Corporate Practice Series Portfolio No. 16-6th, Regulation of Corporate Political Activity, analyzes the role of corporations in the political process. Beginning with a discussion of the history of the regulation of corporate political activity, including the early statutes, and the Federal Election Campaign Act, the portfolio discusses the formation and organization of political action committees, solicitation of contributions, and fund reporting requirements. Emphasis is also placed on nonpartisan communications and miscellaneous political activity, state law regulating corporate political activity, and penalties and remedies relating to the enforcement of both federal and state law.

 

Portfolio 16-6th: Regulation of Corporate Political Activity

I. Overview of Corporate Political Activity 
    A. Introduction 
    B. Early Regulation Under the Tillman Act 
    C. The Federal Corrupt Practices Act of 1925 
    D. Increased Regulation in the 1940s 
    E. The Influence of Judicial Decisions 
    F. The Federal Election Campaign Act of 1971 
    G. ‘Buckley v. Valeo' and the 1974 FECA Amendments 
    H. The FECA Amendments of 1976 
    I. The FECA Amendments of 1979 
    J. The Presidential Election Campaign Fund Act 
    K. The Bipartisan Campaign Reform Act of 2002 
    L. The Honest Leadership and Open Government Act of 2007
    M. 'Citizens United v. FEC' 
    N. The Federal Election Commission

II. Political Action Committees 
    A. Introduction 
        1. Political action committees 
        2. PACs of partnerships and joint ventures 
        3. Subsidiaries of foreign corporations and control by foreign nationals 
        4. Alternatives to connected PACs 
        5. Limited liability companies 
        6. National banks and federally chartered corporations
        7. Federal government contractors 
    B. Formation of the PAC 
        1. Identifying the group or officer(s) at the corporation who can authorize the establishment of a PAC 
        2. Authorizing resolution 
        3. Legal form of the PAC 
        4. Multiple PACs and affiliation issues 
        5. Membership 
        6. Articles of organization and bylaws—checklist 
        7. Becoming operational—multi-candidate political committee status 
        8. Expenses of establishing and administering a PAC and soliciting contributions 
        9. Petty cash 
        10. Federal employer identification number 
        11. Federal and state tax status 
            a. Section 527 tax exemption 
            b. Notifying the IRS of section 527 status (Registration requirement) 
            c. Section 527 disclosure requirements (Reporting requirements) 
            d. Section 527 annual report and return requirements 
    C. Organization 
        1. Office of the treasurer 
        2. Duties of the treasurer 
        3. Campaign depositories 
        4. Federal committees and accounts 
        5. Investment of contributions 
    D. Registration 
    E. Introduction of the PAC 
    F. Solicitations 
        1. Persons who may be solicited 
            a. Stockholders and executives 
            b. Other employees 
            c. Other contributors 
            d. Foreign nationals—no solicitation or contributions permitted 
        2. Procedures relating to all solicitations 
            a. Coercion 
            b. Guidelines for contributions 
            c. Disclaimers 
            d. Payroll deduction systems 
            e. The Internet and PAC fundraising 
        3. Procedures relating to the twice-yearly written solicitations of employees who are not stockholders or executive or administrative personnel 
            a. Who may be solicited 
            b. Manner of solicitation 
            c. Custodial arrangement—office and duties 
            d. Confidentiality 
        4. Labor union access to corporate fund solicitation methods 
            a. Solicitation of stockholders and executives 
            b. ‘Twice-yearly’ solicitations 
    G. Contributions and Expenditures 
        1. General rule 
        2. Contribution limitations 
        3. Earmarked/designated contributions 
        4. Undesignated contributions 
        5. Making expenditures 
        6. Independent expenditures 
        7. Disclaimers for certain communications 
        8. Other disbursements  
    H. Trade Association PACs 
    I. Maintaining Records 
        1. Records of contributions 
        2. Illegal contributions 
        3. Records of disbursements 
    J. Reporting Requirements 
        1. Disclosure categories 
            a. Cash on hand 
            b. Contributions from persons other than committees 
            c. Contributions and transfers from committees 
            d. Loans made or repaid to the committee 
            e. Offsets to operating expenditures 
            f. Other receipts 
            g. Total receipts 
            h. Operating expenditures 
            i. Transfers to affiliated committees 
            j. Loans made or repaid by the committee 
            k. Contribution refunds and offsets 
            l. Contributions made 
            m. Independent expenditures 
            n. Other disbursements 
            o. Total disbursements 
            p. Debts and obligations 
        2. Reporting earmarked/designated contributions 
        3. Reporting ‘in-kind’ contributions 
        4. Reporting independent expenditures 
        5. Reporting expenditures on behalf of more than one candidate 
        6. Reporting debts 
        7. Limited safe harbor 
        8. Reporting contributions ‘bundled' by federal lobbyists, lobbyist employers, lobbying firms, and their PACs 
    K. Filing Dates 
        1. Election year and nonelection year reports 
        2. Monthly reporting 
        3. Filing by mail 
        4. Electronic filing 
    L. Termination 
    M. Effect on State Law

