text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``527 Reform Act of 2004''.
  
  SEC. 2. TREATMENT OF SECTION 527 ORGANIZATIONS.
  
      (a) Definition of Political Committee.--Section 301(4)(A) of the 
  Federal Election Campaign Act of 1971 (2 U.S.C. 431(4)(A)) is amended 
  to read as follows:
                      ``(A) any committee, club, association, or other 
                  group of persons that--
                              ``(i) during one calendar year, receives 
                          contributions aggregating in excess of $1,000 
                          or makes expenditures aggregating in excess of 
                          $1,000; and
                              ``(ii) has as its major purpose the 
                          nomination or election of one or more 
                          candidates;''.
      (b) Definition of Major Purpose for Section 527 Organizations.--
  Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et 
  seq.) is amended by adding at the end the following new section:
  
  ``SEC. 325. DEFINITIONS AND RULES FOR DETERMINING ORGANIZATIONS AND 
                DISBURSEMENTS INFLUENCING FEDERAL ELECTIONS.
  
      ``(a) Major Purpose of Section 527 Organizations.--For purposes of 
  section 301(4)(A)--
              ``(1) In general.--A committee, club, association, or group 
          of persons that--
                      ``(A) is an organization described in section 527 
                  of the Internal Revenue Code of 1986, and
                      ``(B) is not described in paragraph (2),
          has as its major purpose the nomination or election of one or 
          more candidates.
              ``(2) Excepted organizations.--Subject to paragraph (3), a 
          committee, club, association, or other group of persons 
          described in this paragraph is--
                      ``(A) an organization described in section 
                  527(i)(5) of the Internal Revenue Code of 1986, or
                      ``(B) any other organization which is one of the 
                  following:
                              ``(i) A committee, club, association, or 
                          other group of persons whose election or 
                          nomination activities relate exclusively to 
                          elections where no candidate for Federal office 
                          appears on the ballot.
                              ``(ii) A committee, club, association, or 
                          other group of persons that is organized, 
                          operated, and makes disbursements exclusively 
                          for one or more of the following purposes:
                                      ``(I) Influencing the selection, 
                                  nomination, election, or appointment of 
                                  one or more candidates to non-Federal 
                                  offices.
                                      ``(II) Influencing one or more 
                                  State or local ballot initiatives, 
                                  State or local referenda, State or 
                                  local constitutional amendments, State 
                                  or local bond issues, or other State or 
                                  local ballot issues.
                                      ``(III) Influencing the selection, 
                                  appointment, nomination, or 
                                  confirmation of one or more individuals 
                                  to non-elected offices.
                                      ``(IV) Paying expenses described in 
                                  the last sentence of section 527(e)(2) 
                                  of the Internal Revenue Code of 1986 or 
                                  expenses of a newsletter fund described 
                                  in section 527(g) of such Code.
              ``(3) Section 527 organizations making certain 
          disbursements.--A committee, club, association, or other group 
          of persons described in paragraph (2)(B) shall not be 
          considered to be described in such paragraph for purposes of 
          paragraph (1)(B) if it makes disbursements for a public 
          communication that promotes, supports, attacks, or opposes a 
          clearly identified candidate for Federal office during the 
          period beginning on the first day of the calendar year 
          preceding the calendar year in which the general election for 
          the office sought by the clearly identified candidate occurs 
          and ending on the date of the general election.''.
  
  SEC. 3. CERTAIN EXPENSES BY MAJOR PURPOSE ORGANIZATIONS TREATED AS 
                EXPENDITURES.
  
