Appendices

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Appendices

Appendices:
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Appendix L
INDEPENDENT CONTRACTORS
Media Buyers and Other Vendors Purchasing Goods for the Committee

A Committee that contracts with an agent or an independent contractor to make expenditures on its behalf must disclose the expenditures made to and by the agent or independent contractor as detailed below.

Agents and independent contractors typically employed by committees are:

  • Political consultants
  • Public relations consultants
  • Political consulting firms
  • Public relation firms
  • Media buyers
  • Advertising agencies
  • Marketing firms

Services typically provided to committees by agents and independent contractors include but are not limited to:

  • Purchasing radio, television and online advertising
  • Producing radio, television and online advertising
  • Producing or purchasing still photographs
  • Producing or purchasing printed materials
  • Producing or purchasing buttons, hats, bumper stickers, and other campaign materials
  • Conducting polls and surveys
  • Purchasing mail lists
  • Conducting direct mail activities
  • Employing temporary help

Expenditures by Committee to An Agent or Independent Contractor

The total of each expenditure made by a committee to an agent or independent contractor must be reported on the appropriate schedule of the campaign statement that covers the reporting period in which the expenditure was made. The date of the expenditure is the date the committee agrees to pay or contracts with the agent or independent contractor; rather than the date the invoice is paid, date the items are received, or the date the committee receives benefit from the services provided.

Expenditures Made by An Agent or Independent Contractor on Behalf of a Committee

In addition to the above, any expenditure made by an agent or independent contractor on behalf of a committee must be disclosed with the campaign statement that covers the reporting period in which the expenditure was made if:

1)the expenditure is one that the committee would have made itself, or
2)the expenditure was made to a subcontractor supplying services to the agent or independent contractor.

To enable committees to meet this disclosure requirement, the Campaign Finance Act, MCL 169.243, requires agents and independent contractors working for a committee to provide the committee with a list of the expenditures made on the committee’s behalf. Agents and subcontractors are not required to provide an accounting of funds received from a committee that are taken as a profit or used to meet normal operating expenses.

The list of expenditures provided by an agent or independent contractor must include the following:

  • the name and address of each individual or business that received more than $50.00 through a single expenditure or through a series of expenditures made by the agent or independent contractor during the campaign statement reporting period;
  • the purpose and amount of each expenditure; and
  • the date each expenditure was made.

Single or cumulative expenditures of $50.00 or less made by an agent or independent contractor to an individual or business during the campaign statement reporting period can be shown as a lump sum. The committee may be asked to substantiate the reporting of these expenditures by providing a detailed invoice of the goods or services purchased by the vendor.

If the independent contractor sub-contracts the work to another person, itemization is also required from the sub-contractor to report the names and addresses, dates and amounts for expenditures made by the sub-contractor on behalf of the Committee.

Section 43 of the Michigan Campaign Finance Act states “A person who knowingly is in violation of this subsection is guilty of a misdemeanor and shall be punished by a fine of not more than $1,000.00, or imprisoned for not more than 90 days, or both, and if the person is other than an individual the person shall be fined not more than $10,000.00.”

Memo Itemization of Expenditure Example

The Committee to Elect George Mabry hired the firm Primo Consultants to produce some TV adds. Primo Consultants then hired WFAK TV to run the ad on their station. The transactions should be reported in the following way:

FAQs

I am an agent/independent contractor, what I am required to supply a committee?

You are required to provide the committee with a list of the expenditures made on the committee’s behalf. This includes any expenditures that were made to a subcontractor supplying services to the agent/independent contractor. Agents and subcontractors are not required to provide an accounting of funds received from a committee that are taken as a profit or used to meet normal operating expenses.

My committee hired an agent/independent contractor, what do I have to disclose on my campaign statement?

The committee must report the total of each expenditure to an agent or independent contractor on the appropriate schedule of the campaign statement that covers the reporting period in which the expenditure was made. The date of the expenditure is the date the committee agrees to pay or contracts with the agent or independent contractor; rather than the date the invoice is paid. If the agent or independent contractor made expenditures on the committee’s behalf, they are required to provide the committee with a breakdown of their expenditures and this must be memo-itemized on the committee’s campaign statements.

My committee hired an agent/independent contractor, do I have to memo-itemize this expenditure on my campaign statement?

Maybe. If the agent or independent contractor made expenditures on the committee’s behalf, they are required to provide the committee with a breakdown of their expenditures and this must be memo-itemized on the committee’s campaign statements. If the agent or independent contractor did not make expenditures on behalf of the committee other than normal operating expenses, then no memo-itemization is required.

My committee hired an agent/independent contractor for goods/services; when does this need to be reported?

This needs to be reported on the date the committee agrees to pay or contracts with the agent or independent contractor; rather than the date the invoice is paid, the date the items are received, or the date the committee receives benefit from the services provided.

What if the final cost of the goods/services is different than the quoted price on the original invoice?

If the committee reported an outstanding invoice for the quoted price and this amount changes, the committee can either amend the previous report to correct the invoice amount, create a new outstanding invoice for the difference, or if it is being paid within the same reporting period the committee can simply make another expenditure to the agent/independent contractor for the difference.

What amount do I report if I do not have an invoice for the contracted goods/services?

If the amount is not known at the time a campaign statement is due but an agreement has already been made to pay for goods/services, it is best to contact your agent/independent contractor to get a fair market value for the specific goods/services being provided.

Are there penalties associated with not disclosing expenditures to agents or independent contractors and if applicable, the memo-itemizations of sub-contracted work purchased on behalf of the committee?

Maybe. Section 43 of the Michigan Campaign Finance Act states “A person who knowingly is in violation of this subsection is guilty of a misdemeanor and shall be punished by a fine of not more than $1,000.00, or imprisoned for not more than 90 days, or both, and if the person is other than an individual the person shall be fined not more than $10,000.00.”

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Page last modified on May 24, 2019, at 02:44 PM