Partnerships and LLCs involved with corporations and SSFs

Partnerships and limited liability companies (LLCs) that are treated as partnerships are generally prohibited from serving as the connected organization of an SSF. Instead, were such organizations to form a political committee, they would form a nonconnected PAC. A different result occurs, however, when a partnership or LLC is owned by a corporation, as explained.

Partnership/LLC as connected organization

A partnership or LLC that is owned entirely by corporations and affiliated with one of those corporations is permitted to pay the administrative and solicitation costs of its corporate owner’s SSF without the resulting costs being considered a contribution to the committee. The SSF must list one of the partnership or LLC’s affiliated corporate owners (not the partnership or LLC) as its connected organization on its Statement of Organization (Form 1).

Joint venture partnerships/LLCs owned by corporations

When a nonconnected PAC is sponsored by a joint venture partnership or LLC owned entirely by one or more corporations and affiliated with at least one of them, the nonconnected PAC becomes affiliated with the SSF of any corporation affiliated with the joint venture partnership or LLC.

Even though nonconnected PACs sponsored by partnerships or LLCs do not normally carry the solicitation restrictions applicable to SSFs, the rules that apply to SSFs will apply to the nonconnected PAC of a partnership that is an affiliate of a corporation with an SSF. As a result, when a nonconnected PAC becomes affiliated with an SSF, the nonconnected PAC may solicit only that SSF’s restricted class and must follow the rules governing SSF solicitations.