Congress reformed the rules for political fundraising and campaign financing back in 1971, and it has made further changes in the half century since then. If you're involved in fundraising or financing for a candidate, you need to know the rules and follow them. The penalties for breaking the law can run as high as a five-year prison stretch.
TL;DR (Too Long; Didn't Read)
First, file with the IRS to get an employer identification number for your political committee. When you go to the bank, use the EIN the way you do your Social Security number on your own accounts. Open the account in the name of the committee, never your own name.
Types of Committees
When it comes to campaign finance, one important committee is the political action committee. Political action committee money has become increasingly prevalent in elections, as PACs can raise money to donate to campaigns and parties. PACs typically represent business or labor organizations or groups organized around a cause, but some politicians form PACs to help other candidates in their party.
Candidates' campaigns also have political committees to handle the campaign finances. These committees work with the campaign finance director and campaign treasurer to meet the campaign's financial goals.
Rules for campaign finance vary in different states and between state and federal races. Whatever type of committee you're interested in forming, however, will need a separate bank account. Depositing political action committee money in your own account is illegal.
EIN Number for a Political Campaign
When you're opening an account for a PAC or other political committee, you're representing an organization, not an individual. Just as you'd give the bank your Social Security number, you'll need an employee identification number for political campaign bank accounts.
To apply for an EIN, you submit IRS Form SS-4. You'll need to provide the name of the committee, the mailing address, the person in charge and other data. Once the IRS reviews the application, it will issue an EIN number for the political campaign committee or PAC, which you'll include on the bank account paperwork.
Opening the Account
Once you've selected the best bank account for a political campaign or for a PAC, open it as soon as possible. You want the account up and running so you can start depositing donations. If you're working for a candidate, the candidate can usually make small purchases and get reimbursed once the account is established.
If you open an interest-bearing account, you'll have to report the interest earned along with political action committee money. That's a lot of paperwork for very little money, so an interest-free account usually makes more sense.
Keep Up the Paperwork
The SS-4 that gets you the EIN for the political campaign account is only the beginning of the paperwork you'll have to track. You must deposit every donation your PAC or campaign receives and record the name and address of most donors plus other information. You'll also need to report transfers to other accounts, any campaign or political action committee money you spend and on what you spent it.
You'll have to make regular reports providing all the campaign finance information. Depending on the office for which you're running and where you're running, local, state and federal officials may all require some paperwork.
Other Ways to Receive Donations
With this being the internet age, there are many more ways to receive donations than checks. You can solicit donations on the campaign or PAC website, for example, set up a button for PayPal political donations or go with one of the online money services that specializes in campaign funding.
Online and PayPal political donations still have to comply with all campaign finance laws. You'll need an online account for the campaign, not yourself, and you'll need to obtain relevant information about the donors.
- Law Offices of Dan C. Guthrie Jr.: What Is Campaign Fraud?
- Wellstone: Campaign Roles and Responsibilities
- The Center for Responsive Politics: What Is a PAC?
- Federal Election Commission: Getting A Tax ID and Bank Account
- IRS: Form SS-4
- Online Candidate: Opening a Bank Account For Your Political Campaign
- Florida Division of Elections: Campaign Finance
- Raise the Money: Why PayPal is Bad for Political Campaigns
- Federal Election Commission: Fundraising for the Campaign
- PayPal: Political Campaign Contributions Made Secure and Easy