How to Set Up a Political Action Committee in Texas

The Big Picture: Setting up a political action committee (PAC) takes some research and planning.

PACs are groups of two or more people that, as a primary purpose, raise and spend money to support or oppose candidates for office.

PACs can be formed by individuals, corporations, or labor unions. There are different kinds of PACs based on what you want to do:

GPAC – a general-purpose PAC engages in multiple campaigns either on candidate elections or on ballot initiatives.

SPAC – a specific-purpose PAC is limited to one candidate or one ballot measure. These are typically set up to support a specific candidate (ex: Texans for Greg Abbott) but sometimes are set up to engage on ballot elections if a group wants to support or oppose a specific ballot proposition (ex: Texans for Prop 2)

DCE-only PAC – a direct campaign expenditure-only PAC is the Texas equivalent to Super PACs at the federal level. These PACs collect only corporate money from different sources and use it to engage on races. The hitch for these PACs is that they must spend the money without coordinating with anyone and may not make political contributions to candidates (can’t use corporate money for contributions – it’s a felony). 

Hybrid PAC – these are what I like to call “super Super PACs”. These are normal GPACs that can collect corporate money and use it like a Super PAC, while also collecting individual contributions and using them for candidate contributions. 

Once you know what kind of PAC you want, you must file a campaign treasurer appointment. If your PAC will be operating as a GPAC, you’ll file with the Texas Ethics Commission (TEC). If your PAC will be operating in a local election only, you’ll use the same forms but will file them with the local authority instead.

In short, to set up a PAC in Texas, you must:

1. File a campaign treasurer appointment with the TEC
2. Get an employer identification number from the IRS
3. File Form 8871 with the IRS
4. Open a bank account in the name of the PAC
5. File periodic reports with the TEC

Here are the steps in more detail:

1. File a campaign treasurer appointment with the TEC. This form appoints a person to be the treasurer of your PAC. The treasurer is responsible for keeping track of the PAC’s finances and filing reports with the TEC.
   1. Note: generally the treasurer is just a figurehead. They are ultimately the person responsible for filing the reports, but almost always the persons actually managing the reports are hired consultants (like me) who you can trust to get them done on time and correctly. 
2. The EIN is simple to get online, but is necessary to open a bank account.
3. Open a bank account in the name of the PAC. This will be where the PAC’s money is deposited and withdrawn.
   1. Note: Some banks are tricky – they’ll ask for your bylaws or articles of incorporation. These are NOT required for a PAC, so if they ask for them, go to another bank that knows the rules.
4. File periodic reports with the TEC. PACs must file periodic reports with the TEC that detail their fundraising and spending activities. Generally, these reports are due semiannually in Jan and July, but if you have activity in lead-up to an election, you’ll have to file additional reports.

CAUTION: The #1 way you’ll get fined and have complaints filed against your PAC is by forgetting to file campaign finance reports on time. Make sure you hire a crack team to keep you out of trouble!

Dig Deeper:

Texas Ethics Commission PAC Guide: https://www.ethics.state.tx.us/data/resources/guides/pac_guide23.pdf

Texas Ethics Laws Legal Practice Guide: www.andrewcates.com/shop