[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Rules and Regulations]
[Pages 40625-40627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16125]


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FEDERAL ELECTION COMMISSION

11 CFR Part 104

[Notice 2013-09]


Reporting Ultimate Payees of Political Committee Disbursements

AGENCY: Federal Election Commission.

ACTION: Notice of interpretive rule.

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SUMMARY: The Federal Election Commission is clarifying its 
interpretation of the regulatory requirement that political committees

[[Page 40626]]

report the full name and address of each person to whom they make 
expenditures or other disbursements aggregating more than $200 per 
calendar year, or per election cycle for authorized committees, and the 
date, amount, and purpose of such payments, in three situations: A 
political committee reimburses an individual who advanced personal 
funds to pay committee expenses aggregating more than $200 to a single 
vendor; a political committee pays a credit card bill that includes a 
charge of more than $200 for a single vendor; and a candidate uses 
personal funds to pay his or her authorized committee's expenses that 
aggregate more than $200 to a single vendor without receiving 
reimbursement.

DATES: July 8, 2013.

FOR FURTHER INFORMATION CONTACT: Amy L. Rothstein, Assistant General 
Counsel, or Joanna S. Waldstreicher, Attorney, 999 E Street NW., 
Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: Political committees must report the name 
and address of each person to whom they make expenditures or other 
disbursements aggregating more than $200 per calendar year, or per 
election cycle for authorized committees, as well as the date, amount, 
and purpose of such payments. 2 U.S.C. 434(b)(5), (6); 11 CFR 
104.3(b)(3)(i), (vii) (unauthorized committees); 11 CFR 104.3(b)(4)(i), 
(vi) (authorized committees); see also 11 CFR 104.9(a), (b).
    The Commission published a draft Notice on January 31, 2013, to 
seek comment on a proposed interpretative rule to clarify these 
requirements as they apply to the reporting of certain itemized 
disbursements by political committees to vendors. The Commission 
received four comments: Two opposed the draft; one supported the draft 
with a request that the Commission impose an additional reporting 
requirement; and one resubmitted the comment supporting the draft 
without itself opining on the draft. Taking those comments into 
consideration the Commission now issues this Notice to clarify its 
interpretation of 11 CFR 104.3(b)(3)(i), (vii); 11 CFR 104.3(b)(4)(i), 
(vi); and 11 CFR 104.9(a), (b). These clarifications are made to the 
reporting requirements contained in these Commission regulations and 
implicate no other regulations than those referenced above.
    Specifically, this Notice clarifies how a political committee 
should report disbursements in the following scenarios:
    (1) The committee reimburses an individual (such as a campaign 
staffer) who used personal funds to pay committee expenses aggregating 
more than $200 to a single vendor;
    (2) the committee's payment of its credit card bill includes 
charges of more than $200 to a single vendor; and
    (3) the committee is the authorized committee of a candidate who 
used personal funds to pay committee expenses aggregating more than 
$200 to a single vendor without receiving reimbursement.
    As explained further below, in each scenario the political 
committee will satisfy the reporting requirements by itemizing as a 
memo entry on Schedule B the name and address of the original vendor, 
as well as the date, amount, and purpose of the original purchase made 
for or by the political committee. The Commission makes clear that this 
interpretation is based on long-standing Commission practice and is not 
making any fundamental changes to its rules or processes. Further, the 
Commission is only addressing the three issues at hand and is not 
extending the clarification to situations in which a vendor, acting as 
the committee's agent, purchases goods and services on the committee's 
behalf from subvendors. The relationship between committees and its 
vendors raises different issues than the relationships that exist in 
these three circumstances.

