The FEC has issued an “interpretive rule” clarifying how federal PACs should report certain disbursements to vendors on FEC Form 3. Federal PACs have long been required to report the full name and address of each person to whom they make expenditures aggregating more than $200 in a calendar year, along with the date, amount, and purpose of the payment. The new guidance addresses how this general rule applies in 3 specific scenarios. We’ve chosen the simplest sets of facts to explain how the guidance works in practice, so one should read the guidance carefully when deciding whether additional reporting is necessary in a particular circumstance.
Scenario 1: Personal Funds Reimbursement
Imagine you run a PAC, and in that capacity you charge on your personal credit card more than $250 in non-travel expenses, such as catering food for a PAC event. Because you advanced the PAC $250, this is considered to be a contribution to the PAC, which concomitantly owes you a debt in the same amount until you are reimbursed. When the PAC reimburses you $250, how should it report this information? Under the new guidance, the PAC should report a disbursement to you of $250, but it also needs to include a “memo entry” that shows the caterer’s information. An example can be found here. (If the catering had cost less than $200 and the caterer had received no other payments during the year, then a “memo entry” would not be required.)
Now imagine that you are traveling for the PAC and you buy a plane ticket for $600. Special rules apply here because (a) you spent money for travel or subsistence, and (b) the cost exceeded $500. When the PAC reimburses you it will show a disbursement to you in the amount of $600, and then include a “memo entry” showing the airline on which you flew. An example can be found here.
Scenario 2: Payments to Credit Card Company
PACs may have a credit card on which they charge a number of expenses. Imagine that instead of charging PAC expenses to your personal credit card, you charge them to the PAC credit card. In one particular month you charge $50 for office supplies and $300 for a train ticket to the PAC card, and the PAC makes a $350 payment to the credit card company when the bill comes due. How should all of this be reported?
Under the guidance, the PAC should report the total amount disbursed to the credit card company—in this case, $350. But it should also include a separate “memo entry” for any single charge to the card of over $200. Accordingly, in this case there would be no memo entry for the $50 in office supplies. But the disclosure form should include a “memo entry” specifying a $300 charge to the train company for the ticket. An example can be found here.
Scenario 3: Unreimbursed Disbursements by Candidates
This last scenario applies only to candidate committees (also known as “authorized committees”). Federal law allows candidates to use unlimited personal funds to pay for campaign expenditures, and often candidates are not reimbursed by the campaign. The new guidance makes clear that these personal fund expenditures must be reported by the candidate committee when they exceed $200 to a particular vendor for an election cycle. In Schedule A of the FEC Form 3, the candidate committee should disclose an in-kind contribution; in Schedule B, the candidate committee should disclose a disbursement to the candidate and include a “memo entry” disclosing the vendor who received the payment of over $200.
As the FEC has shown in its examples, candidate Cosmo Kramer spends $201 of his personal funds at Monk’s Coffee Shop for a fundraising lunch, and is not reimbursed. His candidate committee shows a $201 in-kind contribution from Cosmo Kramer in Schedule A. In addition, Schedule B shows a $201 disbursement to Cosmo Kramer, as well as a “memo entry” showing that Monk’s Coffee Shop was the ultimate payee.
We will continue to follow how these new rules are implemented and enforced by the FEC.