REQUIRED DISCLOSURE OF NONDEDUCTIBILITY OF CONTRIBUTIONS.

SEC. 10701. REQUIRED DISCLOSURE OF NONDEDUCTIBILITY OF CONTRIBUTIONS. (a) General Rule.— Subchapter B of chapter 61 (relating to miscellaneous provisions) is amended by redesignating section 6113 as section 6114 and by inserting after section 6112 the following new section: “SEC. 6113. DISCLOSURE OF NONDEDUCTIBILITY OF CONTRIBUTIONS. “(a) General Rule.— Each fundraising solicitation by (or on behalf of) an organization to which this section applies shall contain an express statement (in a conspicuous and easily recognizable format) that contributions or gifts to such organization are not deductible as charitable contributions for Federal income tax purposes. “(b) Organizations To Which Section Applies.— 101 STAT. 1330–458 “(1) In general.— Except as otherwise provided in this subsection, this section shall apply to any organization which is not described in section 170(c) and which— “(A) is described in subsection (c) (other than paragraph (1) thereof) or (d) of section 501 and exempt from taxation under section 501(a), “(B) is a political organization (as defined in section 527(e)), or “(C) was an organization described in subparagraph (A) or (B) at any time during the 5-year period ending on the date of the fundraising solicitation or is a successor to an organization so described at any time during such 5-year period. “(2) Exception for small organizations.— “(A) Annual gross receipts do not exceed $100,000.— This section shall not apply to any organization the gross receipts of which in each taxable year are normally not more than $100,000. “(B) Multiple organization rule.— The Secretary may treat any group of 2 or more organizations as 1 organization for purposes of subparagraph (A) where necessary or appropriate to prevent the avoidance of this section through the use of multiple organizations. “(3) Special rule for certain fraternal organizations.— For purposes of paragraph (1), an organization described in section 170(c)(4) shall be treated as described in section 170(c) only with respect to solicitations for contributions or gifts which are to be used exclusively for purposes referred to in section 170(c)(4). “(c) Fundraising Solicitation.— For purposes of this section— “(1) In general.— Except as provided in paragraph (2), the term ‘fundraising solicitation’ means any solicitation of contributions or gifts which is made— “(A) in written or printed form, “(B) by television or radio, or “(C) by telephone. “(2) Exception for certain letters or calls.— The term ‘fundraising solicitation’ shall not include any letter or telephone call if such letter or call is not part of a coordinated fundraising campaign soliciting more than 10 persons during the calendar year.” (b) Penalty.— Part I of subchapter B of chapter 68 (relating to assessable penalties) is amended by adding at the end thereof the following new section: “SEC. 6710. FAILURE TO DISCLOSE THAT CONTRIBUTIONS ARE NON-DEDUCTIBLE. “(a) Imposition of Penalty.— If there is a failure to meet the requirement of section 6113 with respect to a fundraising solicitation by (or on behalf of) an organization to which section 6113 applies, such organization shall pay a penalty of $1,000 for each day on which such a failure occurred. The maximum penalty imposed under this subsection on failures by any organization during any calendar year shall not exceed $10,000. “(b) Reasonable Cause Exception.— No penalty shall be imposed under this section with respect to any failure if it is shown that such failure is due to reasonable cause. 101 STAT. 1330–459 “(c) $10,000 Limitation Not To Apply Where Intentional Disregard.— If any failure to which subsection (a) applies is due to intentional disregard of the requirement of section 6113— “(1) the penalty under subsection (a) for the day on which such failure occurred shall be the greater of— “(A) $1,000, or “(B) 50 percent of the aggregate cost of the solicitations which occurred on such day and with respect to which there was such a failure, “(2) the $10,000 limitation of subsection (a) shall not apply to any penalty under subsection (a) for the day on which such failure occurred, and “(3) such penalty shall not be taken into account in applying such limitation to other penalties under subsection (a). “(d) Day on Which Failure Occurs.— For purposes of this section, any failure to meet the requirement of section 6113 with respect to a solicitation— “(1) by television or radio, shall be treated as occurring when the solicitation was telecast or broadcast, “(2) by mail, shall be treated as occurring when the solicitation was mailed, “(3) not by mail but in written or printed form, shall be treated as occurring when the solicitation was distributed, or “(4) by telephone, shall be treated as occurring when the solicitation was made.” (c) Clerical Amendments.— (1) The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6113 and inserting in lieu thereof the following: “Sec. 6113. Disclosure of nondeductibility of contributions. “Sec. 6114. Cross reference.” (2) The table of sections for part I of subchapter B of chapter 68 is amended by adding at the end thereof the following new item: “Sec. 6710. Failure to disclose that contributions are nondeductible.” (d) Effective Date.— The amendments made by this section shall apply to solicitations after January 31, 1988.