The law in this area had been largely silent up until about two years ago when the Federal Election Commission issued an opinion approving certain childcare expenditures, creating momentum for the creation of similar provisions for state and local candidates across the country. Most states, however, remain silent on the issue. And at least two other states currently prohibit these expenditures.
As for federal candidates, it is permissible to use campaign funds for childcare expenses, but only to the extent that such expenses are incurred as a direct result of the candidate’s election campaign. A careful analysis of the candidate’s profession, income, working hours and childcare duties should be conducted to determine the appropriate cost allocation to the campaign.
Candidates for state and local office are regulated by applicable state and local regulations. California, Colorado, Minnesota, New Hampshire and New York are examples of those states which permit childcare expenditures by campaign committees. Where the law is not perfectly clear, as is the case in most jurisdictions, a nonpartisan campaign finance professional may be able to help a candidate by exploring the possible legal and accounting justifications available to support a candidate’s position.
Candidates should also understand that the permissibility of childcare expenses is only a part of the question. Additional documentation and accounting may be required, particularly in the event a candidate is required to reimburse their campaign for childcare services provided during times when a candidate is not attending to campaign or official duties.
Finally, candidates should consider all of the circumstances surrounding their childcare expenditures. The hiring of an unlicensed childcare provider or an undocumented worker, for example, may invite other legal and political problems on the campaign trail. In addition, cash payments (a common practice in the childcare industry) over certain thresholds may run contrary to other campaign finance laws, employment and tax laws.
Ben Palkowski is an attorney and CPA who focuses his practice on business consulting, with emphasis upon tax and campaign finance. Ben previously worked as an attorney and lobbyist at a large northern New England law firm representing Fortune 500 corporations and trade associations. Prior to that, Ben worked as a legislative director for a state employee labor union and in numerous positions in political organizations. Learn more about Ben and his services at BenPalkowski.com or ElectionLawCPA.com.
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