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      Interpretive rule on reporting ultimate payees of political committee disbursements

FEC Record: OutreachInterpretive rule on reporting ultimate payees of political committee disbursementsJuly 9, 2013 On June 27, 2013, the Commission approved an interpretive rule that clarifies a political committee’s reporting requirements for three specific situations in which someone pays an expense on its behalf. In each instance, the interpretive rule explains how the committee must report the “ultimate payee.” Background The Federal Election Campaign Act (the Act) and FEC regulations require political committees to report the full name and address of each person to whom they make expenditures or other disbursements aggregating more than $200 per calendar year (or per election cycle for authorized committees), along with the date, amount and purpose of the payment. 2 U.S.C. §434(b)(5) and (6); 11 CFR 104.3(b)(3)(i) and (vii) and 104.3(b)(4)(i) and (vi); see also 11 CFR 104.9(a) and (b). On January 31, 2013, the Commission published a draft notice seeking comment on a proposed interpretive rule to clarify these requirements as they apply to the reporting of certain itemized disbursements by committees to vendors. Reporting of Ultimate PayeesThe resulting interpretive rule clarifies how a political committee must report disbursements in the following three scenarios: The committee reimburses an individual who used personal funds to pay committee expenses aggregating more than $200 to a single vendor;The committee’s payment of its credit card bill includes charges of more than $200 to a single vendor; andIn the case of an authorized committee, the candidate used personal funds to pay committee expenses aggregating more than $200 to a single vendor without receiving reimbursement.1 Reimbursements to individuals for out of pocket expenses. When an individual who is not acting as a vendor advances his or her personal funds (or uses a personal credit card) to pay for goods or services on behalf of a political committee, that initial payment (sometimes called a staff advance) is considered to be a contribution. 11 CFR 116.5(a) and (b). It is also treated as an outstanding debt until reimbursed. 11 CFR 116.5(c); see also 11 CFR 104.11.2 As clarified in the interpretive rule, a memo entry identifying the ultimate payee is required for any reimbursement of expenses (other than travel and subsistence expenses) if the individual's payments to the vendor on behalf of the committee aggregate more than $200 in a calendar year (or election cycle for authorized committees). See reporting examples A and B.3 Reporting Example A Reporting Example B When the reimbursement is for travel and subsistence advances that exceed $500, a memo entry is required for each payment to a specific vendor by that individual on behalf of the committee if total payments to that vendor by the political committee (or by the individual on behalf of the committee) aggregate more than $200 in a calendar year (or election cycle for an authorized committee). Each memo entry must include the name and address of the vendor, as well as the date, amount and purpose of the payment. 11 CFR 104.3(b)(4)(i) and 104.9. See reporting examples C and D. Reporting Example C Reporting Example D If the individual used a personal credit card, the memo entry must include the name and address of the vendor that provided the goods or services to the political committee (rather than the credit card company that processed the payment) and the date, amount and purpose of the payment to the vendor. Payments to credit card companies. If a political committee itemizes disbursements to credit card companies on Schedule B (Itemized Disbursements), it must include a memo entry for any transaction with a single vendor charged on the card that exceeds the $200 itemization threshold. The memo entry must include the name and address of the vendor and the date, amount and purpose of the charge, as shown in reporting examples E and F. See 11 CFR 102.9. Reporting Example E Reporting Example F Unreimbursed disbursements by candidates. Authorized committees must disclose disbursements from personal funds made by candidates on behalf of their committees, just as they would disclose any other disbursements that they may make. 2 U.S.C. §434(b)(4), (5) and (6)(A); 11 CFR 104.3(b)(4). As explained in the interpretive rule, out of pocket spending by candidates, as agents of their authorized committees, requires memo entry itemization of the ultimate payee if the aggregate amount of payments to a vendor exceeds $200 for the election cycle. Each memo entry must include the name and address of the vendor to which payment was made and the date, amount and purpose of the payment. See reporting examples G and H. Reporting Example G Reporting Example H The Commission’s Notice of Interpretive Rule was published in the Federal Register on July 8, 2013, at 78 Fed. Reg. 40625. It is available through the Commission’s website.  1 The first two scenarios (individual out-of-pocket expenses and credit card payments) are addressed in and consistent with the Commission’s Reports Analysis Division (RAD) Review and Referral Procedures for the 2011-2012 Election Cycle (made public attransition.fec.gov/pdf/RAD_Procedures.pdf). The third scenario (unreimbursed expenses by candidates on behalf of their authorized committees) was not addressed in that document. Although going forward RAD will routinely send Requests for Additional Information (RFAIs) to campaigns that fail to itemize vendor information in those circumstances, this portion of the interpretive rule will be applied prospectively. The adequacy of committee responses to RFAIs on this issue will only be judged for those sent after the adoption of this interpretive rule. 2 Travel and subsistence expenses that are unreimbursed, or that are reimbursed within a limited period of time, are exempt. 11 CFR 100.79 and 116.5(b). 3 Note that the reporting examples in this article simply illustrate the reporting of the reimbursement on Schedule B and do not account for every possible scenario. In some cases, a corresponding entry on Schedules A (Receipts) and/or D (Debts) may be needed. For help with the reporting of specific situations, contact your Campaign Finance Analyst. Resources: FEC regulationsFEC consideration of interpretive rule [mp3]FEC interpretive rulesReports Analysis Division home pageRecord article: Draft interpretive rule
 Author
          Dorothy YeagerSr. Communications Specialist


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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.


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