III. Other Corporate Political Activity 
    A. General Principles 
        1. Contributions and expenditures 
        2. To a ‘candidate’ 
        3. ‘In connection with a Federal election’ 
            a. Express advocacy versus issue advocacy 
            b. Electioneering communications
            c. Coordination rules 
            d. Contributions/expenditures unrelated to federal elections 
    B. Corporate Independent Expenditures
        1. 'Citizens United' and corporate independent expenditures
        2. The rise of the 'super PAC'
        3. Legal uncertainty following 'Citizens United'
    C. Commercial and Noncommercial Transactions
    D. Corporate Communications to the Restricted Class 
        1. Communications to the restricted class 
        2. Reporting communications to the restricted class 
    E. Communications Outside the Restricted Class 
        1. Candidate and party appearances 
        2. Voter registration and get-out-the-vote drives 
        3. Voting records of congressmen and voter guides 
            a. Voting records 
            b. Voter guides 
        4. Sponsorship of candidate debates 
        5. Disclaimers 
        6. Internet communications 
    F. Additional Corporate ‘Political Activity’ 
        1. Volunteer services and related use of corporate facilities 
        2. Political activity by corporate personnel 
            a. Bundling contributions 
            b. Facilitating contributions 
        3. Use of corporate jets or other corporate transportation 
        4. Rental of meeting rooms 
        5. Donation of accountant and attorney time 
        6. Legal defense funds/redistricting funds 
        7. Employees on leave to participate in political activities or campaigns; fringe benefits and service credit 
        8. Loans, guarantees, and settlements of debts 
    G. Party Contributions and Presidential Nominating Conventions 
        1. Party contributions 
        2. Presidential nominating conventions 
            a. Commercial vendors 
            b. Host committees 
            c. Hospitality suites 
    H. Employee Participation Plans 
    I. Honoraria and Other Payments 
        1. Honoraria 
        2. Other payments 
    J. The Ethics in Government Act
    K. The STOCK Act

IV. State Laws Regulating Corporate Political Activity 
    A. Types of State Statutes 
        1. States that prohibit corporate political contributions and expenditures 
        2. State restrictions on the establishment and use of a PAC 
        3. States that prohibit certain types of corporations from making political contributions or that have ‘pay-to-play' laws affecting state contractors 
        4. States that permit corporate political contributions
    B. State Independent Expenditure Laws 
    C. Special Questions Relating to State Ballot Proposals and Referendum/Petition-Type Activity 
        1. Complete prohibition unconstitutional 
        2. Limitations on the amount of corporate contributions or expenditures related to ballot questions

V. Penalties and Remedies 
    A. Introductory Material 
    B. Federal Enforcement 
        1. Complaint and investigation 
        2. Conciliation 
        3. Civil proceedings
        4. Civil penalties 
        5. Other proceedings 
        6. Administrative Fine Program 
        7. Alternative dispute resolution 
        8. Internal Revenue Service disclaimer 
        9. Criminal penalties 
        10. Enforcement of other criminal statutes 
        11. The Foreign Corrupt Practices Act of 1977 
        12. The Honest Leadership and Open Government Act of 2007 
    C. State and Local Enforcement 
    D. Shareholder Actions 
        1. Derivative actions 
        2. Proxy actions and other control measures initiated by shareholders

Portfolio 16-6th: Regulation of Corporate Political Activity

Wks. 1 The Federal Election Campaign Act of 1971 (as amended) 2 U.S.C. §§431–455

Wks. 2 Federal Election Commission Regulations— Contribution and Expenditure Limitations and Prohibitions 11 C.F.R. Part 110

Wks. 3 Federal Election Commission Regulations— Compliance Procedures; Administrative Fines 11 C.F.R. Part 111

Wks. 4 Federal Election Commission Regulations— Corporate and Labor Organization Activity 11 C.F.R. Part 114

Wks. 5 The Bipartisan Campaign Reform Act of 2002, §§ 312, 314, 315

Wks. 6 Memorandum of Understanding between the FEC and the Department of Justice 

Wks. 7 BCRA Sentencing Guides

Wks. 8 FEC Brochure on Filing a Complaint 

Wks. 9 FEC Brochure on How the Administrative Fine Works 

Wks. 10 List of State Campaign Finance Statutes* 

Wks. 11 Survey of State Contribution Laws

Wks. 12 State Disclosure Offices 

Wks. 13 FEC Brochure on Committee Treasurers 

Wks. 14 FEC Information on Requesting Advisory Opinions and New Advisory Opinion Procedures 

Wks. 15 Statement of Organization—FEC Form 1 and Instructions 

Wks. 17 Report of Contributions Bundled by Lobbyists/Registrants and Lobbyist/Registrant PACs—FEC Form 3L and Instructions

Wks. 18 Report of Receipts and Disbursement—FEC Form 3X 

Wks. 18A FEC Form 3X Instructions 

Wks. 19 Report of Communication Costs By Corporations and Membership Organizations—FEC Form 7

Wks. 20 Independent Expenditure Letter 

Wks. 21 FEC Electronic Filing Overview 

Wks. 22 26 U.S.C. § 527, as amended (Political Organizations)  

Wks. 23 Section 527 Political Organizations Revised Tax Filing Requirements

Wks. 24 IRS Revenue Ruling 2003-49 Providing Questions and Answers On Political Organization Reporting and Disclosure Requirements 

Wks. 25 Internal Revenue Service Resources Online 

Wks. 26 Sample Resolution Approving Formation of a Political Action Committee 

Wks. 27 Sample Articles of Organization for a Political Action Committee 

Wks. 28 Sample Bylaws for a Political Action Committee 

Wks. 29 Solicitation Guidelines for Senior Management 

Wks. 30 Sample Solicitation Letter and PAC Contribution Card

Wks. 31 Script for Meeting to Solicit Contributions to a PAC

Wks. 32 Political Contributions by Certain Investment Advisers, Excerpt of SEC Release No. IA-3043

Wks. 33 SEC Pay to Play Rule FAQs

Wks. 34 Rule G-37: Political Contributions and Prohibitions on Municipal Securities Business

Wks. 35 Questions and Answers Concerning Political Contributions and Prohibitions on Municipal Securities Business: Rule G-37