1. Reimbursements to Individuals for Certain Out-of-Pocket Expenses

    When an individual who is not acting as a vendor advances his or 
her personal funds, including a personal credit card, to pay costs 
incurred in providing goods or services to, or obtaining goods or 
services that are used by or on behalf of, a political committee, the 
political committee must treat the individual's payment as a 
contribution.\1\ 11 CFR 116.5(a), (b). The political committee must 
also treat the obligation arising from the individual's payment as an 
outstanding debt until reimbursed. 11 CFR 116.5(c); see also 11 CFR 
104.11.
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    \1\ Certain travel and subsistence expenses that are not 
reimbursed, or that are reimbursed within a limited period of time, 
are exempt. 11 CFR 116.5(b); see also 11 CFR 100.79.
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    If the political committee itemizes its reimbursement to the 
individual on Schedule B of its report filed with the Commission, then 
the political committee may also need to provide information about the 
vendor to which the individual made payment in a memo entry associated 
with the reimbursement. A memo entry is required for any reimbursement 
of expenses other than travel and subsistence expenses if the 
individual's payments to the vendor on behalf of the committee 
aggregate more than $200 in a calendar year (or election cycle for 
authorized committees). When the reimbursement is for travel and 
subsistence advances that exceed $500, a memo entry is required for 
each payment to a specific vendor by that individual on behalf of the 
political committee if total payments to that vendor by the political 
committee or by that individual on behalf of the committee aggregate 
more than $200 in a calendar year (or election cycle for authorized 
committees). Each memo entry must include the name and address of the 
vendor, as well as the date, amount, and purpose of the payment. 11 CFR 
104.3(b)(4)(i); 11 CFR 104.9.\2\
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    \2\ This clarification is consistent with the Commission's 
Report Analysis Division Review and Referral Procedures for the 
2011-2012 Election Cycle, p. 98 (http://www.fec.gov/pdf/RAD_Procedures.pdf), which is approved by the Commission for every two-
year election cycle. Further, the Commission's Reports Analysis 
Division has been sending Requests for Additional Information to 
authorized committees that did not itemize the ultimate payee for 
reimbursements to staff above the applicable thresholds since the 
1983-1984 election cycle. Similarly, the Reports Analysis Division 
has been sending Requests for Additional Information to party and 
non-party committees that did not itemize the ultimate payee for 
reimbursements to staff above the applicable thresholds since the 
2005-2006 election cycle after internal review procedures for 
authorized and unauthorized committees were merged. However, a grace 
period for calendar year 2005 was provided to party and non-party 
committees to allow for the development of administrative tracking 
systems.
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    For reimbursements of credit card payments, the memo entry must 
include the name and address of the vendor that provided the goods or 
services to the political committee, rather than the credit card 
company that processed the payment, and the date, amount, and purpose 
of the payment to the vendor. Further information about the reporting 
of credit card payments appears in Section 2, below.

2. Payments to Credit Card Companies

    Any political committee that itemizes disbursements to credit card 
companies on Schedule B of its report filed with the Commission must 
itemize as a memo entry any transaction with a single vendor charged on 
the credit card that exceeds the $200 itemization threshold. The memo 
entry must include the name and address of the vendor, and the date, 
amount, and purpose of the charge. Itemizing the ultimate payee, as the 
provider of goods or services to the political committee, accurately 
reflects the credit card company's limited role as a payment

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processor rather than as the provider of goods and services to the 
committee. See 11 CFR 102.9. The itemization requirement prevents a 
committee from avoiding the Act's disclosure requirements by placing 
operating expenditures on a credit card.\3\
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    \3\ This clarification is consistent with the Commission's 
Report Analysis Division Review and Referral Procedures for the 
2011-2012 Election Cycle, p. 96 (http://www.fec.gov/pdf/RAD_Procedures.pdf). Similarly with reimbursements to committee staff, 
the Commission's Reports Analysis Division has been sending Requests 
for Additional Information to authorized committees that did not 
provide memo entries for credit card payments above the applicable 
thresholds since the 1983-1984 election cycle.
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3. Unreimbursed Disbursements by Candidates

    A candidate may make unlimited expenditures from personal funds on 
behalf of his or her authorized committee. See 11 CFR 110.10. Any 
candidate who ``makes a disbursement in connection with [his or her 
own] campaign, shall be considered . . . as having made the 
disbursement . . . as an agent of the authorized committee or 
committees of such candidate.'' 2 U.S.C. 432(e)(2); see also 11 CFR 
101.2(a). Authorized committees must disclose these disbursements on 
their reports filed with the Commission just as they would disclose any 
other disbursements that they may make. 2 U.S.C. 434(b)(4), (5), 
(6)(A); 11 CFR 104.3(b)(4).
    Thus, out-of-pocket spending by candidates, as agents of their 
authorized committees, requires memo entry itemization of the ultimate 
payee if the aggregate amount of payments to that vendor exceeds $200 
for the election cycle. The memo entry must include the date, amount, 
and purpose of the out-of-pocket payments, as well as the name and 
address of the vendor to which payment was made.\4\
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    \4\ Unlike the former two circumstances, this scenario is not 
addressed in the Commission's Reports Analysis Division Review and 
Referral Procedures for the 2011-2012 Election Cycle that has been 
made public with redactions. Although the Reports Analysis Division 
will initiate a regular practice of sending Requests for Additional 
Information for failure to itemize the vendor for candidate out-of-
pocket expenditures on behalf of his or her authorized committee, 
this portion of the interpretive rule will be applied prospectively. 
The adequacy of the responses to Requests for Additional Information 
on this issue will only be judged for those sent after the adoption 
of this interpretive rule.
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    This interpretive rule clarifies the Commission's interpretation of 
existing statutory and regulatory provisions, and therefore does not 
constitute an agency action subject to the notice and comment 
requirements or a delayed effective date under the Administrative 
Procedure Act. See 5 U.S.C. 553. The provisions of the Regulatory 
Flexibility Act, which apply when notice and comment are required by 
the Administrative Procedure Act or another statute, do not apply. See 
5 U.S.C. 603(a).

    Dated: June 27, 2013.

    On behalf of the Commission.
Ellen L. Weintraub,
Chair, Federal Election Commission.
[FR Doc. 2013-16125 Filed 7-5-13; 8:45 am]
BILLING CODE 6715-01-P