Election season 2017 will soon be upon us. Open seats for election include city and town councils and school board races. Running for office is both a thrilling and a scary experience. For individuals, complying with the numerous campaign finance rules is an overwhelming undertaking. Issues facing candidates range from finding a qualified treasurer, opening a bank account, establishing procedures regarding acceptance of contributions and reporting of the committee’s activity.
One of the first positions a candidate needs is a treasurer. The treasurer collects contributions and disburses funds to cover expenses. The treasurer also carefully completes the important job of filing campaign finance reports. Finding a qualified treasurer is one task a candidate needs to consider carefully. An ideal person to fill the role is an individual who is trustworthy and organized and one who is familiar with handling financial transactions while being able to file campaign reports in a timely manner. The individual also needs to be familiar with appropriate jurisdiction’s campaign finance laws.
Once the candidate finds a treasurer, the next step is to open a bank account. In order to obtain a bank account the committee will need to obtain a federal Employer Identification Number (EIN). This number is used in opening the bank account, accepting electronic deposits and issuing 1099s or W-2s for campaign personnel. An error candidates make is using their personal social security number when opening the bank account and accepting electronic deposits. At the end of the calendar year, the committee will send out 1099s. The committee will receive a 1099K Payment Card and Third Party Network Transaction report from their credit and debit card processor. Both these documents will use the candidate’s social security number. Having the candidate’s social security number out in the public exposes the candidate to identity theft.
Another area candidates often overlook is establishing a process for accepting contributions and paying invoices for the committee. Local or state laws dictate what contributions are acceptable in a race. Some local jurisdictions allow candidate committees to accept corporate contributions while the state of Colorado does not. Another example of where rules are different between jurisdictions are limited liability company (LLC) contributions. The state applies the contribution limits to both the limited liability company and the individual owner. Meanwhile, cities and towns may not allow limited liability company contributions at all.
Another area that trips up candidates is timely reporting. The clerk of the town or city or the secretary of state will provide a calendar when reports are due. The state requires the committees to file their reports electronically. Some cities or towns require electronic filing while others allow manual filings. Paying penalties to the secretary of state is not a good use of a committee’s funds. Also, failure to file gives the opposition a message they can use against the candidate in campaign mailings.
Candidates need to familiarize themselves with the rules and processes for running a successful campaign. Candidates minimize common errors by obtaining an EIN when the committee is established. Establishing processes and procedures surrounding the acceptance of contributions helps the committee staff. Finally, timely and accurate campaign finance reporting portrays the candidate as competent and respectful.