The Internal Revenue Service (IRS) has said that state and local PACs that have failed to register could owe millions in penalties, and they are evaluating how to proceed. The "Stealth PAC" Act passed by Congress in 2000 was intended to provide disclosure of soft money contributions and spending by political action committees that is not regulated by the Federal Election Campaign Act because they do not expressly support or oppose candidates. The law requires PACS, exempt under Section 527 of the Internal Revenue Code, to register within 24 hours of organizing. They are also now required to file Form 990, an annual information return. The law applies to state and local political action committees as well as those that are focused on federal elections. But many state and local PACs were unaware the new law applied to them, since they are not involved in federal elections and make financial reports to state agencies. PACs with funds over $25,000 are subject to a penalty of 35% of their total funds if they fail to file. The IRS has said that state and local PACs that have failed to register could owe millions in penalties, and they are evaluating how to proceed. In the meantime, Congress is expected to see renewed efforts to exempt state and local PACs that report to state agencies. Sen. John McCain (R-AZ), sponsor of the original law, has stated he does not think this issue should be dealt with until action is completed on major campaign finance reform legislation he has co-sponsored with Sen. Russell Feingold (D-WI).