House Votes Down Changes to Stealth PAC Law - Campaign Finance Reform

Campaign Finance Reform:

Published: 04/15/2002

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House Votes Down Changes to Stealth PAC Law

Last week the House of Representatives voted down a taxpayer rights bill that included an exemption for state and local PACs that reformers said went too far and would have undermined the recently passed Bipartisan Campaign Reform Act (BCRA).

Ever since the "Stealth PAC" law requiring political action committees (PACs) to report soft money contributions and expenditures to the Internal Revenue Service (IRS) passed in 2000, state and local PACs have lobbied Congress for an exemption when a PAC has no federal election activity and files reports at the state or local level. However, debate continues over how to eliminate duplicate federal and state/local reporting without creating a loophole for federal soft money. Last week the House of Representatives voted down a taxpayer rights bill that included an exemption for state and local PACs that reformers said went too far and would have undermined the recently passed Bipartisan Campaign Reform Act (BCRA).

House Ways and Means Committee Chair William Thomas (R-CA) added the language to what had been bipartisan legislation on taxpayer rights during committee consideration of the bill, H.R. 3991. It would have exempted state and local PACs from IRS reporting where state or local reporting is "substantially similar" to federal requirements. However, Thomas also went beyond PACs to include mandatory exemptions for state parties and affiliates of parties. Campaign finance reform supporters in the House said these provisions would create soft money loopholes. Thomas brought the bill to the floor under rules that require a super-majority of two-thirds and do not permit amendments, which angered many members. The bill, which started with broad support, was defeated on a 219-205 vote. After the vote, Thomas said the issue is unlikely to come up in the House again this year.

Meanwhile, Sens. Kay Bailey Hutchinson (R-TX), Joseph Lieberman (D-CT), Carl Levin (D-MI) and Russell Feingold (D-WI) brought the issue to the Senate by filing a bill (S. 2078) that would eliminate duplicate reporting for state and local PACs, but does not exempt state party organizations. It also requires the IRS to develop procedures for electronic filing of reports.

Electronic filing is a key to making the disclosed information useful to the public, according to a recently issued Public Citizen report. "Déjà Vu Soft Money" notes that the IRS posts disclosure reports by PAC name, in non-searchable format, so that the public cannot locate specific donors or candidates without searching through 14,800 separate files. The report calls for a fully searchable database, similar to that used by the Federal Election Commission (FEC). It also calls for better enforcement of the law, noting that many reports are incomplete and many groups have failed to file at all.