April 20, 2022 •
Super PACs Must Report LLC Attributions
“Going forward,” the Federal Election Commission (FEC) will require disclosure requirements for contributions received from limited liability companies (LLCs) be applied to independent expenditure-only political committees (i.e., Super PACs) in the same manner in which they are applied to all other political committees.
On April 15, four of the six commissioners issued a “Statement of Reasons” for their conclusion of a closeout of a complaint. In the statement, which refers to Matters Under Review (MUR) 7454, Chairman Allen Dickerson, Vice Chair Steven T. Walther, Commissioner Shana M. Broussard, and Commissioner Ellen L. Weintraub assert, “contributions from LLCs to committees must be attributed pursuant to Commission regulations, and those regulations apply to all committees, including [Super PACs]. The Commission will apply that understanding going forward, and may seek civil penalties in appropriate future cases.”
In MUR 7454, the Super PAC in question had not obtained the required attribution information for two contributions made by LLCs. The Super PAC attributed the contributions only to the LLCs. Regulations require committees to report certain attribution information for contributions from LLCs.
An LLC that has a single natural-person member and is not taxed as a corporation must be attributed only to the natural person member, and not the LLC. A contribution by an LLC that is disregarded for tax purposes and does not have a single natural-person member is treated as a partnership contribution; and, a partnership contribution must be attributed to both the partnership and each partner, either in proportion to his or her share of the partnership profits or by agreement among the partners.
In prior cases premised on similar facts, the FEC could not agree whether, following the Citizens United and SpeechNow.org v. FEC court decisions, LLC reporting rules and conduit contribution rules applied to contributions made to the newly formed Super PACs authorized by those judicial rulings. The commissioners determined that “with the passage of time, [Super PACs] have become a regular part of the campaign finance landscape, and…there is no longer a lack of clarity concerning the application of LLC reporting rules and conduit contribution rules in these circumstances.”
Because the FEC has not previously made this conclusion under similar cases, they did not seek a civil penalty against the Super PAC.
State and Federal Communications, Inc. provides research and consulting services for government relations professionals on lobbying laws, procurement lobbying laws, political contribution laws in the United States and Canada. Learn more by visiting stateandfed.com.