Your web browser is not supported You're using Internet Explorer, some features might not work. Please switch to another browser like Chrome, Firefox, or Edge for a better experience.


An official website of the United States government Here's how you know
 **Official websites use .gov**
            
            A **.gov** website belongs to an official government organization in the United States.
 **Secure .gov websites use HTTPS**
            
            A **lock** ( A locked padlock ) or **https://** means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.


Federal Election Commission | United States of America Calendar
           Glossary
          Search
              Search


Menu
      Home
      Campaign finance data
        All data
            Raising
            Spending
            Loans and debts
            Filings and reports
            Candidates
            Committees
            Bulk data
            Campaign finance statistics
        Find elections. Search by state or ZIP code
          Look up contributions from specific individuals
      Help for candidates and committees
        All compliance resources
            Guides
            Forms
            Dates and deadlines
            Trainings
        Learn about electronic filing
          Find and contact your committee's analyst
      Legal resources
        All legal resources
            Advisory opinions
            Enforcement
            Statutes
            Legislation
            Regulations
            Court cases
            Policy and other guidance
        Search across all legal resources
          Search guidance documents
      About
        All about the FEC
            News and announcements
            Commission meetings
            Mission and history
            Leadership and structure
            Reports about the FEC
            Careers
            Working with the FEC
            Contact
        Introduction to campaign finance and elections


- Home
- ›
      FEC Record: Compliance
- ›
      MURs 5403 and 5466: Prohibited funds used to pay federal expenses and failure to allocate and report shared expenses

FEC Record: ComplianceMURs 5403 and 5466: Prohibited funds used to pay federal expenses and failure to allocate and report shared expensesOctober 1, 2007 On August 29, 2007, the Commission announced a settlement with America Coming Together (ACT) regarding violations of the Federal Election Campaign Act (FECA) during the 2004 Presidential election. ACT agreed to pay $775,000 to settle charges that it used funds raised outside federal limits and prohibitions to pay expenses that should have been paid with federal funds. This settlement represents the third largest civil penalty in an enforcement matter in the Commission’s thirty-three year history. Background ACT is a federal political action committee (PAC) that also has a nonfederal account registered under section 527 of the Internal Revenue Code. Under FECA, PACs may maintain separate federal and nonfederal accounts in order to fund both federal and nonfederal activity. Contributions to a PAC’s federal account must be within federal limits and prohibitions, while donations to the nonfederal account may be raised outside of the federal amount limits and source prohibitions. Under FEC regulations in place for the 2003-2004 cycle, a nonconnected PAC such as ACT could pay its “administrative expenses” with an allocated mixture of federal and nonfederal funds based on a ratio that reflects the relative proportion of its federal and nonfederal activities. However, expenses incurred on behalf of, or attributable to, federal candidates must be paid for with federal funds. For most of the 2004 election cycle, ACT used an allocation ratio of two percent federal funds and 98 percent nonfederal funds for its administrative expenses and generic voter drives. In October 2004, ACT changed this allocation ratio to 12 percent federal funds and 88 percent nonfederal funds. Conciliation Agreement ACT raised approximately $137 million in connection with the 2004 elections—approximately $33.5 million in federal funds and $103.5 million in nonfederal funds. The FEC concluded that approximately $70 million in disbursements characterized by ACT as “administrative expenses” for door-to-door canvassing, direct mail and telemarketing were actually attributable to clearly identified federal candidates and were required either to be paid with 100 percent federal funds or to be allocated between federal and nonfederal candidates based on the time or space devoted to each candidate. Under either method, ACT was required to use a substantially higher proportion of federal funds than that reflected in either the estimated or adjusted funds expended allocation ratio for administrative expenses used by ACT in 2003-2004. The Commission also concluded that, even for the approximately $30 million in disbursements that could properly be characterized as administrative and generic voter drive expenses, ACT should have used at least 90 percent federal and 10 percent nonfederal funds. Therefore, ACT should have used approximately $27 million in federal funds and approximately $3 million in nonfederal funds to pay for these expenses. The conciliation agreement sets forth that ACT: Failed to properly attribute and report expenditures attributable to specific candidates;Failed to properly allocate and report joint administrative activities; andUsed nonfederal funds to pay the federal share of allocated administrative expenses. ACT agreed to pay the civil penalty and to cease and desist from further violating the law and Commission regulations.
 Author
          Amy Pike


Read next: MURs 5928 and 5853: exemptions apply to political blogs
 Related: Explore campaign finance data »


This information is not intended to replace the law or to change its meaning, nor does this information create or confer any rights for or on any person or bind the Federal Election Commission or the public. The reader is encouraged also to consult the Federal Election Campaign Act of 1971, as amended (52 U.S.C. 30101 et seq.), Commission regulations (Title 11 of the Code of Federal Regulations), Commission advisory opinions and applicable court decisions.


About
          Careers
          Press
          Contact
   Privacy and security policy
          Plain language
          No FEAR Act
          Strategy, budget and performance
 Open government
          Protected Voices
          USA.gov
          Inspector General
          FOIA
 OpenFEC API
          GitHub repository
          Release notes
          FEC.gov status


Federal Election Commission
 The FEC's Twitter page
            The FEC's YouTube page Sign up for FECMail


Hide glossary Glossary Search terms