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Campaign Finance 2/5/2008 7:12:15 AM EST Emerging Issues Commentary: Campaign Finance for Corporations
With the 2008 presidential race heating up and an expected tight battle for Senate seats, the courts can expect challenges to the lines drawn by new regulations and the holes left by invalidated regulations. Federal campaign finance law is a hot issue on Capitol Hill and in the boardroom. New regulations, advisory opinions from the Federal Election Commission, and court cases make campaign finance a minefield for the unwary corporate counsel. May a corporation run off copies of a candidate's campaign flier and distribute it to employees or post it in the lunchroom? Is a corporation required to prevent an employee from forwarding political email to other employees in his department? Is the answer different if the email is soliciting funds? What if a corporation wants to lend its private jet and pilot to a federal candidate? This commentary briefly addresses the history of campaign finance regulation as it applies to corporations, outlines the current regulatory framework, and provides the basic rules of corporate participation in the federal election process with links to applicable regulations.
Excerpt:
So-called 527 organizations have become the subject of regulatory and legislative attention. A 527 organization is a political organization that is exempt from income tax under section 527 of the U.S. Tax Code, 26 USCS § 527. A well-known example of a 527 organization was the "Swift Boat Veterans for Truth," which disseminated advertisements vilifying John Kerry's Vietnam service during the 2004 election. It should be noted that most political committees are also 527 organizations, including the national parties' committees. Under tax law, 527s are required to make certain financial disclosures to the Internal Revenue Service (IRS). However, unless a 527 chooses to register with the F[ederal] E[lection] C[omission (FEC)] as a "political committee" under the Federal Election Campaign Act [(FECA)], or is found to be a political committee in fact by FEC investigation, it is not subject to FECA’s disclosure rules, the ban on the use of corporate funds in federal election campaigns, or the ceiling on the size of individual contributions to political committees. Reformers have called on the FEC and Congress to apply the B[ipartisan] C[ampaign] R[eform] A[ct]'s soft-money restrictions to all 527 organizations, not just those that qualify as political committees under FECA as interpreted by the U.S. Supreme Court.
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