Expenditures And Disbursements

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Table of Contents

Candidate Manual:
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Appendices:
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CANDIDATE COMMITTEE - RECORDING AND REPORTING EXPENDITURES

“Expenditures” are anything of monetary value spent by the Candidate Committee to influence the nomination or election of the candidate or the qualification, passage or defeat of a ballot question.

The committee treasurer or designated record keeper must record all expenditures by the amount, date made, purpose, and the name and address of the individual or business that received the funds. A receipt must be obtained for each expenditure made by the committee (a canceled check is acceptable). See Appendix A

When a Written Instrument is Required: A Candidate Committee may not make expenditures of $50.01 or more in cash. An expenditure of $50.01 or more must be made by a written instrument such as a check or money order. The written instrument must show the Candidate Committee name and the name of the recipient. Persons authorized to make committee expenditures do not have to be listed on the committee’s Statement of Organization.

ACCEPTABLE EXPENDITURES

Petty Cash Fund: The committee treasurer may set up a petty cash fund with funds withdrawn from the committee’s official account. The committee must keep records of payments from the petty cash fund showing the amount, date and purpose of each expenditure. Single expenditures of $50.01 or more must not be made from the petty cash fund.

In-Kind Expenditures:

In-kind expenditures are goods, services and facilities donated at no cost. The value of an in-kind expenditure is the fair market value or usual rental charge of the good, service or facility.

Incidental Expense Disbursements (Officeholders Only): “Incidental Expense” means an expenditure that is an ordinary and necessary expense paid or incurred in carrying out the business of an elective office. The Candidate Committee account of a candidate who is holding office may be used to make disbursements to pay for expenses that are incidental to holding that office. The following is a listing of some of the incidental expenses for which disbursements may be made:

  • A disbursement necessary to assist, serve, or communicate with a constituent.
  • A disbursement to purchase office furniture, equipment and supplies.
  • A disbursement for a district office if the office is not used for campaign-related activity.
  • A disbursement for the public official or his or her staff, or both, to attend a conference, meeting, reception, or similar event.
  • A disbursement to maintain a publicly owned residence or temporary residence at the seat of government.
  • An un-reimbursed disbursement for travel, lodging, meals or other expenses incurred by the public official, a member of the public official’s immediate family, or a member of the public official’s staff in carrying out the business of the elective office.
  • A donation to a tax-exempt, charitable organization, including the purchase of tickets to charitable or civic events.
  • A disbursement to a ballot question committee.
  • A purchase of tickets to another Candidate Committee’s fund raiser, not to exceed $100.00 per Candidate Committee per calendar year. The tickets are to be used by the candidate whose committee is making the purchase, or by members of his or her immediate family or his or her staff.
  • A purchase of tickets to other committee’s fund raisers, not to exceed $100.00 per committee per calendar year. If tickets to fund raising events sponsored by a Political Committee, Independent Committee, Ballot Question Committee or Political Party Committee are purchased as “incidental expenses”, those purchases would be limited to $100.00 per committee per calendar year.
  • A disbursement for an educational course or seminar that maintains or improves skills employed by the public official in carrying out the business of the elective office.
  • A purchase of advertisements in testimonials, program books, souvenir books, or other publications if the advertisement does not support or oppose the nomination or election of a candidate.
  • A disbursement for consultation, research, polling, and photographic services not related to a campaign.
  • A fee paid to a fraternal, veteran, or other service organization.
  • A payment of a tax liability incurred as a result of authorized transactions by the Candidate Committee of the public official.
  • A fee for accounting, professional, or administrative services for the Candidate Committee of the public official.
  • A debt or obligation incurred by the candidate committee of a public official for a disbursement authorized by one of the incidental expense subdivisions of the Act, if the debt or obligation was reported in the Candidate Committee is Campaign Statement is filed for the year in which the debt or obligation was incurred.

