Appendices

PA 119 of 2017 amended the Michigan Campaign Finance Act (MCFA) to include provisions to bring the MCFA in sync with the 2010 U.S. Supreme Court decision known as Citizens United. The amendment added provisions to specifically allow corporations, labor unions and DDS/Indian tribes to use their treasury funds for independent expenditures on behalf of Michigan candidates and ballot proposals. To accomplish this, the amendment established a new committee type called the Independent Expenditure Committee (IEC or Super PAC). An IEC/Super PAC can be organized and registered to make:

• Independent expenditures on behalf of state and local candidates,
• Independent expenditures to support or oppose state and local ballot proposals,
• Direct expenditures to another IEC/Super PAC,
• Direct expenditure to ballot question committees, and
• Other lawful disbursements.

Independent expenditure means an expenditure that is not made in cooperation, consultation, or concert with, or at the request or suggestion of, a ballot question committee or a candidate, a candidate committee or its agents, or a political party committee or its agents, and if the expenditure is not a contribution to a committee. This means that IEC/Super PAC CANNOT make the following:

• Direct contributions to:
  • a candidate committee,
  • a political committee,
  • an independent committee,
  • a political party committee (State, County, or Congressional District)
  • a House caucus committee, or
  • a Senate caucus committee.
• Expenditures that are in cooperation with, consultation with, in concert with, or at the request/suggestion of:
  • a candidate,
  • a candidate committee or its agents, or
  • a political party committee or its agents.
• Other unlawful disbursements.

These restrictions are true even if the committee has not received any funds from a corporation, union or DDS/Indian tribe.

It is important to note that corporations, labor unions and DDS/Indian tribes remain prohibited from using their general treasury funds to make contributions directly to candidate committees, independent committees, political committees, political party committees, or House or Senate political party caucus committees.

Determining Registration and Reporting Requirements

A group or organization must register as an IEC/Super PAC when the definition of a committee is met. A “committee” is a group or organization that receives contributions or makes expenditures for the purpose of influencing or attempting to influence the action of the voters for or against the nomination or election of a candidate, the qualification, passage, or defeat of a ballot question, or the qualification of a new political party, if contributions received total $500.00 or more in a calendar year or expenditures made total $500.00 or more in a calendar year. Once registered, all of the committee’s activity is reported by the committee on detailed campaign statements. A group or organization is not required to register unless the group or organization solicits or receives contributions for the purpose of making an expenditure to a ballot question committee or independent expenditure (IEC/Super PAC) committee. This means that a group or organization that simply uses its own treasury funds to make independent expenditures is not required to register regardless of the amount spent.

To clarify the registration and disclosure requirements, the following charts are provided.

ACTING ALONE
A group, organization, corporation, union or DDS/Indian tribe may use its unsolicited treasury money to make an independent expenditure on behalf of a candidate and/or ballot proposal. There is no limit to the amount of money that can be used nor are there any restrictions in the timing of the expenditures when acting alone and making independent expenditures. In this case, registration is not required; however, there may be reporting requirements.

Who is Acting Alone	Independent Expenditure Calendar Year Activity	Registration/Disclosure	Section of MCFA	Late Filing Fees
Group, Organization, Corporation, Union, or DDS/Indian tribe	$100.00 or less single or cumulatively for the same candidate or proposal.	No Registration as an IEC/Super PAC required.* No disclosure is required.	Section 51	NA
Group, Organization, Corporation, Union, or DDS/Indian tribe	Between $100.01 and $499.99 for the same candidate or proposal.	No Registration as an IEC/Super PAC required.* Must file an Independent Expenditure Report within 10 calendar days. See….	Section 51	Late filing fees apply. See Appendix E
Corporation, Union, or DDS/Indian tribe	$500.00 or more single or cumulatively for the same candidate or proposal.	No Registration as an IEC/Super PAC required.* Must file an Independent Expenditure Report within 10 calendar days. See…	Section 51, 55	Late filing fees apply. See Appendix E
Group (not a corporation, union or DDS/Indian tribe), or Organization (not a corporation, union or DDS/Indian tribe)	$500.00 or more single or cumulatively for the same candidate or proposal.	Registration is required. See…	Section 3, 21, 55	Late filing fees apply. See Appendix E

(*)A group, organization, corporation, union or DDS/Indian tribe acting alone may optionally register as an IEC/Super PAC and follow the filing requirements of the MCFA.

ACTING JOINTLY WITH OTHERS
A group, organization, corporation, union or DDS/Indian tribe may join together to pool funds from unsolicited general treasuries to make one or more independent expenditures on behalf of candidates or ballot proposals.

