Political Law

Engaging in political activity can create liability if not carefully managed. At every level of government, laws, regulations and rules prohibit, restrict and require disclosure of lobbying and political activities. In many cases, applicable regulatory regimes overlap and are not necessarily intuitive. Accordingly, because of the potential for negative publicity, civil penalties and even prison time, every entity that comes in contact with government officials must have a compliance program in place to limit its potential for non-compliance.

The past 15 years or so have been particularly active in the area of political law. Notably, this activity has not been limited to the federal level — state and local governments continue to enact new campaign finance, lobbying, ethics and "pay-to-play" laws.

Holland & Knight's Political Law Team helps clients navigate the complicated world of political law by designing internal compliance programs, vetting campaign contributions and gifts, and representing clients during investigations.

Campaign Finance

For more than 100 years, it has been illegal for corporations to contribute funds out of the corporate treasury directly to a candidate for federal office. Corporate "soft money" contributions to the national political parties have been illegal since enactment of the Bipartisan Campaign Reform Act of 2002 (BCRA). In addition, it is illegal for corporations to facilitate the making of a contribution to a federal candidate or to reimburse employees for contributions to a federal candidate. However, as a result of the Supreme Court's 2010 decision in Citizens United v. Federal Election Commission, corporations and labor unions may now use treasury funds to pay for communications that urge voters to support or oppose federal candidates (express advocacy). The ban on corporate and labor union direct contributions to federal candidates, political parties or political action committees (PACs) remains in place. Corporate contributions at the state level vary by jurisdiction.

In addition, most states and the federal government have rules regarding candidate events, such as fundraisers and "meet and greets," candidate travel on private aircraft and third-party communications that mention candidates.

Potential problem areas in campaign finance include illegal corporate contributions, reimbursed campaign contributions and improper disclaimers. Any entity that operates a PAC, makes federal, state or local corporate campaign contributions, or has individual employees involved in political activity should implement a comprehensive compliance program to prevent violations of campaign finance laws.

Lobbying

The Honest Leadership and Open Government Act of 2007 (HLOGA) increased civil penalties for violations of the Lobbying Disclosure Act of 1995 (LDA), as amended, from $50,000 to $200,000. For the first time, it provides criminal penalties of up to five years in prison. In addition, the U.S. Government Accountability Office (GAO) is now required to audit LDA filings, and lobbyists and their employers are both subject to the LDA. The IRS requires organizations to track and report lobbying expenses, using a different definition of lobbying found in the Internal Revenue Code (IRC). In addition to the LDA and IRC, every state and many localities regulate lobbying activity. In some cases, registration is required before making a lobbying contact.

Vetting

Holland & Knight has the country's largest practice advising presidential appointees through appointment and Senate confirmation. As the nation gets ready for another election cycle and individuals consider opportunities to serve in Executive Branch positions, the importance of vetting and attention to government ethics requirements has never been more important. The vetting process can be daunting for individuals joining an administration from the private sector or academia. The hurdles are particularly acute for individuals with complex investment portfolios, sophisticated trust and estate plans, or significant employee benefit and executive compensation arrangements.

For more than 20 years, the attorneys in Holland & Knight's vetting practice have guided individuals through all phases of this complex process. Our lawyers have represented appointees in Democratic and Republican administrations, including the current administration, and work closely with the White House Counsel's Office, the U.S. Office of Government Ethics, designated ethics officials of a wide range of departments and agencies, and with staffs of the U.S. Senate committees of jurisdiction. The lead partners in the practice have taught the nation's first course on the presidential appointments process at Georgetown University Law Center and at Harvard Law School for more than 15 years.

Our team counsels individuals (and their employers) through the full range of issues, including the tax, financial, executive compensation, national security and government ethics issues facing prospective appointees. Our attorneys also provide outside counsel to clients who serve in the executive branch, providing confidential advice related to potential conflicts, compliance with financial disclosure requirements and advice on post-government employment ("revolving door") restrictions.

Ethics

All entities that come in contact with government employees must be aware of and comply with conflict of interest laws, post-employment restrictions, and gift and travel rules. With the passage of HLOGA in 2007, violations of the House and Senate gift and travel rules are now violations of the LDA for lobbyists and entities that employ lobbyists. HLOGA also included increased post-employment, gift and travel restrictions for the legislative branch. In addition, there are gift and post-employment restrictions for political appointees in the executive branch. Each state and most localities also have separate ethics provisions.

Tax

An understanding of the definition of lobbying and political campaign activities is critical for all organizations, regardless of tax status. Tax-exempt organizations must take care to comply with IRS restrictions on political and lobbying activity by being aware of the operative definitions, limits and restrictions in this area and how they are applied to particular types of 501(c) organizations. Taxable businesses are precluded from taking a business expenses deduction for most lobbying and political expenses. Further, trade associations must notify their members that the portion of their dues allocable to lobbying by the association is not deductible. Political organizations such as PACs, political parties and issue advocacy groups must comply with Section 527 of the IRC and IRS disclaimer requirements.

Pay-to-Play

"Pay-to-play" laws ban, restrict or require disclosure of certain campaign contributions or gifts to public officials made by government contractors or potential government contractors. These laws combine elements of campaign finance, ethics and government procurement law. They can apply not only to contributions or gifts made by the government contracting entity itself or its PAC but also can extend to personal political contributions made by the contracting entity's officers, directors, employees and, in some cases, the family members of such individuals.

Pay-to-play laws exist at every level of government. Federal pay-to-play laws operate principally in the financial services sector and include pay-to-play rules regulating investment advisers, municipal securities dealers and municipal advisors, placement agents, swap dealers and securities-based swap dealers. Numerous states and major municipalities also have their own pay-to-play regimes, including Illinois, New Jersey, Connecticut, New York City, Los Angeles and Philadelphia. In short, for entities with government contracts, pay-to-play has become a compliance challenge that cannot be ignored.

A Wide Range of Political Law Services

Holland & Knight's Political Law Team provides services in the following areas:

Federal, state and local campaign finance compliance:

• establishing and maintaining PACs
• preparing and reviewing Federal Election Commission (FEC) and state filings
• advising on corporate political activities
• pre-clearing political advertising
• pre-clearing political travel
• tracking individual contributions for purposes of the FEC biennial contribution limit
• implementing internal compliance programs to avoid violations of the Federal Election Campaign Act, FEC regulations, and related state or local laws and regulations
• representation during an enforcement action or audit

Federal, state and local lobbying compliance:

• preparing and reviewing LDA registrations and filings
• calculating lobbying expenses using either the LDA or IRS method
• consulting on planned events, including receptions, meals and travel
• advising on post-employment restrictions for former government employees
• designing and implementing internal lobbying compliance programs to avoid violations of the House and Senate rules, the LDA, and related state or local laws and regulations
• representation during an enforcement action or audit

Federal, state and local ethics compliance:

• preparing and reviewing gift, travel and financial disclosure forms
• pre-clearing gifts and travel
• drafting internal policies, reimbursement forms and employment contracts

Federal, state and local pay-to-play compliance:

• preparing and reviewing pay-to-play disclosure and certification forms
• designing and implementing internal pay-to-play compliance programs
• pre-clearing campaign contributions

IRS compliance related to lobbying and political campaign activities:

• lobbying and political restrictions for 501(c) organizations
• IRS (and federal, state and local campaign finance) compliance for "527" organizations
• IRS filing requirements for state or local political committees
• creating and maintaining affiliated organizations (including PACs and 501(c)(4) entities)
• implementing internal compliance programs to avoid violations of IRC and IRS regulations