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Disclosure of Political Activities of Tax- Exempt Organizations

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Disclosure of Political Activities of Tax- Exempt Organizations DISCLOSURE OF POLITICAL ACTIVITIES OF TAX- EXEMPT ORGANIZATIONS HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT OF THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION JUNE 20, 2000 Serial 106–103 Printed for the use of the Committee on Ways and Means ( U.S. GOVERNMENT PRINTING OFFICE 68–223 DTP WASHINGTON : 2001 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 COMMITTEE ON WAYS AND MEANS BILL ARCHER, Texas, Chairman PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York BILL THOMAS, California FORTNEY PETE STARK, California E. CLAY SHAW, JR., Florida ROBERT T. MATSUI, California NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania AMO HOUGHTON, New York SANDER M. LEVIN, Michigan WALLY HERGER, California BENJAMIN L. CARDIN, Maryland JIM MCCRERY, Louisiana JIM MCDERMOTT, Washington DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana MAC COLLINS, Georgia JOHN S. TANNER, Tennessee ROB PORTMAN, Ohio XAVIER BECERRA, California PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida WES WATKINS, Oklahoma LLOYD DOGGETT, Texas J.D. HAYWORTH, Arizona JERRY WELLER, Illinois KENNY HULSHOF, Missouri SCOTT MCINNIS, Colorado RON LEWIS, Kentucky MARK FOLEY, Florida A.L. SINGLETON, Chief of Staff JANICE MAYS, Minority Chief Counsel SUBCOMMITTEE ON OVERSIGHT AMO HOUGHTON, New York, Chairman ROB PORTMAN, Ohio WILLIAM J. COYNE, Pennsylvania JENNIFER DUNN, Washington MICHAEL R. MCNULTY, New York WES WATKINS, Oklahoma JIM MCDERMOTT, Washington JERRY WELLER, Illinois JOHN LEWIS, Georgia KENNY HULSHOF, Missouri RICHARD E. NEAL, Massachusetts J.D. HAYWORTH, Arizona SCOTT MCINNIS, Colorado Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occur- rences are inherent in the current publication process and should diminish as the process is further refined. ii VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 C O N T E N T S Page Advisory of June 8, 2000, announcing the hearing ............................................... 2 WITNESSES U.S. Department of the Treasury, Joseph Mikrut, Tax Legislative Counsel ..... 27 Joint Committee on Taxation, Lindy Paull ........................................................... 42 Castle, Hon. Michael N., a Representative in Congress from the State of Delaware ............................................................................................................... 15 Center for Responsive Politics, Larry Makinson ................................................... 70 Doggett, Hon. Lloyd, a Representative in Congress from the State of Texas .... 7 Hill, Frances R., University of Miami, School of Law .......................................... 73 Lieberman, Hon. Joseph I., a United States Senator from the State of Con- necticut .................................................................................................................. 13 McCain, Hon. John, a United States Senator from the State of Arizona ........... 10 Mitchell, Cleta Deatherage, Sullivan & Mitchell, P.L.L.C ................................... 87 Moramarco, Glenn J., Brennan Center for Justice, New York University School of Law ........................................................................................................ 60 Potter, Hon. Trevor, Brookings Institution, and Wiley, Rein & Fielding ........... 81 Troy, Leo, Rutgers University ................................................................................ 98 SUBMISSIONS FOR THE RECORD Alliance for Justice, John Pomeranz, letter ........................................................... 119 OMB Watch, statement ........................................................................................... 122 Walden, Hon. Greg, a Representative in Congress from the State of Oregon, statement .............................................................................................................. 128 iii VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 DISCLOSURE OF POLITICAL ACTIVITIES OF TAX-EXEMPT ORGANIZATIONS TUESDAY, JUNE 20, 2000 HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON OVERSIGHT, Washington, D.C. The Subcommittee met, pursuant to call, at 2:03 p.m., in room 1100, Longworth House Office Building, Hon. Amo Houghton (Chairman of the Subcommittee) presiding. [The advisory announcing the hearing follows:] (1) VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 2 ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT FOR IMMEDIATE RELEASE, Contact: (202) 225–1721 June 8, 2000 No. OV–19 Houghton Announces Hearing on Disclosure of Political Activities of Tax-Exempt Organizations Congressman Amo Houghton (R–NY), Chairman, Subcommittee on Oversight of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on proposals for enhanced public disclosure relating to political ac- tivities of tax-exempt organizations. The hearing will take place on Tuesday, June 20, 2000, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 2:00 p.m. Oral testimony at this hearing will be from both invited and public witnesses. In- vited witnesses will include a representative of the U.S. Department of the Treas- ury. Also, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee or for inclusion in the printed record of the hearing. BACKGROUND: Under current law, various tax-exempt organizations participate in the political process. Depending on the tax law provision granting a particular organization its exemption, that participation can include direct or indirect intervention in political campaigns, direct or grass-roots lobbying, and dissemination of analyses with a call to action. The public often has little or no information regarding the contributors to, or the nature and extent of, the political activities of these organizations. The Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105– 206) directed the Joint Committee on Taxation and the Treasury Department to re- port on additional disclosures by tax-exempt organizations that would be in the pub- lic interest. The Joint Committee’s report was delivered in January of this year as required and makes a number of recommendations for enhanced disclosure of tax- exempt organization political activities. The Treasury Department has yet to submit its report. In announcing the hearing, Chairman Houghton stated: ‘‘The public is entitled to know about the activities of organizations given special tax-exempt status by our laws. Unfortunately, current laws permit various organizations to shield their polit- ical activities from public scrutiny and accountability. This hearing will explore op- tions for providing increased disclosure by all tax-exempt organizations participating in the political process.’’ FOCUS OF THE HEARING: This hearing will examine various proposals for enhanced disclosure relating to the political activities of tax-exempt organizations, including organizations described in Internal Revenue Code sections 501(c)(4), (5), and (6) and section 527. VerDate 20-JUL-2000 16:17 Apr 30, 2001 Jkt 060010 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 K:\HEARINGS\68223.TXT WAYS3 PsN: WAYS3 3 DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD: Requests to be heard at the hearing must be made by telephone to Traci Altman or Pete Davila at (202) 225–1721 no later than the close of business, Tuesday, June 13, 2000. The telephone request should be followed by a formal written request to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Rep- resentatives, 1102 Longworth House Office Building, Washington, D.C. 20515. The staff of the Subcommittee on Oversight will notify by telephone those scheduled to appear as soon as possible after the filing deadline. Any questions concerning a scheduled appearance should be directed to the Subcommittee on Oversight staff at (202) 225–7601. In view of the limited time available to hear witnesses, the Subcommittee may not be able to accommodate all requests to be heard. Those persons and organizations not scheduled for an oral appearance are encouraged to submit writ- ten statements for the record of the hearing. All persons requesting to be heard, whether they are scheduled for oral testimony or not, will be notified as soon as pos- sible after the filing deadline. Witnesses scheduled to present oral
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