February 4, 2021 •
Spotlight Act: US Senate Bill to Enhance Disclosure of Financial Political Activity Reintroduced
On February 3, U.S. Senators Jon Tester and Ron Wyden reintroduced a bill to reverse a U.S. Treasury Department’s decision limiting IRS disclosure requirement of certain tax-exempt organizations engaging in political activities.
Senate Bill 215, the Spotlight Act, requires non-profit organizations engaging in political activity, such as donating to candidates and purchasing political ads, provide the IRS with the names and basic information of donors who contribute more than $5,000.
The bill repeals an IRS revenue procedure exempting certain tax-exempt organizations that are not 501(c)(3) organizations from the requirement to report the names and addresses of substantial contributors (persons who contribute more than $5,000 per year) on information returns that are filed with the IRS. The proposed legislation requires tax-exempt organizations falling under sections 501(c)(4), 501(c)(5), and 501(c)(6) of the Internal Revenue Code (e.g., social welfare organizations, labor organizations, business leagues) to disclose the names and addresses of all substantial contributors on their returns. The bill also eliminates the authority of the IRS to provide exceptions to the disclosure requirements for tax-exempt organizations.
A version of the Spotlight Act was first introduced by the Senators in 2018
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