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  • FEC Record: Advisory opinions

AO 2010-16: SSF of corporate-owned LLC

November 1, 2010

EmblemHealth LLC, a limited liability company that is treated as a partnership for tax purposes and is wholly owned by corporations, may pay the administrative and solicitation costs of its affiliated corporation’s separate segregated fund (SSF), but it may not be named as the SSF’s connected organization. Nevertheless, the name of the SSF may be changed and abbreviated to EmblemHealth PAC, and EmblemHealth LLC and its owner  corporations may solicit contributions to the SSF from the restricted class of EmblemHealth LLC and its  corporate owners.


EmblemHealth LLC is a limited liability company, treated as a partnership under the Internal Revenue Code,1

that is wholly owned by two not-for-profit health services corporations: Health Insurance Plan of Greater New York (HIP) and Group Health Incorporated (GHI). Another corporation, EmblemHealth Inc., is the sole owner of both HIP and GHI. HIP and GHI established EmblemHealth LLC to integrate management and administration, and to set direction for the joint operations of GHI and HIP.

EmblemHealth LLC asks if an SSF currently operated by HIP may be renamed “EmblemHealth Services

Company LLC Federal Political Action Committee,” abbreviated as “EmblemHealth PAC,” and further asks if it may act as the connected organization for the SSF. Furthermore, EmblemHealth LLC asks if it, GHI and HIP may each use personnel and resources to pay the administrative and solicitation expenses for the SSF, and solicit the restricted classes of EmblemHealth LLC, GHI and HIP for contributions to the SSF.


The Federal Election Campaign Act (the Act) and Commission regulations do not include partnerships or LLCs in the definition of “connected organization” (11 CFR 100.6(a)), instead permitting them to contribute directly to candidates. However, partnerships that are owned entirely by corporations may not make contributions because

of the dual attribution principle. Contributions by partnerships are attributed not only to the partnership but  also to the partners which, in this case, are corporations prohibited from making contributions. 11 CFR 110.1(e). In order to avoid prohibiting these types of partnerships from both making contributions and establishing and administering an SSF, the Commission has interpreted the Act and Commission regulations as permitting such partnerships to pay the administrative or solicitation costs of an SSF established by the partnership’s corporate owner, but only when the partnership is wholly owned by corporations and is affiliated with at least one of the corporations. AOs 2009-14 and 1992-17.

EmblemHealth LLC is wholly owned by GHI and HIP, both of which are corporations wholly owned by EmblemHealth, Inc. GHI and HIP are therefore subsidiaries of EmblemHealth Inc., and are thus affiliated.

EmblemHealth LLC and its corporate owners may all act as the connected organization for the SSF, paying for its administrative expenses and solicitation costs. However, because EmblemHealth LLC itself does not satisfy the definition of “connected organization” as discussed above, it may not be listed as the SSF’s connected organization on FEC Form 1. Instead, the SSF must list one of EmblemHealth LLC’s corporate affiliates as the connected organization. AOs 2009-14, 2004-42 and 2003-28.

The SSF may be renamed “EmblemHealth Services Company LLC Federal Political Action Committee,” abbreviated as “EmblemHealth PAC.” In past advisory opinions, the Commission has permitted an SSF’s name to include only the name of a joint venture LLC that was treated as a partnership under Commission

regulations, where the LLC was performing the functions of the SSF’s connected organization. AOs 2004-42 and 2003-28. Under that circumstance, the SSF may omit the names of the LLC’s affiliated corporate owners from its name “because the LLC was in virtually the same position as a corporate subsidiary of the owner corporation.” AO 2004-42.

An SSF and its connected organization may solicit contributions from the restricted class – the executive and administrative personnel and stockholders, and their families – of its subsidiaries, branches, and other affiliates. 2 U.S.C. §§ 441b(b)(2)(A) and (4)(A)(i); 11 CFR 114.3(a)(1) and 114.5(g)(1). Once the Commission

has concluded that entities are affiliated, any one affiliate may solicit the restricted class of any other affiliated entities. AOs 2004-32 and 2001-18. Therefore, HIP, GHI and EmblemHealth LLC may solicit the restricted class of the SSF’s connected organization (HIP) and the restricted class of its affiliated corporation (GHI) for contributions to the SSF. Although EmblemHealth LLC is not a corporate affiliate of HIP or GHI, the Commission has, in previous advisory opinions, determined that the executive and administrative personnel of partnerships that were affiliated with corporations could be solicited for contributions to the corporation’s separate segregated fund. AOs 1989-08 and 1983-48. Therefore, because EmblemHealth LLC is affiliated with HIP, GHI and

EmblemHealth Inc., and is treated as a partnership under Commission regulations, HIP, GHI and EmblemHealth

LLC may solicit contributions from EmblemHealth LLC’s executive and administrative personnel for contributions to the SSF.

Date issued: September 23, 2010; Length: 6 pages

An LLC that elects to be treated as a partnership by the Internal Revenue Service under 26 CFR 301.7701-3 is treated as a partnership under Commission regulations. 11 CFR 110.1(g)(2).

  • Author 
    • Christopher Berg
    • Communications Specialist