Public Citizen Letter Calls on IRS to Require Congressional “Leadership PACs” to Fully Disclose Contributions and Expenditures Under New “Section 527” Campaign Finance Reform Law

July 18, 2000

Public Citizen Letter Calls on IRS to Require Congressional “Leadership PACs” to Fully Disclose Contributions and Expenditures Under New “Section 527” Campaign Finance Reform Law

WASHINGTON, D.C. — The Internal Revenue Service (IRS) should clarify that “leadership PACs” associated with federal candidates and officials must fully reveal their finances, Public Citizen said today in a letter urging IRS Commissioner Charles O. Rossotti to issue guidance under a new law mandating disclosure of contributions and expenditures of Section 527 political organizations.

The Public Citizen letter was prompted by press reports, appearing within days of the president?s signing the law July 1, suggesting that one prominent group of Section 527 “stealth PACs” — so-called state or non-federal accounts of leadership PACs connected to federal officeholders and candidates — would not have to disclose their contributions and expenditures under the new law. According to Public Citizen?s inquiries, at least one lawyer associated with such PACs has promoted this self-serving argument with the press.

In fact, as Public Citizen?s analysis of the law and relevant Federal Election Commission regulations demonstrates, there is absolutely no legal basis for any exemption of the state or non-federal accounts of leadership PACs.

Until enactment of the new law, there was no requirement for the existence of these accounts to even be acknowledged. According to press reports, there are at least 30 known state leadership PACs fueled by unlimited, often undisclosed contributions. This money is being spent on ads, voter registration drives, polling and other activities designed to influence elections.

“It is time to stop this destructive process where good campaign finance reform legislation is continually subverted by politicians trying to find loopholes,” Public Citizen President Joan Claybrook said. “Congress has just overwhelmingly voted to reveal undisclosed Section 527 political money. The IRS should make it crystal clear that leadership PACs cannot evade this law through so-called ?non-federal accounts? that raise unlimited, secret funds from wealthy special interests.”

###