The Incidental Office Expense Disbursements Schedule 1C is designed to accommodate reporting of incidental expense disbursements as a part of the Candidate Committee’s Campaign Statements.

Expenditures and Incidental Disbursements to Federal Candidate Committees: A state or local candidate committee can make expenditures to federal candidate committees (Congress, US Senate and President) to the extent that it furthers the nomination or election of the candidate. Therefore, as with other expenditures made with committee funds, the expenditure must tangibly benefit the candidate’s nomination or election effort. This includes the purchase of tickets to a federal candidate’s fund raiser. Since a candidate at the federal level is not a candidate as defined by the MCFA in Section 3, the $100.00 threshold per calendar year per candidate for fund raising tickets, as provided in Section 44, does not apply.

A state or local candidate committee that uses committee funds to purchase a ticket to a federal candidate committee fund raiser as an incidental office expense is limited to the $100.00 per calendar year per candidate as outlined in Section 9 of the MCFA.

Credit Card Expenditures: A committee may make expenditures via credit card. These expenditures are reported based on the committee type and the holder of the credit card. Credit card expenses involve additional considerations and care must be taken to fully report and track the debt records, interest payment and revolving payments in the committee records. Most commonly, there are 3 situations that the committee may find in the use of a credit card.

1. A committee has its own credit card in the name of the committee and the committee makes payments to that credit card company

2. A candidate of a committee or their spouse uses his or her personal credit card to make expenses on behalf of the committee

3. A committee volunteer uses his or her personal credit card to make expenses on behalf of the committee with the understanding that the committee will promptly provide reimbursement

A committee that has been issued a credit card (the name of the committee is on the credit card) can make expenditures on that credit card at any time. At the time that the committee discloses making a payment to the credit card company, the committee must memo-itemized all of the expenses made on the credit card that have not been previously disclosed.

  • If the debt to the credit card company is paid in full within the reporting period, the committee is not required to report the expenses on the Debts and Obligations schedule.
  • If the debt to the credit card company is not paid in full within a reporting period, the committee must disclose the outstanding debt owed to the credit card company.

Interest paid on a debt over the amount of the original debt is reconciled at the end payment period and can be shown as an expenditure to the credit card company for interest.

A candidate or the candidate’s spouse that uses his or her personal credit card to make expenses on behalf of the committee is in fact making in-kind contributions to the committee. How the in-kind contributions are reported depends on when the reimbursement is made to the candidate/spouse.

  • If the reimbursement to the candidate/spouse is being made in the same reporting period as the in-kind contribution, the committee reports the reimbursement to the candidate/spouse and memo sub-itemizes the vendors where the goods/services were purchased. The reimbursement is made to the candidate/spouse, not the credit card company. In this situation, the committee does not report anything on the Debts and Obligations Schedule or the In-kind Contribution Schedule.
  • If the reimbursement to the candidate/spouse is being made in a subsequent reporting period as the in-kind contribution, the committee reports receiving the in-kind contribution from the candidate/spouse and reports the vendor where the goods/services were purchased on the In-kind Contribution Schedule. The contribution can be listed as a loan that is owed back to the candidate and must be added to the Debts and Obligations Schedule. The credit card company does not appear on the In-kind Contribution Schedule or Debts and Obligations Schedule at all as the committee does not owe the credit card company; the candidate/spouse is assuming this debt as personal debt. When the committee is able to reimburse the candidate/spouse in a subsequent reporting period, a payment is reported on the debt owed to the candidate/spouse. The payment should be reported on both the Direct Expenditure Schedule and the Debts and Obligations Schedule. (If committee is unable to reimburse the candidate/spouse, the debt must be listed as forgiven on the Debts and Obligations Schedule at the time of dissolution of the committee.)

A committee volunteer that uses his or her personal credit card to make expenses on behalf of the committee with the understanding that the committee will promptly reimburse him or her is not making an in-kind contribution. In this case, the volunteer is assuming personal responsibility for the debt and the credit card company does not appear on the campaign statement.

