IBA Compliance Connection

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Can an Illinois political action committee (PAC) use its state-issued committee ID in lieu of an employer identification number (EIN) when opening a new account? A PAC told us that it is not obligated to get an EIN or file a tax return. The State Board of Elections Guide to Campaign Disclosure provides that a financial institution may require an EIN rather than using an individual’s SSN. It also provides that if interest is earned on invested campaign funds, the committee must also file an IRS report and an IDR report. We don’t want to violate either BSA or tax reporting requirements.

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No, we do not believe an Illinois political action committee (PAC) can use its state-issued committee ID in lieu of an employer identification number (EIN) to open a bank account.

PACs are political organizations subject to taxation under the Internal Revenue Code, though they may be entitled to certain exemptions. The IRS requires political organizations to obtain an EIN even if they have no employees.

PACs registered with the Illinois State Board of Elections (Board) are required to segregate their funds, which may not be comingled with any personal funds of officers, members, or associates of the committee. As you noted, the Board’s Guide to Campaign Disclosure provides that, “the financial institution chosen by the committee may require an [EIN] issued by the [IRS]. . . eliminate[ing] the use of an individual’s social security number attached to a campaign account that may result in a personal tax liability.”

Further, FinCEN’s customer identification program (CIP) requirements obligate a bank to obtain a customer’s name, address, and taxpayer identification number prior to opening an account. Accordingly, we do not believe a PAC may substitute its committee ID number for an EIN when opening an account.

For resources related to our guidance, please see:

  • IRS Website, Political Organizations Filing Requirements (“Political parties; campaign committees for candidates for federal, state or local office; and political action committees are all political organizations subject to tax under IRC section 527.”)
  • Internal Revenue Code, 26 USC 527(a) (“A political organization shall be subject to taxation under this subtitle only to the extent provided in this section. A political organization shall be considered an organization exempt from income taxes for the purpose of any law which refers to organizations exempt from income taxes.”)
  • Illinois Election Code, 10 ILCS 5/9-3(a) (“Every political committee shall file with the State Board of Elections a statement of organization within 10 business days of the creation of such committee, except any political committee created within the 30 days before an election shall file a statement of organization within 2 business days in person, by facsimile transmission, or by electronic mail.”)
  • Illinois Election Code, 10 ILCS 5/9-1.8(a) (“‘Political committee’ includes a candidate political committee, a political party committee, a political action committee, a ballot initiative committee, and an independent expenditure committee.”)
  • Illinois Election Code, 10 ILCs 5/9-6(c) (“All funds of a political committee shall be segregated from, and may not be commingled with, any personal funds of officers, members, or associates of such committee.”)
  • Illinois State Board of Elections Guide to Campaign Disclosure, p. 6 (“Opening a separate segregated bank account is suggested when forming a political committee. . . . When opening a campaign account, the financial institution chosen by the committee may require an employer identification number issued by the Internal Revenue Service. This procedure eliminates the use of an individual’s social security number attached to a campaign account that may result in a personal tax liability.”)
  • FinCEN CIP Regulations, 31 CFR 1020.220(a)(2)(i) (“The CIP must contain procedures for opening an account that specify the identifying information that will be obtained from each customer. Except as permitted by paragraphs (a)(2)(i)(B) and (C) of this section, the bank must obtain, at a minimum, the following information from the customer prior to opening an account: (1) Name; (2) Date of birth, for an individual; (3) Address . . .; and (4) Identification number, which shall be: For a U.S. person, a taxpayer identification number. . . .”)
  • FinCEN Regulations, 31 CFR 1010.100(mm) (“Person. An individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.”)