Who is Acting Jointly	Independent Expenditure Calendar Year Activity	Registration/Disclosure	Section of MCFA	Late Filing Fees
Group, Organization, Corporation, Union, or DDS/Indian tribe	$100.00 or less single or cumulatively for the same candidate or proposal.	No Registration as an IEC/Super PAC required.* No disclosure is required.	Section 51	NA
Group, Organization, Corporation, Union, or DDS/Indian tribe	Between $100.01 and $499.99 for the same candidate or proposal.	No Registration as an IEC/Super PAC required.* Must file an Independent Expenditure Report within 10 calendar days. See Appendix G for details.	Section 51	Late filing fees apply. See Appendix E
Group, Organization, Corporation, Union, or DDS/Indian tribe	Spending or receiving $500.00 or more on behalf of candidates and proposals	Registration as an IEC/Super PAC required.	Section 3 and 21	Late filing fees apply. See Appendix E

(*)A group, organization, corporation, union or DDS/Indian tribe acting jointly, but not triggering the registration requirement may optionally register as an IEC/Super PAC and follow the filing requirements of the MCFA.

Filing a Statement of Organization

The committee is registered by filing a Statement of Organization with the appropriate filing official within 10 calendar days of meeting or exceeding the $500.00 threshold. The threshold is met with a single independent expenditure or a series of independent expenditures. A separate committee is required to be registered even if the corporation, labor union, or DDS/Indian tribe has a registered Separate Segregated Fund (SSF PAC).

The IEC/Super PAC is then required to file detailed campaign statements disclosing its contributions and independent expenditures. Campaign statements are required to be filed by state level committees and local level committees with specific coverage dates and filing deadlines. State level committees that spend or receive $5,000.00 or more in any calendar year must file electronically.

A committee that does not spend or receive in excess of $1,000.00 in a calendar year may qualify for a reporting waiver. A committee must request the Reporting Waiver on a Statement of Organization if the filing official determines that committee is eligible and grants the reporting waiver, then the campaign statements mentioned above may be waived. For more information see Appendix C of the manual.

A corporation, labor organization, DDS/Indian tribe or other group that intends to act as an independent expenditure committee (IEC/Super PAC) must file an Independent Expenditure Report if it spends between $100.01 and $499.99 in a calendar year on independent expenditures and has not yet registered an IEC/Super PAC as explained above. The Independent Expenditure Report form is available on the Department of State’s website.

Frequently Asked Questions (FAQ)

Can groups other than corporations, labor organizations and DDS/Indian tribe that want to act as an independent expenditure committee register as an IEC/Super PAC?

Yes. The MCFA does not limit the formation and registration of these committees by other groups. Corporations, labor organizations and DDS/Indian tribes are free to contribute to any registered IEC/Super PAC or Ballot Question Committee. All committees registered under the MCFA must comply with its filing and disclosure requirements.

Are there rules for naming an IEC/Super PAC? Can the name include a candidate name or ballot proposal reference?

The MCFA does not prohibit an IEC/Super PAC from using a candidate name in the committee name and provides no other requirements for naming the committee.

Is there any limit on the amount of money that a corporation, labor union, or an DDS/Indian tribe can spend on independent expenditures for candidates or ballot proposals?

No. There is no limit on the amount of money that can be spent on independent expenditures. The activity must be carefully reviewed to determine any required filings and disclosure obligations.

Is there a limited time frame when an independent expenditure can be made?

No. Independent expenditures can be made at any time. Care should be taken to ensure that the reporting requirements are met either by disclosing the independent expenditures in a required campaign statement or an Independent Expenditure Report as appropriate.

Can independent expenditures be made in all election types?

Groups, organizations, corporations, labor unions, and DDS/Indian tribes can make independent expenditures to support or oppose candidates in any state or local primary, general, special or recall election, or any political party caucus or convention. Again, the activity must be carefully reviewed to determine the required filing and disclosure obligations.

Can a candidate or political party solicit funds for an IEC/Super PAC?

Maybe; a candidate, candidate committee, political party committee, or an agent of the candidate or committee can solicit contributions on behalf of an independent expenditure committee (IEC/Super PAC). However, the solicitation cannot in any way cooperate, consult, act in concert, or otherwise coordinate in any way on independent expenditures made on behalf of that candidate or committee. This does not apply when the IEC/Super PAC makes independent expenditures during an election cycle related solely to the one candidate that is involved in the solicitation.

Can a corporation, labor organization, or DDS/Indian tribe make a contribution consisting of general treasury funds to a candidate committee?

No. The prohibition on corporate, union and DDS/tribal contributions to candidates and committees that make contributions to candidates remains in effect. Corporations, labor unions and DDS/Indian tribes may not make contributions to candidates, candidate committees, independent committees, political committees, political party committees, or House or Senate political party caucus committees.

Can a corporation, labor union, or DDS/Indian tribe contribute treasury funds to an IEC/Super PAC?

Yes. Corporations, labor unions and DDS/Indian tribes can make contributions to an IEC/Super PAC so long as the independent expenditures are not, in any way, directly or indirectly made in cooperation, consultation, or concert with, or at the request or suggestion of, a ballot question committee or a candidate, a candidate committee or its agents, or a political party committee or its agents, and if the expenditure is not a contribution to a committee.

What corporate, union, or DDS/tribal activity is prohibited by the MCFA?

