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An omission or Ambiguity in a legal document that allows the intent of the document to be evaded.

Loopholes come into being through the passage of statutes, the enactment of regulations, the drafting of contracts or the decisions of courts. A loophole allows an individual or group to use some gap in the restrictions or requirements of the law or contract for personal advantage without technically breaking the law or contract. In response, lawmakers and regulators work to pass reforms that will close the loophole. For example, in the federal tax code, a long-standing loophole was the socalled tax shelter, which allowed taxpayers to reduce their tax debt by making investments. Although not closed entirely, this loophole was substantially reduced by the tax reform act of 1986 (Pub. L. No. 99-514, 100 Stat. 2085 [codified as amended in numerous sections of 26 U.S.C.A.]).

Loopholes exist because it is impossible to foresee every circumstance or course of conduct that will arise under, or in response to, the law. Loopholes often endure for a time because they can be difficult to close. Those who benefit from a loophole will lobby legislators or regulators to leave the loophole open. In the case of Election Campaign Financing, it is the legislators themselves who benefit. The Federal Election Campaign Act Amendments of 1974 (Pub. L. No. 93-443, 88 Stat. 1263 [1974] [codified as amended in scattered sections of 2 U.S.C.A. §§ 431–455 (1988)]) were passed to limit private financing of federal election campaigns. But loopholes in the law allow these limits to be circumvented. Through one loophole, intermediaries can pool or "bundle" contributions so that the limit is not legally exceeded. Through another, money raised specifically for building political parties (soft money) is funneled into campaigns.

Further readings

Burke, Debra. 1995. "Twenty Years After the Federal Election Campaign Act Amendments of 1974: Look Who's Running Now." Dickinson Law Review 99 (winter).

Wardle, Geoffrey M. 1996. "Political Contributions and Conduits after Charles Keating and Emily's List: An Incremental Approach to Reforming Federal Campaign Finance." Case Western Reserve Law Review 46 (winter).




noun alternative, aperture, contrivance, device, escape clause, escape hatch, escape valve, exception, excuse, expedient, foramen, means of essape, mechanism for evasion, opening, outlet, saving clause, uncommunicativeness, vehicle for escape, way of escape, way out
References in classic literature ?
In the morning the jailer brought him fresh provisions -- he had already devoured those of the previous day; he ate these listening anxiously for the sound, walking round and round his cell, shaking the iron bars of the loophole, restoring vigor and agility to his limbs by exercise, and so preparing himself for his future destiny.
Coupling the poor girl's intelligence with my previous knowledge, and the result of our good friend's inquiries on the spot, I left him no loophole of escape, and laid bare the whole villainy which by these lights became plain as day.
Seeing them come so straight towards them, they resolved to take them in a line as they came: and as they resolved to fire but one at a time, perhaps the first shot might hit them all three; for which purpose the man who was to fire put three or four small bullets into his piece; and having a fair loophole, as it were, from a broken hole in the tree, he took a sure aim, without being seen, waiting till they were within about thirty yards of the tree, so that he could not miss.
BOSTON - Massachusetts and a handful of other states are eyeing the adoption of combined reporting laws that would close tax loopholes that increasingly are used by large national companies to lower their state income taxes or avoid paying them altogether.
But Simbol noted the bill allowed a few loopholes for a small number of courses that continue to vary across campuses.
NLPC Chairman Kenneth Boehm stated, "It is important to highlight that MCI's use of tax loopholes will likely allow it to pay this fine effectively with taxpayer dollars.
If his analysis proves anything, however, it's mostly that tax shelters and loopholes are as culpable as high tax rates.
Teamstudio Security Audit provides a detailed report on the security issues identified within a client's Domino server environment and provides actionable steps to close security loopholes.
Yet even this hasn't stopped Hahn from hitting up commissioners for money through loopholes in the ethics reform package he proposed.
praised the International Brotherhood of Police Officers (IBP0) for its support in helping to pass legislation in the Senate which would close gun show loopholes.
SACRAMENTO - State Treasurer Phil Angelides and a group of Democratic lawmakers called on state officials Tuesday to close $386 million in loopholes for corporations and the wealthy to help balance the state budget.