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Reporting Campaign Debt

This article answers common questions about reporting campaign debt. The Federal Election Campaign Act (the Act) and Commission regulations require committees to report debts and obligations continuously if they exceed $500 or have been outstanding 60 days or more. 11 CFR 104.3(d) and 104.11. This article addresses the process of reporting campaign debts including reporting estimated debts, unpayable debts, disputed debts, candidate loans and fundraising to retire debts.

When should the committee disclose a debt it owes?
A debt of $500 or less is reportable once it has been outstanding 60 days from the date incurred (the date of the transaction, not the date the bill is received). The debt must be disclosed on the next regularly scheduled report. A debt exceeding $500 must be disclosed in the report covering the date on which the debt was incurred, and must be reported on Schedule D until it is repaid in full (see example). 11 CFR 104.3(d) and 104.11.

Debts reported on Schedule D
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Payments made on the debt are also reported on Schedule D until the debt is retired. The debt repayments made must also be reported on the appropriate line number of the Detailed Summary Page and itemized on Schedule B if necessary. On line 10 of the Form 3 Summary Page, the committee enters the total of outstanding debts owed by it (from Schedule D), plus the balance of outstanding loans owed by it (from Schedule C). Paper filers must be sure to label the Schedule D as “debt owed by the committee” by checking the box for line 10 at the top of Schedule D.

What if the treasurer does not know the exact amount of a debt?
If the exact amount of a debt is not yet known, the treasurer may report an estimated amount, provided that the report notes that the figure is an estimate. (See example.)

Reporting estimated debts
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Once the committee knows the actual amount, the treasurer must either amend the earlier report (and all subsequent reports) to indicate the correct amount, or include the correct figure, along with an explanation of the change, in the campaign’s next report. 11 CFR 104.11(b).

What if the committee has disputed debts?
A disputed debt is a bona fide disagreement between the creditor and the committee as to the existence of a debt or the amount owed by the committee. 11 CFR 116.1(d). If the creditor provided something of value, notwithstanding the dispute, then the committee must disclose the following: the amount the committee admits it owes; the amount the creditor claims is owed; and any amounts the committee has paid the creditor. 11 CFR 116.10. The committee may also note on the report that disclosure of a disputed debt is not an admission of liability or a waiver of any claims against the creditor. Once a dispute is resolved, the committee should report the correct amount on the next report, along with a statement explaining that the dispute was resolved.

Can the committee stop reporting unpayable debts?
A committee with an unpayable debt (e.g., a debt owed to a defunct entity) that wants to stop reporting the debt should call its Reports Analysis Division (RAD) analyst for assistance. (The name and contact number of the assigned analyst can be accessed on the RAD FAQs web page.) RAD typically advises committees to file a statement on Form 99 (Miscellaneous Text Statement) that includes a request to discontinue reporting the debt and an explanation of why the debt is unpayable and what efforts the committee has made to contact the vendor, including the timeline and any supporting details. Committees must continue to report the debt until they have verified with RAD that a debt may be left off future reports. 11 CFR 116.9.

How does the committee report debts owed to it?
Continuously report a debt owed to the committee on Schedule D if the debt exceeds $500 or has been outstanding 60 days or more. 11 CFR 104.3(d) and 104.11. Payments received on the debt are also reported on Schedule D until the debt is retired. The debt repayments received must also be reported on the appropriate line number of the Detailed Summary Page and itemized on Schedule A if necessary. On line 9 of the Form 3 Summary Page, the committee enters the total of outstanding debts owed to it (from Schedule D), plus the balance of outstanding loans owed to it (from Schedule C). Paper filers must be sure to label the Schedule D as “debt owed to the committee” by checking the box for line 9 at the top of Schedule D.

May the campaign continue to raise contributions to retire debts after the election?
Yes. When raising contributions to retire debts after the election is over, a campaign must remember three general rules:
1. Debt retirement contributions are subject to the limits and prohibitions of the Act and must be aggregated with the contributor's prior contributions for that election;
2. Contributions made after an election to retire debts must, in most cases, be specifically designated for that election by the contributor; and
3. Contributions designated for, but made after, a particular election may not exceed the campaign’s net debts outstanding. 11 CFR 110.1(b)(3)(i).

How do I calculate “net debts outstanding?”
A campaign’s “net debts outstanding” consist of unpaid debts incurred with respect to the particular election less the sum of: 1) cash on hand; 2) amounts owed to the candidate or the committee; and 3) personal loans in excess of $250,000. “Unpaid debts” include the following: all outstanding debts and obligations; the estimated cost of raising funds to liquidate the debts; and if the campaign is terminating, estimated winding down costs (for example, office rental, staff salaries and office supplies). 11 CFR 110.1(b)(3)(ii). “Cash on hand” consists of the resources available to pay the campaign’s total debts, including currency, deposited funds, traveler’s checks, certificates of deposit, treasury bills and any other investments valued at fair market value. “Amounts owed” includes amounts owed to the campaign with respect to that election in the form of credits, refunds of deposits, returns and receivables or a commercially reasonable estimate of the collectible amount.

