CAMPAIGN DISCLOSURE REQUIREMENTS OFTEN OVERLOOKED

 

BEWARE - The Franchise Tax Board is authorized under Section 90001 of the California Government Code to audit Campaign Disclosure Statements. The audit can include tests of the accounting records and other such auditing procedures.

The purpose of campaign disclosure is to provide the public with the identity of contributors and the amounts they give, as well as the amount officeholders, candidates and committees spend. The laws passed to enforce that purpose can be challenging for the unwary, therefore some often overlooked requirements, some identified in audit reports, are provided here:

  • Even unopposed "candidates" are subject to the campaign disclosure provisions of the Political Reform Act. (Gov. Code 82007)
  • Prior to soliciting or receiving any contribution (including a loan or use of personal funds), all elected officeholders and all candidates must file Form 501 (candidate intention).
  • Officeholders and candidates who receive contributions or make expenditures, including personal funds, must establish a campaign checking account in California and, within 10 days, file Form 502 (Campaign Bank Account). Candidates for county office must file a copy of the Form 502 with the County Clerk within 24 hours, or prior to the close of business on the first working day following the establishment of the account.
  • A Statement of Organization (Form 410) must be filed within 10 days by any person who receives contributions totaling $1,000 ($50 for county office candidates) or more during a calendar year.
  • Loans to a candidate are considered contributions unless the loan is from a financial institution. Personal funds are also considered contributions; however, contribution limits do not apply to a candidate's personal funds used to support his/her own election. There is no cap of how much a candidate may spend on his/her own election. If, however, the funds are considered a loan to the candidate's committee, there is a cap of $20,000.
  • Filing fees and candidate statement fees may be paid in cash if the candidate is using personal funds and will not be reimbursed through the committee. (Gov. Code 85200) Otherwise, campaign disclosure laws require that expenditures of $100 or more be made by written instrument containing the names of both the payee and payer. (Gov. Code 84300)
  • Cash contributions or expenditures of $100 or more are prohibited.
  • Candidates for County Offices are prohibited from receiving contributions from business entities or labor unions. However, if the business or labor committee is created for or sponsored by a corporation, partnership or labor union or other business entity for the sole purpose of using voluntary donations of its individual members or employees for political purposes may make contributions up to $600 in support of or in opposition to a candidate or recall. (County Ordinance Section 8.05.050)
  • Maintain invoices and receipts for all expenditures, even if you are spending less than $1,000.
  • Make copies of all contributor checks.
  • Candidates must disclose employer information for all contributors and keep all records of occupation and employer information.
  • The source for each loan must be disclosed.
  • All expenditures of $100 or more must be itemized on the campaign statements, and then summarized on the Campaign Disclosure Statement Summary Page.
  • As long as a committee is in existence, a Semi-Annual Campaign Statement must be filed. If the candidate has filed a long form (460) previously in the calendar year, a 460 must be filed as the Semi-Annual Statement even if there is no activity. If a 470 has been filed previously in the year, another 470 must be filed as the Semi-Annual Statement.
  • Payee addresses must be disclosed on the campaign statements for expenditures made.
  • If the committee changes its treasurer, an amendment to the Statement of Organization must be filed.

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