Section 54 of the MCFA prohibits corporations, labor unions and DDS/Indian tribes from making contributions to candidates and committees that make contributions to candidates. It also prohibits corporations, labor unions and DDS/Indian tribes from pooling resources to make independent expenditures that are in any way:

Has the Department issued any Declaratory Rulings or Interpretive Statements that further clarify the implications on IEC/Super PAC activity?

No.The Department of State has not yet received any requests for a Declaratory Ruling concerning the application of the new provisions and, therefore, has not issued a Declaratory Ruling or Interpretive Statement that further clarifies the implications on IEC/Super PAC activity.

Independent expenditure means an expenditure by a person or committee if the expenditure is not made in cooperation, consultation, or concert with, or at the request or suggestion of, a ballot question committee or a candidate, a candidate committee or its agents, or a political party committee or its agents, and if the expenditure is not a contribution to a committee. Has the Department issued any guidance on the definition or application of this definition?

No.The MCFA does not provide any further definitions of the terms cooperation, consultation or concert. Without any further guidance, the best course of action is to refer to the definitions of these terms in legal dictionaries, standard dictionaries and potential clarifications provided under federal laws.

Were there any changes that affect how corporations, unions, or DDS/Indian tribes can participate through a registered Separate Segregated Fund(SSF PAC)?

No. Corporations, labor organizations and DDS/Indian tribes can only contribute to candidates through the creation of a separated segregated fund, commonly referred to as an SSF PAC. The SSF PAC is funded through contributions made by certain qualified contributors, and no corporate, union, or DDS/tribal treasury monies can be transferred to the SSF PAC. An SSF PAC can also make independent expenditures on behalf of candidates and ballot proposals.

Can the corporate, union, or DDS/tribal treasury funds be commingled with the Separate Segregated Fund/SSF PAC of the corporation, labor union, or DDS/Indian tribe?

No. Treasury funds cannot be commingled with funds that are distributed to candidate committees, independent committees, political committees, political party committees, or House or Senate political party caucus committees. However, certain provisions apply to connected organizations that provide for the acceptance subsequent transfer of SSF PAC contributions from Michigan connected organization account to the SSF PAC.

Can an IEC/Super PAC coordinate or work with an independent or political committee on an independent expenditure?

Maybe; the MCFA does not prohibit the coordination of independent expenditures with political or independent committees with the condition that the coordination does not constitute a contribution to the political or independent committee or is otherwise prohibited.

What are the penalties for making a prohibited contribution under Section 24B(4)?

Section 24B(4) states: An independent expenditure committee shall not make a contribution to a candidate committee, independent committee, political committee, political party committee, or house or senate political party caucus committee. The penalty for violating this provision is outlined below.

• An individual who knowingly violates or causes a person to violate this provision is guilty of a felony punishable by imprisonment for not more than 3 years or a fine of not more than $5,000.00, or both.
• A person that violates this provision that is not an individual is subject to 1 of the following, whichever is greater: (a) A fine of not more than $20,000.00. (b) A fine of not more than triple the amount of the improper contribution or expenditure.

Are there other penalties that are prescribed for IEC/Super PAC committees?

Yes, Section Section 24( c )(2) prescribes penalties for the defeat of the independent nature of an independent expenditure.

Are there exemptions to the defeat of an independent nature of an independent expenditure?

Yes. Section 24( c )(2) provides specific exemptions to the defeat of an independent nature of an independent expenditure.

What must be reported if $100.00 or less in a calendar year is spent on independent expenditures by a corporation, labor union, or DDS/Indian tribe not required to be registered under the MCFA as an IEC/Super PAC?

Nothing; however, records must be kept and reviewed to determine if and when a reporting threshold is reached.

Does the decision affect how the Department interprets “Express Advocacy” in Michigan?

No. The decision has no effect on the Department of State’s interpretation of express advocacy as it pertains to Michigan elections. Section 6 provides communications that do not expressly advocate the nomination or election of a candidate or the qualification, passage or defeat of a ballot question are not subject to the MCFA.

What, if any, requirement is there to provide an identifier or disclaimer on print or broadcast advertisements purchased as an independent expenditure?

The identifier and disclaimer requirements of Section 47 of the MCFA were not affected by the decision. All printed or broadcast advertisements purchased as an independent expenditure in support of or opposition to a candidate must contain an identifier and disclaimer. For more information see Appendix J of the PAC Manual.

Does the amendment affect how corporations, labor unions, or DDS/Indian tribes can support or oppose ballot proposals?

No.Corporations, labor unions and DDS/Indian tribes can support or oppose ballot proposals. See the Ballot Question Committee Manual for more information.

Can an IEC/Super PAC formed for political purposes incorporate?

Yes, there is nothing in the MCFA that prohibits a committee from incorporating if it is formed for political purposes.

Are IEC/Super PACS required to file 48 hour Special Election Independent Expenditure Reports?

Yes. Section 33 of the MCFA requires IEC/Super PACS to file these reports. See Appendix G for more information.

Are IEC/Super PACS required to file 48 hour Late Contribution Reports?

Yes. Section 32 of the MCFA requires IEC/Super PACS to file these reports. Appendix G for more information.