      (a) In General.--Section 301(9)(A)(i) of the Federal Election 
  Campaign Act of 1971 (2 U.S.C. 431(9)(A)(i)) is amended by inserting 
  ``, including any amount described in section 325(b)'' after 
  ``office''.
      (b) Applicable Communications.--Section 325 of the Federal Election 
  Campaign Act of 1971 (as added by section 2(b)) is amended by adding at 
  the end the following new subsection:
      ``(b) Certain Expenditures for Major Purpose Organizations.--
              ``(1) In general.--Subject to paragraph (2), a purchase, 
          payment, distribution, loan, advance, deposit, or gift of money 
          or anything of value for--
                      ``(A) a public communication that refers to a 
                  clearly identified candidate for Federal office or to a 
                  political party (regardless of whether a candidate for 
                  State or local office is also mentioned or identified) 
                  and that promotes, supports, attacks, or opposes a 
                  candidate for that office or a political party 
                  (regardless of whether the communication expressly 
                  advocates a vote for or against a candidate), or
                      ``(B) voter registration activity, voter 
                  identification, get-out-the-vote activity, or generic 
                  campaign activity conducted in connection with an 
                  election in which a candidate for Federal office 
                  appears on the ballot (regardless of whether a 
                  candidate for State or local office also appears on the 
                  ballot),
          shall be an expenditure under section 301(9)(A)(i) if made by, 
          or on behalf of, a political committee (as defined in section 
          301(4)) or a committee, club, association, or other group of 
          persons for which the nomination or election of one or more 
          candidates is its major purpose.
              ``(2) Exception.--Any funds used for purposes described in 
          paragraph (1) that, in accordance with allocation rules set 
          forth in section 325(c), are disbursed from a non-Federal 
          account shall not be treated as expenditures.''.
  
  SEC. 4. RULES FOR ALLOCATION OF EXPENSES BETWEEN FEDERAL AND NON-
                FEDERAL ACTIVITIES.
  
      Section 325 of the Federal Election Campaign Act of 1971 (as added 
  by section 2(b) and amended by section 3) is amended by adding at the 
  end the following:
      ``(c) Allocation and Funding Rules for Expenses of Separate 
  Segregated Funds and Nonconnected Committees Relating to Federal and 
  Non-Federal Activities.--
              ``(1) In general.--In the case of any disbursements by any 
          separate segregated fund or nonconnected committee for which 
          allocation rules are provided under paragraph (2)--
                      ``(A) the disbursements shall be allocated between 
                  Federal and non-Federal accounts in accordance with 
                  this subsection and regulations prescribed by the 
                  Commission, and
                      ``(B) in the case of disbursements allocated to 
                  non-Federal accounts, may be paid only from a qualified 
                  non-Federal account.
              ``(2) Costs to be allocated and allocation rules.--
          Disbursements by any separate segregated fund or nonconnected 
          committee in connection with Federal and non-Federal elections 
          for any of the following categories of activity shall be 
          allocated as follows:
                      ``(A) At least 50 percent of any administrative 
                  expenses, including rent, utilities, office supplies, 
                  and salaries not attributable to a clearly identified 
                  candidate shall be paid with funds from a Federal 
                  account, except that for a separate segregated fund 
                  such expenses may be paid instead by its connected 
                  organization.
                      ``(B) At least 50 percent of the direct costs of a 
                  fundraising program or event, including disbursements 
                  for solicitation of funds and for planning and 
                  administration of actual fundraising events, where 
                  Federal and non-Federal funds are collected through 
                  such program or event shall be paid with funds from a 
                  Federal account, except that for a separate segregated 
                  fund such costs may be paid instead by its connected 
                  organization.
                      ``(C) At least 50 percent of the expenses for 
                  public communications or voter drive activities that 
                  refer to a political party, but do not refer to any 
                  clearly identified Federal or non-Federal candidate, 
                  shall be paid with funds from a Federal account.
                      ``(D) 100 percent of the expenses for public 
                  communications or voter drive activities that refer to 
                  a political party, and refer to one or more clearly 
                  identified Federal candidates, but do not refer to any 
                  clearly identified non-Federal candidates, shall be 
                  paid with funds from a Federal account.
                      ``(E) At least 50 percent of the expenses for 
                  public communications or voter drive activities that 
                  refer to a political party, and refer to one or more 
                  clearly identified non-Federal candidates, but do not 
                  refer to any clearly identified Federal candidates, 
                  shall be paid with funds from a Federal account, except 
                  that this subparagraph shall not apply to 
                  communications or activities that relate exclusively to 
                  elections where no candidate for Federal office appears 
                  on the ballot.
                      ``(F) At least 50 percent of the expenses for 
                  public communications and voter drive activities that 
                  refer to one or more clearly identified candidates for 
                  Federal office and one or more clearly defined non-
                  Federal candidates, without regard to whether the 
                  communication refers to a political party, shall be 
                  paid with funds from a Federal account.
              ``(3) Qualified non-federal account.--For purposes of this 
          subsection--
                      ``(A) In general.--The term `qualified non-Federal 
                  account' means an account which consists solely of 
                  amounts--
                              ``(i) that, subject to the limitations of 
                          subparagraphs (B) and (C), are raised by the 
                          separate segregated fund or nonconnected 
                          committee only from individuals, and
                              ``(ii) with respect to which all other 
                          requirements of Federal, State, or local law 
                          are met.
                      ``(B) Limitation on individual donations.--
                              ``(i) In general.--A separate segregated 
                          fund or nonconnected committee may not accept 
                          more than $25,000 in funds for its qualified 
                          non-Federal account from any one individual in 
                          any calendar year.
                              ``(ii) Affiliation.--For purposes of this 
                          subparagraph, all qualified non-Federal 
                          accounts of separate segregated funds or 
                          nonconnected committees which are directly or 
                          indirectly established, financed, maintained, 
                          or controlled by the same person or persons 
                          shall be treated as one account.
                      ``(C) Fundraising limitation.--No donation to a 
                  qualified non-Federal account may be solicited, 
                  received, directed, transferred, or spent by or in the 
                  name of any person described in subsection (a) or (e) 
                  of section 323.
              ``(4) Voter drive activity and federal account defined.--
          For purposes of this subsection--
                      ``(A) Voter drive activity.--The term `voter drive 
                  activity' means any of the following activities 
                  conducted in connection with an election in which a 
                  candidate for Federal office appears on the ballot 
                  (regardless of whether a candidate for State or local 
                  office also appears on the ballot):
                              ``(i) Voter registration activity.
                              ``(ii) Voter identification.
                              ``(iii) Get-out-the-vote activity.
                              ``(iv) Generic campaign activity.
                      ``(B) Federal account.--The term `Federal account' 
                  means an account which consists solely of contributions 
                  subject to the limitations, prohibitions, and reporting 
                  requirements of this Act. Nothing in this subsection or 
                  in section 323(b)(2)(B)(iii) shall be construed to 
                  infer that a limit other than the limit under section 
                  315(a)(1)(C) applies to contributions to the 
                  account.''.
  
