	Background

Prior to 1975, the Internal Revenue Code (IRC) was silent as to the tax treatment of organizations whose primary purpose is influencing elections. Section 527 Political Organizations

Political organizations that qualify under Section 527 are taxed only on certain income. This is not true for campaign committees of candidates for state or local office. Selected Legislation in the 110th Congress

		H.R. 1204

The 527 Transparency Act of 2007 would no longer allow 527 organizations to file the periodic expenditure and contribution reports with the IRS on a semi-annual basis. Finally, the bill would require that the reports be simultaneously filed with the FEC. H.R. 3771

The State and Local Candidate Fairness Act of 2007 would change the tax rate at which state and local candidates' principal campaign committees are taxed.
Political organizations have the primary purpose of influencing federal, state, or local elections and conducting similar activities. Those that qualify under Section 527 of the Internal Revenue Code are taxed only on certain income. Under the Code, 527 organizations are subject to reporting requirements that involve registration, the periodic disclosure of contributions and expenditures, and the annual filing of tax returns. Section 527 organizations must also comply with applicable campaign finance laws. In the 110th Congress, the 527 Transparency Act of 2007 (H.R. 1204) would change the frequency of the periodic disclosure requirements and the penalties for violating them, and the State and Local Candidate Fairness Act of 2007 (H.R. 3771) would change the tax rates at which state and local candidates' principal campaign committees are taxed. This report describes these organizations, the reporting requirements they face under the Internal Revenue Code, and the two bills.