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Lisa Farnum

Lisa Farnum

New Rules for Making Independent Expenditures

They’ve Expanded for Corporations & Non-Profits

March 16, 2018

In this post-Citizens United environment where the U.S. Supreme court has decided that Federal limits on corporate independent expenditures are unconstitutional, corporations now have more ways to make their voices heard in elections.  However, buyer beware!  In Michigan there are new rules governing corporate involvement in elections. 

In the fall of 2017, Governor Snyder signed legislation (SB 335) that made changes to the Michigan Campaign Finance Act (MCFA).  Public Act 119 defined and created a regulatory framework for Independent Expenditures and Independent Expenditure Committees.  In addition to regulating campaign contributions made through Political Action Committees, campaign finance laws also apply to individuals, corporations, non-profits, unincorporated businesses, unions and domestic dependent sovereigns that seek to influence elections through Independent expenditures (IE’s) and Independent Expenditure Committees (IEC’s), also known as “Super PAC’s.”

Before diving into the new rules, it’s important to understand the differences between IEC’s and IE’s. 

An IEC is:

  • A group or organization registered with the county if participating in districts within one county, or registered with the State Bureau of Elections if participating in multiple districts/counties or state level elections, including Senate/Representative/Ballot Proposals.
  • A group or organization that spends $500 or more on independent expenditures, or receives more than $500 in contributions in a calendar year (which triggers registration).
  • A group or organization that accepts contributions from other corporations, unincorporated businesses & groups, non-profits, unions, Indian tribes, political committees, ballot committees, political party committees in order to make Independent Expenditures.
  • A group or organization that makes independent expenditures to influence an election as allowed by law.

An IE by an unregistered group or individual is:

  • An IE of more than $100/year made by an individual, group or organization (person*).
  • An expenditure made by an individual or group that uses funds from its treasury and does not solicit or accept funds from other sources in order to make the IE.

* For the purposes of this article a person is—as defined by the MCFA—a corporation, union or domestic dependent sovereign.  For clarity, “group” and “organization” in this article are used to replace “person.”

Basic IEC rules, reporting requirements and penalties

  • An IEC may not make an expenditure made in cooperation, in consultation, or at the request of a ballot question committee, a candidate, candidate committee or its agents, a political party or its agents. 
  • An IEC must file regular reports as required with the County or State Bureau of Elections, schedules set by the entity it’s registered with.
  • An IEC can accept contributions from organizations and individuals; but not foreign nationals.
  • An IEC can make unlimited independent expenditures to support or oppose ballot proposals, and oppose or support candidates.
  • An IEC can make direct contributions to Ballot Question Committees and other IEC’s.
  • IEC’s may not contribute to candidate, independent, political or political party committees.
  • Under the new rules candidates are able to solicit for Super PAC’s, but cannot coordinate how it spends the money.

The new law prohibits coordination between an independent committee and a candidate on how the IEC would spend the money raised.  However, it would allow a candidate or those working on behalf of a candidate to solicit money for the independent committee.  The updates include regulations for the Super PACs and penalties for candidate coordination with them. 

Also worth noting on the federal level, candidates are limited as to how much money they can solicit for Super PACs.  Note: Under the MCFA, that is not limited.

Thresholds for registration

The MCFA requires registration as a committee when an organization or two or more individuals receive or spend more than $500 for the purpose of influencing (i.e. support or oppose) the nomination or election of a candidate, the qualification, passage or defeat of a ballot question, or the qualification of a new political party in a calendar year. Once the $500 threshold is met, the organization or persons have 10 days to form and register with the appropriate filing official.

Penalties for late registration

A late filing fee can be assessed; $10 for each business day the statement remains not filed, not to exceed $300. Failing to file and report after 10 days of receiving a “failure to file” notice will result in fines. Failure to file for more than 30 days after a statement of organization is submitted results in a misdemeanor that is punishable by a fine of not more than $1,000.

Penalties for filing late reports

A committee that fails to file a statement will be assessed a late filing fee if the committee has raised $10,000 or less during the previous 2 years.  The late filing fee is equal to $25 for each business day the statement remains unfiled, not to exceed $500.00.  If the committee has raised more than $10,000 during the previous 2 years, the late filing fee will not exceed $1,000.

IE’s made by unregistered organizations & individuals

Expenditures made by a group or organization (other than an IEC) that uses funds from its treasury not solicited or accepted from other sources to make a contribution to a Ballot Question Committee or IEC is exempt from registering as a Super PAC or IEC.  However, these IE’s do require reporting.

Thresholds for IE reporting

An individual, group or organization—other than a committee—that makes an independent expenditure in an amount of $100.01 or more in a calendar year is required to file a report.  The IE must be reported within10 days after making that independent expenditure.  The report should be made on an independent expenditure report form provided by the secretary of state.  The report requires disclosure of:

  • Date of the expenditure
  • Brief description of the nature of the expenditure
  • Amount, the name and address of the person to whom it was paid, the name and address of the person filing the report, together with the name, address, occupation, employer, and principal place of business of each person that contributed $100.01 or more to the expenditure
  • The identity of the candidate or ballot question which the independent expenditure was made

(Find links to the forms here: http://www.michigan.gov/sos/0,4670,7-127-1633_8723_11893-452015–, 00.html)

Penalties for late IE reports

If a group or individual fails to file a report they will be subject to a late filing fee. For independent expenditures totaling less than $10,000, the late filing fee is $25 for each business day the report remains unfiled, not to exceed $1,000.  For independent expenditures totaling $10,000 or more, the late filing fee is $50 for each business day the report remains unfiled, not to exceed $5,000.  An organization or group that violates this subsection by failing to file a report required under this section for more than 30 days after the report is required to be filed is guilty of a misdemeanor punishable by imprisonment for not more than 90 days and/or a fine of not more than $1,000.

Special Election Independent Expenditure Report

Additionally, if a political committee makes an independent expenditure within 45 days of a special election, a report of the expenditure must be filed within 48 hours. 

Even though Michigan has allowed for the operation and registration of Super PAC’s since 2010, PA 119 & PA 120 created a new official category for the Independent Expenditure Committee (Super PACs), specifying registration, filing requirements and late filing penalties for this new committee type. 

This column is provided as general information and not as legal advice. Content is intended to serve only as a guide.  Every filing situation is different and I welcome your questions.  Please call or email: (517) 482-5311, or Lfarnum@farnuminc.com.  You can also visit the Bureau of Elections for more information (http://www.michigan.gov/sos/0,4670,7-127-1633_8723—,00.html), or consult with your attorney.

Lisa Farnum, MPP is President of L Farnum, Incorporated.  L Farnum, Inc. is a firm that specializes in PAC & Lobby compliance, research and association management.  Lisa has been helping clients resolve campaign finance issues and maintain compliance for more than 16 years.  She earned a Bachelor of Arts in Business Administration from Northwood University and a Master of Public Policy from the University of Michigan, Dearborn.  Ms. Farnum has over 25 years of experience in business and association management.

March 15, 2018 · Filed under Lisa Farnum

1 response so far ↓

  • 1 Henry Mayers // Mar 17, 2018 at 12:43 pm

    Nicely-done – very helpful!

    I’m still debating that the trade of allowing treasury expenditures was an equal trade to get their expenditure data. Then again, the SCOTUS did not give us a choice in allowing treasury monies to be spent.

    Thanks for the insight.

    Henry Mayers
    American Promise in Michigan’s Capital


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