loophole


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Loophole

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).

Cross-references

Lobbying.

loophole

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 ?
Then, swallowing the contents of his glass, which he put down close to him, Athos arose carelessly, took the musket next to him, and drew near to one of the loopholes.
He took occasion, too, to examine the gentleman as closely as he could, expecting to discover sundry loopholes in his person, pierced by his adversary's sword.
She left the chapel--very slowly and often turning back to gaze again--and coming to a low door, which plainly led into the tower, opened it, and climbed the winding stair in darkness; save where she looked down, through narrow loopholes, on the place she had left, or caught a glimmering vision of the dusty bells.
Patches have been released by security companies for a critical loophole in the Internet Explorer browser from software company Microsoft.
On this Veterans Day, the Obama administration renews its pledge to work with Congress to close a loophole in current law that puts in jeopardy the quality education that these men and women deserve.
8, 2015 /PRNewswire/ -- Matthew Ryncarz, the author of The Metabolic Loophole Diet, has announced that his award winning weight loss book is being released in international book stores.
FATCAT fund managers are using a PS700million-a-year loophole to pay a lower income tax rate than teachers and nurses, a report warns today.
MOTORING lawyer Nick Freeman, also known as Mr Loophole, has made headlines for years because of his ability to win motoring offence cases for famous clients.
CALL centre operators were yesterday accused of exploiting a legal loophole to avoid paying fair wages.
AN MP claimed a government decision to close a VAT loophole should mean ministers can act on other taxation problems.
Summary: A lawyer known as Mr Loophole for helping celebrities evade driving bans has refused to help his own daughter fight a speeding ticket.
As part of the state budget, legislators dosed a tax loophole that applied to limited liability companies.