  • If the reimbursement to the volunteer is made in the same reporting period as the purchases, the committee reports the reimbursement to the volunteer and memo sub-itemizes the vendors where the goods/services were purchased. The reimbursement is made to the volunteer, not the credit card company. In this situation, the committee does not report anything on the Debts and Obligations Schedule or the In-kind Contribution Schedule.
  • If the reimbursement to the volunteer is made in a subsequent reporting period as the purchases, the committee reports the expenditures as an in-kind debt owed to the volunteer in the current campaign statement. The debt is carried forward until the reporting period it is brought to zero. When the committee makes a payment to reimburse to the volunteer the committee, a direct expenditure is made to the volunteer; not the credit card company. The purpose of the expenditure should be made clear that the payment is for an in-kind contribution or loan from the volunteer.
  • If the volunteer is not repaid, the debt must be listed as forgiven by the volunteer to the extent that the volunteer does not exceed the contribution limit. Care must be taken to ensure that the contributions limits are not exceeded inadvertently.

Credit Card FAQs

Can my committee use a credit card to make expenditures? Yes. There are several ways that a committee might use a credit card. Depending on the situation, care must be taken to report the activity timely and accurately by the committee.

How do I report credit card expenses if the committee has a credit card in its name? At the time that the committee discloses making a payment to the credit card company, the committee must memo-itemized all of the expenses made on the credit card that have not been previously disclosed. If the debt to the credit card company is paid in full within the reporting period, the committee is not required to report the expenses on the Debts and Obligations schedule. If the debt to the credit card company is not paid in full within a reporting period, the committee must disclose the outstanding debt owed to the credit card company. Interest paid on a debt over the amount of the original debt is reconciled at the end payment period and can be shown as an expenditure to the credit card company for interest.

The candidate/spouse used a personal credit card to make expenditures for the committee, how is this reported? When the candidate or spouse use their personal credit card, they are actually making an in-kind contribution to the committee. The committee does not owe the credit card company as the candidate/spouse is assuming personal debt. The credit card company should not appear on the campaign statements and payment reimbursements should be made to the candidate/spouse, not the credit card company.

A volunteer used a personal credit card to make expenditures for the committee and wants to be paid back, how is this reported? When the volunteer use their personal credit card, they are not making an in-kind contribution to the committee. The committee does not owe the credit card company as the volunteer is assuming personal debt. The credit card company should not appear on the campaign statements and payment reimbursements should be made to the volunteer, not the credit card company.

Can the committee pay for credit card services charges for the committee’s credit card? If the credit card is in the committee name, then the committee can pay for service charges associated with the credit card. The committee can not pay for service charges for a personal credit card.

Automobile Expenses: A Candidate Committee may make expenditures for the use of an automobile for campaign purposes, or make incidental office expense disbursements for the use of an automobile for constituent services. There are several choices as to how the automobile expense may be managed. The acceptable options for candidates subject to the Act are described below.

Candidate uses personal vehicle: A candidate who uses his or her personal vehicle for campaign purposes may be reimbursed from the Candidate Committee account. The candidate who is an officeholder may also use a personal vehicle for constituent services and business related to the office held.

  • Option 1: If the candidate owns the vehicle, he or she may be reimbursed for miles traveled for campaign or business purposes based on cents per mile rate, such as the IRS standard mileage rate for business miles.
  • Option 2: The candidate may be reimbursed for a percentage of actual expenses incurred in operating the vehicle, such as monthly car payment, insurance, gasoline, oil, insurance, licensing, tires, batteries, etc. If the vehicle is leased rather than owned, the actual expense percentage method should be used.

The candidate should choose option 1 or option 2. With either option, the candidate must maintain a log to document the number of miles driven or percentage of usage of the vehicle that details the date of each trip, the number of miles of each trip the rate of reimbursement and the purpose of each trip. This information is required to be disclosed on a campaign statement.