  SEC. 5. CONSTRUCTION.
  
      No provision of this Act, or amendment made by this Act, shall be 
  construed--
              (1) as approving, ratifying, or endorsing a regulation 
          promulgated by the Federal Election Commission, or
              (2) as establishing, modifying, or otherwise affecting the 
          definition of political organization for purposes of the 
          Internal Revenue Code of 1986.
  
  SEC. 6. EFFECTIVE DATE.
  
      The amendments made by this Act shall take effect on January 1, 
  2005.
target: 527 Reform Act of 2004 - Amends the Federal Election Campaign Act of 1971 to revise the definition of political committee to include any committee, club, association, or other group of persons that has as its major purpose the nomination or election of one or more candidates ("Section 527 Organizations" or major purpose organizations).
  
  Treats certain expenses by major purpose organizations as expenditures subject to the limitations and reporting requirements of such Act.
  
  Provides that any disbursement by separate segregated fund or nonconnected committee shall be allocated between Federal and non-Federal accounts in accordance with this Act and regulations prescribed by the Federal Election Commission. States that disbursements allocated to non-Federal accounts may be paid only from a qualified non-Federal account.
  
  Prohibits a separate segregated fund or nonconnected committee from accepting more than $25,000 in funds for its qualified non-Federal account from any one individual in any calendar year.
feat_title: A bill to amend the Federal Election Campaign Act of 1971 to define political committee and clarify when organizations described in section 527 of the Internal Revenue Code of 1968 must register as political committees, and for other purposes.