POLITICAL ACTION COMMITTEES
{Update-New Court Ruling makes 501(c)(4) organizations viable PAC Substitutes}
Q. What is a Political Action Committee?
A. Political Action Committees (PAC's) are nonprofit organizations created to support a particular candidate for election to public office, or to promote legislation favorable to the PAC's cause. If correctly structured pursuant to Internal Revenue Code ("IRC") Sections 527 or 501(c)(4), PAC's are exempt from federal income tax. However, contributions to PAC's are not tax deductible unless the organization has attained tax exempt status as a charity under a different section of the IRC, Section 501(c)(3). Although contributions to IRC 501(c)(3) organizations are tax deductible as charitable contributions, unlike other PAC's, the IRS places strict limits on the amount of funds that 501(c)(3) organizations can use to influence legislation. Also, IRC 501(c)(3) organizations are absolutely prohibited from campaigning for a particular candidate for public office. So, their use as PAC's is severely limited.
Q. Are PAC's regulated by state and federal law?
A. Yes, PAC's are heavily regulated. Not only must the PAC obtain tax exempt status under the IRC, it must comply with federal and state campaign disclosure laws and other "compliance" type laws. At the outset, a PAC is even required to register with the federal government within 24 hours of its creation!
Q. How are PAC's created in Florida, and what are they allowed to do?
A. Florida laws require that PACs take one of two forms of legal existence, depending on the purpose of the PAC. The first way is by forming a "committee of continuing existence." A committee of continuous existence means any organization which is certified pursuant to the provisions of Section 106.04 Florida Statutes. In order to qualify as a committee of continuous existence, an organization that is involved in making contributions to candidates, political committees, or political parties. At least 25% of the income of a committee of continuing existence must be derived from dues or assessments payable on a regular basis by its membership pursuant to provisions contained in the charter or bylaws.
A committee of continuing existence can: Contribute to candidates, political committees, other committees of continuous existence, electioneering communication organizations or political parties. No funds of a committee of continuous existence can be expended on behalf of a candidate, except by means of a contribution made through the duly appointed campaign treasurer of the candidate. Contribute to political committees supporting or opposing issues, but only up to 25% of its aggregate income, as reflected in the annual report for the previous year.
A committee of continuous existence cannot make independent expenditures. Make electioneering communications. Support or oppose issues without first registering as a political committee.
The second classification of a PAC in Florida takes the form of an "electioneering communications organization."
This is an organization whose activities are limited to making expenditures for electioneering communications or accepting contributions for the purpose of making electioneering communications. Electioneering communication means a paid expression in any communications media by means other than the spoken word in direct conversation that refers to or depicts a clearly identified candidate for office or contains a clear reference indicating that an issue is to be voted on at an election, without expressly advocating the election or defeat of a candidate or passage or defeat of an issue. An expenditure made for, or in furtherance of, an electioneering communication is not considered a contribution to or on behalf of any candidate and does not constitute an independent expenditure, nor is it subject to the limitations applicable to independent expenditures. Florida Statute 106.11 describes the manner in which "expenditures" for these purposes can be made.