How To Set Up A Political Action Committee by ermalos

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									               How To Set Up A Political Action Committee
In order to conduct a political advertising campaign, and to solicit contributions to support that
campaign, it is necessary to set up a legal entity under the rules of the Federal Elections
Commission. This legal entity is known as a Political Action Committee, or PAC. For a
variety of reasons, it is best for a small group of citizens who wish to campaign against a
specific federal candidate (Senator or Representative) to form what is known as a
Nonconnected PAC. Such a committee requires a minimum of effort to register and to run
and may be started by as few as two individuals – the operating officer and the treasurer.

Key features of a Nonconnected PAC
   Must register with the Federal Elections Commission (FEC) within 10 days of formation.
   Is tax-exempt. Must not even file an information return with the IRS.
   Can accept donations from any individual, but not corporations.
   Donations are limited to $5000 per individual per election (primary, general or special).
   Donations made to a Nonconnected PAC are not tax deductible.
   May donate up to $5000 to a candidate per election (primary, general or special).
   May donate up to $15000 per year to a national political party.
   May mention a candidate by name in advertising.
   May advertise without restriction right up to the day of the election.
   Must file reports with the FEC on a monthly or quarterly basis.

Steps in forming a Nonconnected PAC
   Create an organizational structure for the PAC by writing by-laws.
   Designate a treasurer for the PAC.
   Open a separate bank account for the PAC.
   Set up a website for the PAC (optional, but wise).
   Set up a PayPal account for the PAC (optional, but wise).
   Register the PAC with the FEC (FEC Form 1).
   Obtain an IRS Tax Identification Number (IRS Form SS-4). It is unclear why this is even
   needed, since the PAC is tax-exempt and contributions to the PAC are not tax deductible.

Key points to cover in the PAC By-Laws
   The general purpose or goal of the PAC.
   How the PAC will be managed or supervised (single officer, board of directors, etc.).
   How the treasurer will be chosen.
   Who will mange day-to-day operations.
   How, and from whom, money will be raised.
   Criteria for donating PAC funds to some specific candidate or a political party, as opposed
   to spending PAC funds in direct advertising pursuant to the stated PAC goals.
                                              OVER
Reports that must be filed with the FEC
   All financial activity associated with the PAC, covering all receipts and expenditures, must
   be reported to the FEC (FEC Form 3X).
   An initial report must be filed to cover any financial activity that took place prior to the
   registration of the PAC.
   Reports may be filed monthly, to be received by the FEC not later than the 20th of the
   following month.
   Reports may be filed quarterly (election years), to be received by the FEC not later than
   the 15th of the month following the end of each quarter.
   In nonelection years, quarterly filers must file only a semiannual report to be received by
   the FEC not later than 31 July.
   Quarterly filers must submit a Pre-Primary Report and a Pre-General Election Report to be
   received by the FEC not later than 12 days prior to the election. This report covers
   donations and expenditures made up to the last 20 days of the campaign period.
   Quarterly filers must submit a Post-General Election Report to be received by the FEC not
   later than 30 days after the general election. This report covers donations and
   expenditures made in the last 20 days preceding the election and the 20 days following
   the election.
   All filers must file an expenditure report (within 48 hours) when the sum of individual
   expenditures exceeds $10000.
   During the last 20 days preceding an election, all filers must file an expenditure report
   (within 24 hours) when the sum of individual expenditures exceeds $1000.
   All filers must submit a year end report to be received by the FEC not later than 31
   January of the following year. This report is in lieu of the final monthly, quarterly or
   semiannual report that otherwise would have been required.

Record keeping required by the FEC
   Copy of the PAC By-Laws.
   Copies of all FEC and IRS forms filed by the PAC.
   Copies of all receipts for expenditures made by the PAC.
   Details of all contributions received by the PAC.
   These details include the amount and date of the donation and the name and address of
   the donor.
   If the donation is in excess of $200, the donor’s occupation and employer should be
   recorded.
   This regulation is deemed as fulfilled (even if full details are not obtained) if the PAC
   treasurer can demonstrate that “best efforts” to obtain the information were employed
   when the contribution was solicited.
   All records must be maintained for a minimum of 3 years.

More information, links to FEC and IRS forms and sample documents may be found at:

http://www.betrayed-vietnam-vet.info/PAC

								
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