FEDERAL ELECTION COMMISSION WASHINGTON, D.C. 20463

 

MEMORANDUM

TO: Patricia C. Orrock

 Chief Compliance Officer

 Thomas E. Hintermister

 Assistant Staff Director

 Audit Division

FROM: Neven F. Stipanovic 

Acting Associate General Counsel

Policy Division

 Lorenzo Holloway 

 Assistant General Counsel

 Compliance Advice 

Margaret J. Forman

Attorney 

SUBJECT: Proposed Interim Audit Report on the Tennessee Democratic Party (LRA 1073) 

I. INTRODUCTION

 The Office of the General Counsel has reviewed the proposed Interim Audit Report 

(“proposed IAR”) on the Tennessee Democratic Party (“the Committee” or “TDP”). The

proposed IAR contains five findings: (1) Misstatement of Financial Activity, (2) Receipt of 

Contributions in Excess of the Limit, (3) Disclosure of Joint Fundraising Transfers, (4) 

Recordkeeping for Employees, and (5) Reporting of Debts and Obligations.1

 We concur with 

 1 We recommend that the Commission consider this document in Executive Session because the 

Commission may eventually decide to pursue an investigation of matters contained in the proposed IAR. 

11 C.F.R. §§ 2.4(a) and (b)(6).

November 29, 2018

LH by 
LRA 1073 Tennessee Democratic Party 

IAR Legal Comments

Page 2 of 2 

the findings, except as to Finding 2, addressed below. If you have any questions, please contact 

Margaret J. Forman, the attorney assigned to this audit. 

II. THE STATUTE AND REGULATIONS DO NOT PROVIDE A LEGAL BASIS 

FOR TREATING AS EXCESSIVE CONTRIBUTIONS FUNDS TRANFERRED 

FROM THE FEDERAL ACCOUNT TO THE NON-FEDERAL ACCOUNT

WITHOUT PROOF OF NOTICE TO THE CONTRIBUTORS (Finding 2)

The proposed IAR finds that the Committee received $201,274 in apparent excessive

contributions. Of this amount, the proposed IAR identifies $151,200 as excessive because the 

Committee failed to notify contributors that it transferred the excessive portions of the 

contributions into the nonfederal account. The Committee did not provide the Audit Division 

with solicitations or designations, or any other documentation pertaining to these apparent 

excessive contributions, which would show that the Committee informed the contributors that

any excessive portion of the contribution would be transferred to the nonfederal account, or 

refunded. Additionally, the proposed IAR states that the Committee did not appear to maintain 

sufficient funds in its federal account to make refunds of the remaining excessive contributions 

that had not previously been transferred to the nonfederal account. This finding, therefore, is 

based on the lack of documentation, such as a solicitation, to contributors providing notice that 

any excessive portion of a contribution would be transferred to the nonfederal account. 

Commission regulations require that excessive contributions deposited into a party 

committee account be refunded or, with the contributor’s permission, reattributed.2

 See 11 

C.F.R. §§ 103.3(b)(3),(4), 110.1(k)(3). While Commission regulations generally prohibit party 

committees from transferring funds from their nonfederal to federal accounts, see 11 C.F.R. § 

300.30(b)(3)(v), nothing in the Federal Election Campaign Act of 1971, as amended (“the Act”), 

or Commission regulations prohibits transfers from federal accounts to nonfederal accounts. 

Furthermore, the Commission has permitted party committees to transfer amounts that do not 

comply with the federal source and amount restrictions into a nonfederal account. See, e.g.,

Final Audit Report on the Utah Republican Party, at 12 (Jan. 6, 2017). Neither the Act nor 

Commission regulations require a committee to provide written notice of the option to request a 

refund in such circumstances. We, therefore, recommend that the Audit Division raise this issue 

in its cover memorandum to the Commission. 

 

2

 Contributions to state party committees such as TDP are not eligible for redesignation, which is available 

only to candidates and authorized committees. See 11 C.F.R. § 110.1(b)(5).