New Jersey says No to SuperPACs

Today, the New Jersey Election Law Enforcement Commission issued Advisory Opinion 01-2013  holding that a committee organized under Section 527 of the IRS code and intending to make solely independent expenditures (i.e., expenditures not coordinated with candidates or parties) of $2,400 or more in the 2013 New Jersey legislative elections must be classified as a political committee under New Jersey law, subject to registration, reporting, and contribution limits, if over half of its total activity is for that purpose.  The Fund for Jobs and Growth represented that it is an organization incorporated in the District of Columbia that will make only independent expenditures in support of legislative candidates in New Jersey elections in 2013 and that more than  half of its spending will be in support of that independent expenditure program in New Jersey.

ELEC held that independent expenditure activity comes within the meaning of “aid or promote” the election or defeat of a candidate as used in the definition of “political committee” under New Jersey law because that definition does not differentiate between activity that is “coordinated” and activity that is “independent” of a candidate.  ELEC applied the “major purpose” test derived from Buckley v. Valeo (1976) in concluding that spending in excess of half of the Fund’s total spending on independent expenditures in New Jersey elections would constitute a “major purpose” of supporting New Jersey candidates in 2013 elections.

Because the Fund is a “political committee,” ELEC stated it must observe New Jersey law with respect to contribution limits in addition to registration and contributor reporting requirements.  Specifically, the Fund may receive no more than $7,200 per election from a contributor (except for contributions from political party committees and legislative leadership committees).  ELEC reached this result notwithstanding the Fund’s representation that since the time of the U.S. Supreme Court opinion in Citizens United v. FEC (2010) and the subsequent Court of Appeals opinion in Speechnow.org v. FEC (D.C. Cir. 2010) (en banc), no court has upheld a government restriction on the amount that an independent expenditure-only committee (more popularly known as a super PAC) may receive as a contribution.

Will this ELEC Advisory Opinion become the subject of a court challenge?  Stay tuned.

Genova Burns Giantomasi Webster LLC Of Counsel Gregory E. Nagy assisted with this post.

Topics:  ELEC, Election Related Expenditures, IRS, PACs, Political Contributions, SuperPACs

Published In: Elections & Politics Updates, Finance & Banking Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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