Kentucky Administrative Regulations › Title 32 - DEPARTMENT OF STATE, REGISTRY OF ELECTION FINANCE › Chapter 2 - Practice and Procedure › Section 32 KAR 2:180 - Extension of credit to candidates, campaign committees, or political issues committee

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				121.180(7)
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				121.180(7) provides that if
				the final statement of a candidate, campaign committee, or political issues
				committee shows an unexpended balance or outstanding debt, the entity shall
				continue to file supplemental reports until all debts have been settled and any
				outstanding balance depleted. Except for debts incurred in campaigns prior to
				January, 1989, only candidates may contribute after an election to defray
				outstanding debts. As a result, obligations owed by a candidate are of
				necessity assumed by the candidate personally. Regardless of whether an
				outstanding debt is the result of a pre-1989 campaign or subsequent election,
				the failure to settle a debt may result in a contribution, and often an illegal
				corporate contribution, or a contribution in excess of the contribution limit
				in effect at the time of the election. It is necessary to promulgate this
				administrative regulation to establish the criteria on which the registry shall
				determine if an outstanding debt has been converted to a contribution.
Section 1. Scope. This administrative
			 regulation shall apply only to debts incurred for elections held subsequent to
			 November, 1993.
Section 2.
			 Extensions of credit to candidates, campaign committees, or political issues
			 committees.
(1) For purposes of this section,
			 an "unsatisfied extension of credit" means an outstanding debt which has not
			 been satisfied within a reasonable time after the date of an election and which
			 has not been assumed by a candidate personally.
(2) An unsatisfied extension of credit
			 through deferred billing or payment for goods and services rendered to a
			 candidate, campaign committee, or political issues committee shall be construed
			 as a campaign contribution if:
(a) The
			 transaction was entered into with no reasonable expectation of
			 repayment;
(b) The transaction is
			 based upon terms and conditions not available to other customers served by the
			 creditor;
(c) The transaction is
			 not a transaction between two (2) unrelated parties bargaining at arm's length;
			 or
(d) The transaction constitutes
			 a significant deviation from the creditor's regular commercial
			 practices.
(3) An
			 extension of credit through deferred billing or payment for goods and services
			 rendered to a candidate, campaign committee, or political issues committee, may
			 be considered a campaign contribution if:
(a)
			 The creditor abandons efforts to enforce or collect the debt on grounds that
			 are not commercially reasonable;
(b) The creditor abandons, forgives, or
			 cancels the debt under conditions not generally available to other customers of
			 the creditor;
(c) The creditor
			 abandons, cancels or forgives the debt for no reasonable business purpose;
			 or
(d) In the case of a creditor
			 who is an individual or unincorporated entity, if any of the conditions in this
			 subsection are determined to exist, and the amount of the debt forgiven,
			 abandoned, or cancelled, when added to other monetary or in-kind contributions
			 made by the creditor exceed the contribution limits in effect at the time of
			 the extension of credit.
(4) An extension of credit through deferred
			 billing or payment for goods and services rendered by a creditor to a candidate
			 or campaign committee or the cancellation, forgiveness, or abandonment of such
			 a debt may be determined by the registry to be a campaign contribution if a
			 totality of the evidence indicates that the transaction is not commercially
			 reasonable. The mere passage of time shall not be determinative, nor shall the
			 finding that a transaction was merely unwise. In making the determination, the
			 registry shall consider:
(a) Whether owners or
			 controllers of the creditor are contributors to or political supporters of the
			 candidate;
(b) Whether the amount
			 of credit extended exceeds the amount of credit extended to nonpolitical
			 customers of the creditor; and
(c)
			 Whether the terms under which the credit was extended are substantially
			 different than the terms and conditions generally applied in transactions
			 between the creditor and its nonpolitical customers.