatement—If it is established to the satisfaction of the Secretary that a failure to report described in subsection (b) was due to reasonable cause and not negligence or intentional disregard, then any tax imposed under subsection (a) with respect to such failure (including interest) shall not be assessed and, if assessed, the assessment shall be abated and, if collected, shall be credited or refunded as an overpayment.”

“506. Requirement to register and report independent Federal election-related activity expenditures

“(a) In general

“(1) Loss of tax-exempt status—An organization described in section 501(c) shall not be exempt from taxation under section 501(a), and a political organization described in section 527 shall not be exempt from tax under such section, for any period after the date described in paragraph (2) if such organization is required to register under section 303 or 353 of the Federal Election Campaign Act of 1971 or report under section 304 or 354 of such Act and fails to do so or, in the case of a report under such section 304 or 354, files an inaccurate report.

“(2) Time of loss of exemption—The date described in this paragraph is the date on which the first failure described in paragraph (1) occurred.

“(b) Exceptions

“(1) Safe harbor—Notwithstanding subsection (a), an organization shall not fail to be treated as exempt from tax under section 501(a) or section 527 if the sums for which there was a failure to report under section 304 or 354 of the Federal Election Campaign Act of 1971 aggregates $25,000 or less.

“(2) Best efforts—An organization shall not fail to be treated as exempt from tax under section 501(a) or section 527 if the Secretary determines that the treasurer or responsible person with respect to such organization (within the meaning of section 352 of the Federal Election Campaign Act of 1971) has made best efforts to comply with the requirements to which the failure relates. In any case in which such failure relates to a failure to report the identification (as defined in section 301 of such Act) of a person, such best efforts shall not be considered to have been made unless the treasurer or responsible person made efforts to contact the person through multiple means of communication and attempted to use publicly available information to establish such identification.

“(c) Denial of reinstatement—Any organization to which subsection (a) applies, and any responsible individual with respect to such organization (as defined in section 4968(d)(2))—

“(1) shall not be eligible to apply for exemption from taxation under section 501(a), and

“(2) shall not be treated as a political organization under section 527,

“(d) Reasonable cause exception—If it is established to the satisfaction of the Secretary that a failure described in subsection (a)(1) was due to reasonable cause and not negligence or intentional disregard, then subsection (a) shall not apply.”