April 15, 2015

Commissioner Douglas A. Kellner

Commissioner Gregory P. Peterson
Commissioner Andrew J. Spano
Commissioner James A. Walsh
NYS Board of Elections
40 North Pearl Street, Suite 5
Albany, NY 12207-2729
Dear Commissioners Kellner, Peterson, Spano and Walsh:
We join a broad coalition of good government groups to urge you to close the LLC loophole,
which governs the way that limited liability companies participate in the political process. We
are encouraged that this issue will be on the agenda at your upcoming meeting on Thursday, and
hope that you use this opportunity to fix a gaping loophole in our states elections.
We were pleased that the Governor included a provision to close the LLC loophole in
his Executive budget proposal. We were disappointed it was not included in the final enacted
budget. In addition, we sponsor bills that would make this fix legislatively, and we will continue
to push this legislation forward. But you have the power to solve this problem yourselves, by
issuing a new opinion to reverse the way our state treats LLCs.
The Board of Elections (BOE) governs LLC contributions in a way that is inconsistent with all
other types of campaign contributions. The contribution limits that apply to corporations do not
apply; the assignment of contributions to members required of partnerships does not exist; and
the transparency and protection against an individual contributing above the legal limits is
absent:

Each individual and each LLC has the same contribution limit -- $60,800 to a statewide
candidate per election cycle. But LLCs are not prohibited from making multiple
contributions over the limit from a single source, and are not required to disclose
information that meaningfully identifies the source of their contributions. This means
individuals controlling multiple LLCs may give effectively unlimited contributions to
each candidate.

Partnership contributions above $2,500 must be attributed to each partner whose

contribution exceeds $99. LLCs are not required to attribute contributions to members or
disclose their membership publicly, for purposes of contributions or otherwise.

Corporations may contribute an aggregate of up to $5,000 in a calendar year to

candidates and committees. LLCs may contribute an aggregate of up to $150,000 in a
calendar year to candidates and committees.

The impact of the BOEs 1996 decision to treat LLCs as individuals is dramatic. The coalition
of civic organizations referenced above wrote a letter to the Governor on April 13, which
detailed the impact of the BOEs 1996 decision to treat LLCs as individuals: As the Moreland
Commission discovered in 2013, one entity utilized 25 separate LLCs and subsidiary entities to
make 147 separate political contributions totaling more than $3.1 million since 2008. In cases
where the Moreland Commission has not weighed in, it can be impossible to track the source of
LLC contributions, since the only identifying information available online is the name of the
LLC, the date of filing, the county where filed, a mailing address, and a registering agent's
address. Thats why papers across the state, including the Albany Times Union, New York Daily
News, Syracuse Post-Standard, Rochester Democrat and Chronicle, Buffalo News, Glens Falls
PostStar, Plattsburgh Press-Republican, and Middletown Times Herald-Record have supported
closing the loophole.
In addition, the BOE policy is out of step with how LLCs are classified by the Federal Election
Commission. Originally the FEC treated LLCs similarly to the way New York State now does.
This error was corrected sixteen years ago, when the FEC ruled that LLCs would be treated as
corporations or partnerships for Federal election law and contribution purposes. A number of
other jurisdictions have also closed, or never opened, the LLC loophole. In New Jersey, LLCs
are not allowed to make contributions as an entity. In Colorado, contributions from LLCs are
prohibited if the IRS treats them as corporations. And Maryland and Washington D.C. have
passed legislation closing their LLC loopholes.
We note that in addition to the push by the coalition of good government groups, the Brennan
Center for Justice at NYU School of Law and Emery Celli Brinckerhoff & Abady LLP wrote
you a letter on April 9 urging action on this matter. We join their request that you rescind the
Boards 1996 opinion to treat LLCs as individuals and we support their proposal that you
provide that LLCs will be treated either as corporations or partnerships depending on their tax
status; and clarify that no person may use multiple LLCs to circumvent contribution limits and
disclosure requirements."
We urge a robust debate at Thursdays meeting, and action to fix this deeply damaging policy.
There's no reform more important to restoring faith in our state government. Thank you for your
attention to this.
Sincerely,

Daniel Squadron
New York State Senator
26th District

Brian Kavanagh
New York State Assemblymember
74th District