House Committee Revises Stealth PAC Law

State and Local PACs May Get Exemption From Reporting. The "Stealth PAC" Act passed by Congress in 2000 was intended to provide disclosure of soft money contributions and spending that is not regulated by the Federal Election Campaign Act because the activities funded do not expressly support or oppose candidates. But since the act became law, state and local PACs have lobbied for an exemption, claiming the requirements duplicate reports they must file with state election commissions. On March 28 they made progress toward that goal, getting an exemption included in H.R. 3991, the “Protection and IRS Accountability Act of 2002.” Most of the act is aimed at Internal Revenue Service (IRS) reforms, but it also eliminates requirements for political action committees, exempt under IRC Section 527, to file notification reports for state and local candidates that file with state or local election commissions. The bill will now be considered in the Senate. Many state and local PACs were unaware of the requirements, assuming the rules only applied to federal elections. If the law is enforced as written, some campaigns could face steep fines. See this OMB Watch analysis for details. It is not clear what action the IRS will take if the reporting requirement is eliminated.
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