Federal law requiring campaign groups to file with IRS may hit candidates

Because of Nevada campaign law, local candidates could be pulled into the net of federal campaign reporting requirements imposed on U.S. Senate and other candidates.

The law signed July 1 was designed to make "stealth" campaign groups report their income and spending to reduce the influence of soft money in campaigns.

In the past, those groups were allowed to raise and spend unlimited amounts of cash on politics tax free, provided they didn't urge the election or defeat of a specific candidate.

The new federal law requires those groups to file quarterly reports with the Internal Revenue Service if they raise more than $25,000 a year, disclose all expenses over $500 and contributions over $200 from their "fund."

"This is a tax code loophole that should have been closed years ago," said Secretary of State Dean Heller.

The problem is that Nevada law requires each candidate for office to set up a separate account or "fund" for their campaign money and that "fund" could qualify the individual candidate under the federal definition of a political organization.

If so, Elections Deputy Susan Morandi said, individual Nevada candidates for state and local office could be required to report their finances to the federal government under the new law just like congressional candidates.

She said it's a question of interpretation and that the answer for state and local candidates must come from the Federal Election Commission, which can be reached at (800) 424-9530.