Insights

Candidates and political committees filing reports with the Texas Ethics Commission should be aware of a recent change for calculating “cash on hand” at the end of a reporting period.

Traditionally, the Commission has 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. The total of those assets would be reported as “contributions maintained” by the filer.

At its December 2016 meeting, the Commission tweaked its rule 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.”

Now, if contributions are accepted via the filer’s PayPal or Anedot account, for example, the filer must report those amounts. However, if the contributions are accepted and held by a third party fundraiser – think ActBlue or similar online outfits that collect “conduit” contributions – those funds would not be included in the total cash on hand.

The Commission also provided that a discrepancy between the amount reported and the actual contributions maintained is de miminis if the difference does not exceed $250 or the lesser of 10% of the amount disclosed or $2,500. A violation classified as de minimis can result in a waived fine or a confidential settlement agreement.

So, beginning with the January 2017 semi-annual reports, make sure to include those funds held in an online merchant account that have not yet been transferred to the committee’s operating bank account.

Ross Fischer of the Gober Group is the former Chairman of the Texas Ethics Commission and an expert in the field of Texas campaign finance and lobby laws.