Dancing around IRS rules
Richard Fulton
There are a dozen or so people hoping to become the next president of the United States.
You might be able to name a fair number of them.
You may also be asking yourself, ”why don’t they simply come out and say they are candidates for their party’s nomination for president?”
Good question.
Everyone knows they are running or at least “testing the waters.” But there is the rub.
You see, most of them are thumbing their noses at the law so that they can be free to raise money in very large amounts.
Federal law says clearly that anyone “testing the waters” of federal candidacy for office must follow a variety of restrictions. This is especially true of raising money for that candidacy.
If you are formally “testing,” you can only receive $2,700 in contributions from any one individual, and you can take no monies from corporations or union funds.
Jeb Bush, a Republican candidate, has publicly said he is raising $100 million from Super PACS.
Yet, he is not “testing the waters” of a presidential campaign. The same is true more quietly of a dozen other “candidates.”
The law says no money can be raised for polls, travel, staffing, or administrative expenses (renting offices, etc.) unless “testing the waters.”
The Federal Election Commission is supposed to monitor this law as it did in the 1970s and 1980s. But they can’t bother this election cycle.
How do the candidates get away with this?
They form, or have formed for them, committees or PACS to skirt the law.
A formal campaign committee is formed by contenders when they announce. A “testing the waters” candidate can form a presidential exploratory committee. But these committees raise monies under the same rules as the campaign committee — $2,700 contribution limits, no corporate or union money.
So these are avoided as long as possible since they limit large contributions. Other committees are formed to disguise the campaigning.
Multicandidate PACs must support at least five candidates and Leadership PACs are formed by office holders to exert influence. Both can raise $5,000 per person and no corporate or union contributions. These are better, but limited.
The big bucks come from Super PACs, and 501(c)(4) organizations. The first is allowed under the Supreme Court’s generous Citizens United case that opened the floodgate of corporate monies.
SuperPACs can raise unlimited monies from individuals, corporations and unions. They are formally controlled by non-candidates, but often are undisguised supporters of certain candidates. They file reports periodically with the FEC, giving donors and amounts.
The 502(c)(4) organizations are formed under the IRS Code as “social welfare” organizations. They can participate in political advocacy but not as their primary purpose. IRS must get periodic reports on funding. They can raise unlimited funds.
Scott Walker is the only potential candidate to use a general 527 organization (all the above are under this section of the IRS Code) to avoid registration with the FEC. Yet, he has opened an office in Iowa which seems directly to challenge the law.
Chris Christie is connected to Leadership Matters for America, a multicandidate group. Ted Cruz has the Job, Growth and Leadership Fund and a Leadership PAC.
Rand Paul has Reinventing a New Direction PAC and a Leadership PAC. Scott Walker also has something called Our American Revival and Rick Perry has a Rick-PAC and a Multicandidate PAC. Jeb Bush’s is called Right to Rise and he has a SuperPAC too.
Hillary Clinton has not formed her own committee because she is, of course, not “testing the waters.” Though out of the blue comes a Super PAC called Ready for Hillary that has raise more than $13 million. She wonders where this came from.
Notice that most of these PACS and committees have names that are almost impossible to recognize in relation to their purpose, ideology, or goal, except in broad terms. At least the Hillary group and the Rick-PAC are unambiguous.
So why are all those candidates so coy? Money my dear sir and madam, money.
Source: The Campaign Legal Center
