The Omnibus Appropriations Bill and its Impact on the Political Activity of 501(c)(4)s, Federal Contractors, and Public Companies
On Tuesday December 15, 2015, congressional leaders reached an agreement on the FY16 Omnibus Appropriations bill ("Omnibus bill"). The Omnibus bill, which has 2009 pages, funds the government through the current fiscal year and includes multiple provisions that relate to the political activity of certain individuals and organizations, specifically 501(c)(4) tax-exempt organizations, federal government contractors, and publicly traded companies.
The Omnibus bill prohibits the Department of Treasury, which includes the Internal Revenue Service, from issuing, revising, or finalizing any regulation, revenue ruling, or other guidance related to determining whether a 501(c)(4) organization is operated exclusively for the promotion of social welfare purposes, unless involving a particular taxpayer. This prohibition is clearly designed to suspend efforts prioritized by certain Obama Administration officials to restrict political activities of 501(c)(4) organizations.
The Omnibus bill also addresses the disclosure of political activity by federal government contractors. It states that federally appropriated funds may not be used to recommend or require an entity that is submitting an offer for a federal contract to disclose certain political activities. This includes contributions, independent expenditures, and disbursements for an electioneering communication to a candidate for federal office or to a political committee.
The Securities and Exchange Commission ("SEC") is also prohibited from requiring certain disclosures by publicly traded companies. The Omnibus bill states that the SEC may not finalize, issue, or implement any rule, regulation, or order requiring the disclosure of political contributions, dues paid to trade associations, and contributions to tax exempt organizations. Again, this language is designed to slow down proposed efforts by the SEC to disclose and deter political activity by corporations.
While the Omnibus bill is lengthy and has a plethora of technical details that analysts will be sorting out in the coming weeks, these noted provisions directly relate to the political activity of 501(c)(4)s, federal government contractors, and public companies, and the areas of government with which they interact. These provisions should be noted by practitioners and corporations operating in these regulated areas.
If you have any questions please contact your Clark Hill political law attorney to discuss the bill and its potential impacts.