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), all elected officeholders and all candidates must file Form 501 (candidate intention).

• Contributions include PERSONAL FUNDS and are subject to the same disclosure requirements.

• A Statement of Organization (Form 410) must be filed within 10 days by any person who receives contributions totaling $1,000 or more during a calendar year. Candidates for county offices (excludes judges, school boards and special district boards) must file a Form 410 prior to the acceptance of any campaign contribution totaling $50 or more or the making of any expenditure intended to influence the outcome of any election.

• Officeholders and candidates who receive contributions or make expenditures must establish a campaign checking account in California and report it on a Form 410 (previously reported on a Form 502, which has been eliminated)

• Loans to a candidate are considered contributions unless the loan is from a financial institution. The Federal Election Campaign Act (2 U.S.C. §442b & e) prohibits contributions from national banks, national corporations, and foreign nationals in connection with any local, state, or federal election to political office.

• 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)

• 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)

• Never accept or spend $100 or more in cash.

• For contributions of $100 or more, including loans, and in-kind contributions, you must disclose the contributor's name, address, occupation and employer. Contributions of $100 or more may not be made in the form of a money order or cashier’s check. Contributions may continue to be made with a credit card. (Gov. Code §84300)

• Maintain details on contributions and expenditures of $25 or more, even if you are spending less than $1,000. Refer to recordkeeping guidelines in Manual A.

• Make copies of all contributor checks.

• Itemize expenditures of $500 or more made by an agent or campaign consultant.

• Include your name and campaign address in at least 6-point type on the outside of all mass mailings (more than 200 pieces). Your committee's name may be used if it includes your name. If your name is not part of the committee's name, you may use just your name, or both your name and the name of the committee.

• Candidates must disclose employer information for all contributors and keep all records of occupation and employer information.

• NO PERSONAL USE OF CAMPAIGN FUNDS. Use campaign funds only for political, legislative, or governmental purposes.

• 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 Form 410 Statement of Organization must be filed.

• If $1,000 or more is received from one contributor during the last 16 days before the election, disclose receipt within 24 hours, even if the contribution is from your personal funds.