Candidate Committee purchases or leases the vehicle with committee funds: The candidate may choose to purchase or lease the vehicle, paying for it with funds from the Candidate Committee account.

  • Option 1: Actual expenses of operating the vehicle for campaign, business and personal purposes would be paid directly from the committee account. The candidate would keep a log to document personal use of the vehicle and reimburse the committee account for that use. If the vehicle is owned or being purchased by the committee, the reimbursement may be by either the mileage rate method or the percentage of actual expense method. If the vehicle is leased, the reimbursement should be based on the actual expense percentage method.
  • Option 2: The candidate would use the committee owned vehicle only for campaign or business purposes and uses a personally owned car for personal business. There would be no need for reimbursement by the candidate to the committee for personal use of the vehicle.

Prior to leasing a vehicle with committee funds, the candidate should verify with the leasing company involved whether the lease can be transferred to the candidate if he or she leaves office prior to the termination of the lease. The Department of State does not offer advice on this matter.

Disposition Of Vehicle: If the Candidate Committee is purchasing the vehicle and the candidate ceases to hold office or to be a candidate, the committee may sell the vehicle at fair market value (determined by blue book value or by calculating the depreciated value) to anyone, including the candidate or give it to an Independent Committee or Ballot Question committee, political party or a charity. Money from the sale belongs to the committee and can be disposed of in the same manner as any other unexpended funds.

If the candidate personally owns the vehicle, no disposition of the vehicle would be necessary.

Automobile Use Of Candidate with Multiple Committees: The officeholder may purchases the vehicle using personal funds. Once this is done, each committee may reimburse the officeholder for miles driven on business for that committee. A log should be kept to record the number of miles driven and a reimbursement rate set that is the same for each committee.

Use of Independent Contractors: See Appendix L

Prohibited Expenditures

A Candidate Committee may not:

  • lend funds to another Candidate Committee;
  • lend funds to the candidate or to any other person;
  • make an expenditure to or on behalf of another Candidate Committee;
  • purchase ads in other candidates’ program books; or
  • pay debt from a previous election without meeting the requirements of Section 52(6);
  • contribute to a Legal Defense Fund; including the candidate’s own Legal Defense Fund;
  • make expenditures for legal purposes other than those that comply with Section 21a.

Disposing of Debts from a Previous Election Cycle: Debts may be carried forward and paid in subsequent election cycles. Section 52(6) of the MCFA, MCL 169.252(6), sets out the requirements for paying debts from a previous election cycle with funds received in a current election cycle. There are two options provided in Section 52(6) for the payment of debt from a previous election cycle.

Option 1: Written designation from contributor is required.

A contribution received by a candidate committee is considered to be for the current election cycle unless designated by the contributor for a previous election cycle. A designated contribution applies only to the limit of the cycle so designated. A contributor can designate a contribution for a previous election cycle if:

  • The designation is made in writing for a specific election cycle identified by the contributor by the date of the election or the year of the election.
  • It can be substantiated that the contributor did not reach the contribution limit set for the candidate in the election cycle identified in the designation; and
  • The designated contribution does not exceed the candidate committee’s outstanding debts from the election cycle identified in the designation.

Option 2: Written designation from contributor is not required.

A contribution received by a candidate committee is considered to be for the current election cycle and is applied to the contribution limit of the current election cycle. The debt is paid using the current cycle funds without a written designation up to the contribution limit of the current cycle. The contribution limit of the previous cycle is not considered in this option. Once the contribution limit is reached, additional contributions from the contributor can only be used to pay debts from a previous election cycle using option 1 above.

Committees are encouraged to resolve all debts promptly to avoid future filing requirements and potential violations.

Dissolution of Committee: See Appendix W

TRANSFER OF FUNDS See Appendix T




Page last modified on March 14, 2018, at 12:30 PM