Insights

As we enter 2017—and in preparation for the Semi-Annual reports due on January 17—it is worth reminding Texas candidates and committees of a couple of rules recently adopted by the Texas Ethics Commission.

First, thanks to the new TEC Rule §20.60, Texas candidates and committees no longer have to individually report each processing fee for political contributions received. On the Semi-Annual Report, for example, registrants can report merchant fees and/or other fees for processing political contributions as a single entry. To use a singular entry, all payments must be made to the same payee for the same purpose. For the expenditure date, use the date that the first expenditure (of that type) was made. You should include all fees dated during the reporting period. And, as always, if you cannot “readily ascertain” the amount of the expenditure, then such amount need not be included.

Second, the Texas Ethics Commission tweaked its “cash on hand” rule, effective December 1, 2016, in an effort to address funds that are raised and maintained online. The new calculation method will now include “the balance of political contributions accepted and held in any online fundraising account (i.e., online merchant account) over which the filer can exercise control by making a withdrawal, expenditure, or transfer.” You might recall that Ross Fischer of The Gober Group published a blog on this rule change in December. Prior to the rule change, the Commission required filers to report (1) the balance on deposit in financial institutions and (2) the present value of any investments that can be readily converted to cash (i.e., the “literal” combined total of the cleared balances in all depository and investment accounts only). The total of those assets would be reported as “contributions maintained” by the filer.

Keep in mind that the revised rule for reporting cash on hand is still a “literal” reporting required, especially as compared to the reconciled reporting totals required in many other jurisdictions, (e.g., the Federal Election Commission). However, your cash on hand total should now include the balance in merchant accounts from online fundraising, e.g., Anedot, PayPal, Stripe, even before the balance is cleared in the bank account. Failure to calculate cash on hand accurately may subject the registrant to penalties and/or fines.

Although it is not a new rule, it is also worth reminding Texas candidates and committees that now is the time to change their filing schedule if that’s desirable. If an MPAC would like to change to a GPAC and use that filing schedule, the MPAC must deliver written notice to the Commission of the change between January 1 and January 15. GPACs that want to change to an MPAC schedule do not have to give the Commission notice; it need only begin filing monthly.

As many of us have learned, the best way to minimize stress in a compliance program is to stay organized and on top of deadlines. To that end, below are some key, regularly-scheduled dates* in 2017 for you to put on your calendar (*NOTE: Dates reflected below are for reference and may not be complete for any singular compliance program. This information should not be used or taken as a substitute for advice from legal counsel.)

2017 Important Dates for Candidates and Committees in Texas