Cuomo Presents Eight Options For Closing The LLC Loophole

In the Times Union, Casey Seiler reports that “Gov. Andrew Cuomo is introducing eight separate bills covering the governor and — singly or in combination — differing sets of statewide and legislative offices. The bills would apply to:

1. Everyone (all candidates for state political office)
2. Candidates for Governor and the State Legislature
3. Candidates for Governor and State Senate
4. Candidates for Governor and State Assembly
5. Candidates for Governor, the Attorney General and the Comptroller
6. Candidates for Governor and the Attorney General
7. Candidates for Governor and the Comptroller
8. Candidates for Governor

Each measure “requires that limited liability corporations be treated as traditional corporations, capping contributions at $5,000,” according to the administration’s release. “The bills would prevent LLCs from circumventing disclosure requirements and ensure that businesses do not wield an outsized influence in politics and elections across the state.”

From the Governor’s press release:

The LLC loophole is widely open to abuse – with companies regularly taking advantage of the gap in state law to set up numerous LLCs to donate millions of dollars to political campaigns, candidates for public office and elected officials in New York.

For several years, Governor Cuomo has introduced legislation to close the LLC loophole. These calls have not resulted in a change in law. Since 2010, 14 separate bills have been introduced in the State Legislature to close the LLC loophole.

The Governor believes we need one set of rules for everyone running for office in New York. This year, the Governor is advancing eight bills designed to close the LLC loophole – all of which apply to candidates for Governor:

*The limitations would apply to contributions provided directly to a candidate, or through a political party, committee or organization.

The Federal Election Campaign Act of 1971 is the primary law governing political campaign spending and fundraising in the United States. In 1974, the New York State Legislature overturned a ban which previously outlawed corporations from donating to political campaigns, and replaced it with a $5,000 contribution limit.

Until 1996, New York’s election law aligned with FECA and capped donations by businesses and corporations to political campaigns, while mandating full disclosure. In 1996, the New York State Board of Elections broke from federal law and ruled that LLCs may be treated as separate and distinct individuals for the purpose of campaign contributions.

The ruling allowed LLCs to contribute up to $60,800 per candidate in a statewide race or a maximum of $150,000. The law also permitted these companies to donate with increased anonymity and at far greater levels than other corporate, partnership and business entities across the state.

In April 2015, the state Board of Elections took up a vote to close the LLC loophole and issue a new ruling with regards to LLC contributions. The Board deadlocked, voting 2-2 on the issue and ultimately failing to overturn the 1996 decision.



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