Travis H. Long, CPA, Inc. Blog

Originally published in the Cedar Street Times

April 18, 2014

Have you ever wondered exactly what that little section is at the top right of your personal tax returns with checkoff boxes for the taxpayer and spouse to send $3 to the Presidential Election Campaign Fund?  And why is it on your tax returns?

The majority of people do not check the boxes.  There are of course a variety of reasons for this.  Perhaps they are just apathetic towards politics, and the boxes appear like additional meaningless gibberish to wade through at tax time.  Or perhaps they loathe politics and politicians in general and would dry-heave at the idea of giving three of their hard-earned dollars to a few baby-kissers!  Or just maybe they understand campaign finance laws, agree with Congress’ original intent, and have made an educated decision about whether or not to check the box.

Despite the explicit language in that section on the return: “Checking a box below will not change your tax or refund,” many people still think they are contributing extra money out of their pocket to give to the election process if they check the box.  In reality, what Congress has done is given you the ONLY direct choice you have about how the tax dollars they just collected from you are going to be spent.  This is your one opportunity to pull the purse strings!

The concept of public dollars being used for presidential election campaign financing had its genesis in the early and mid-1960s amidst a series of campaign financing scandals and a growing disparity between the parties’ abilities to raise funds.  The idea was to level the playing field for candidates running for president to make it more difficult to buy America’s vote.

The Presidential Election Campaign Act, sponsored by Senator Russell Long was passed in 1966, but was repealed the next year in a challenge led by Senator Al Gore, Sr.  Gore and Senator Robert Kennedy felt that the current law did not do enough since it was not the sole mechanism of financing and still allowed the “corrupting influence” of large private contributions.  Ironically, the Kennedy family had used vast amounts of its family’s personal wealth to finance and ultimately win the election of 1960 for Robert’s brother, John F. Kennedy, as well as financing Robert Kennedy’s bid for election in 1968 against Johnson.

The issue was then revived and was passed again in 1971 as a tax return checkoff to allocate $1 beginning on the 1972 tax returns.  Congress decided that Americans would get to decide how much money would be utilized to fund the elections.  President Nixon and most Republicans were opposed to the idea in general, so the IRS was not being pressured to make it easy.  It was a separate form that had to be requested and it was not advertised very well – only bringing $4 million into the fund the first year.  In 1973, Senator Long did some negotiating with the IRS and the checkoff box was moved to the front of the Form 1040 the next year.  By the 1976 election $90 million had been collected.

The intent of the Presidential Election Campaign fund is to provide full funding for the major party presidential nominees in the general elections, provide funds for the party nominating conventions, and provide partial funds for the primary elections.

In order to receive the funds, the candidates must show broad national public support in the primaries; they must not spend more than $50,000 of their own money; in the general elections they cannot accept any private individual or Political Action Committee (PAC) funds; and there is a cap on the maximum that can be spent on the election campaign.

The various caps and funding amounts were indexed for inflation, however the checkoff amount was not.  The only change since 1972 came in 1994 when the checkoff amount was raised from one dollar to three dollars by Congress.  Making matters worse, its peak participation in 1980 of 28.7 percent of taxpayers utilizing the checkoff has consistently fallen to the 2012 level of only 6.4 percent.  If there is a shortfall, then candidates will just get less money prorata.

President Barack Obama and Mitt Romney became the first general election candidates since the program’s inception to turn down public financing and to raise the funds privately instead.  And two weeks ago, President Obama signed into law legislation that ends the portion of the law that finances the presidential nomination conventions.

All of these factors combined indicate the pendulum is rapidly swinging the other direction and unraveling the system that has operated over the past 40 years.  I suppose after a few more scandals or when one party starts out-fundraising the other substantially there will be outcry again, and the campaign finance laws will be reinvigorated once again.

At least for now, you still have the option to tell Congress how to spend a few of your tax dollars.  If you have already filed your returns for 2013 and have an incredibly intense desire to contribute to this degenerating fund, you can file an amendment to do so.  Interestingly, if you now have an incredibly intense desire to uncontribute to this fund, you cannot amend your return to do that!  This will lead us to our next topic in two weeks – amending your tax returns!

Prior articles are republished on my website at www.tlongcpa.com/blog.

IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.