A campaign calculates its net debts outstanding as of the day of the election. Thereafter, the campaign continually recalculates its total net debts outstanding as additional funds are received for, or spent on, the election for which the debt remains. 11 CFR 110.1(b)(3)(ii) and (iii).

How should the committee report credit card payments?
Payments to credit card companies should be disclosed on Schedule B, line 17. Use MEMO entries to identify the original vendor(s) if payments to the vendor(s) exceed $200 during the election cycle. For more information, see the Interpretive Rule on Reporting of Ultimate Payees, 78 Fed. Reg. 40625 (2013). 11 CFR 104.9(a) and (b). (See example.)

Reporting credit card payments
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If there are multiple credit card payments on a report, you should clearly identify the payment to which each memo entry relates.

How should the committee report a loan from the candidate’s personal funds?
Report the initial receipt of the loan from the candidate on Schedule A, line 13(a) regardless of the amount of the loan. 11 CFR 104.3(a)(4)(iv). The loan must also be reported continuously on Schedule C until it is repaid in full. Make sure to include all loan terms on Schedule C. If there is no due date or interest rate, you can enter “none” or “n/a,” but you cannot leave these fields blank. Be sure to include the term “personal funds” on either Schedule A or C. (See examples.)

Reporting Candidate Loan from Personal Funds - Schedule A
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Reporting Candidate Loan from Personal Funds - Schedule C
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Are there any special rules on repaying personal loans from the candidate?
If the candidate makes loans to the campaign (including advances or candidate endorsed bank loans) that aggregate more than $250,000, the following rules apply:

  • The committee may use contributions to repay the candidate for the entire amount of the loan or loans only if those contributions were made on or before the day of the election; and
  • The committee may use contributions to repay the candidate only up to $250,000 from contributions made after the date of the election.

If the committee uses the amount of cash-on-hand as of the date of the election to repay the candidate for loans in excess of $250,000, then it must do so within 20 days of the election. During that time, the committee must treat the portion of candidate loans that exceed $250,000, minus the amount of cash-on-hand as of the day after the election as a contribution by the candidate. 11 CFR 116.11(c).

Any loan payments must be reported on Schedule B, line 19(a) and on Schedule C. 11 CFR 104.3(b)(4)(iii). Any interest payments must be reported as an operating expenditure and require itemization on Schedule B, line 17 once payments to the candidate exceed $200 in the election cycle.

How should the committee report a loan from the candidate derived from a lending institution?
For candidate loans to the committee derived from the candidate’s line of credit or bank loan, report the initial receipt of the loan from the candidate on Schedule A, line 13(a) regardless of the amount of the loan. 11 CFR 104.3(a)(4)(iv). The loan must also be reported continuously on Schedule C until it is repaid in full. Make sure to include the loan terms between the candidate and the committee on Schedule C. If there is no due date or interest rate, you can enter “none” or “n/a,” but you cannot leave these fields blank. Be sure to indicate the original source of the funds (e.g., “home equity line of credit,” “advance on brokerage account,” etc.) on Schedules A and C. In addition, the terms of the loan, advance, or line of credit extended by the lending institution to the candidate must be reported on Schedule C-1. Schedule C-1 must disclose the date, amount, and interest rate; the name and address of the lending institution; and the types and value of collateral that secure the loan, advance, or line of credit. Schedule C-1 must be filed with the first report disclosing the loan, and in succeeding reporting periods each time the loan or line of credit is restructured. (See examples.)

Reporting Candidate Bank Loan - Schedule A
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Reporting Candidate Bank Loan - Schedule C
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Reporting Candidate Bank Loan - Schedule C1
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May the candidate forgive a loan made to the campaign?
Yes. If the candidate is forgiving a loan, the candidate must write a letter, preferably on campaign letterhead, addressed to the FEC stating that he/she forgives the loan (Senate committees must send this letter to the Secretary of the Senate). The candidate’s original signature must be on this letter. If the committee files electronically, contact the software provider for help in disclosing loan forgiveness on the report. Paper filers must reduce the loan amount manually on the report.

For additional information on reporting campaign debt, please consult Chapter 13 of the Campaign Guide for Congressional Candidate Committees [PDF] and RAD’s online answers to frequently asked reporting questions.

(Posted 07/21/2014; By: Zainab Smith)

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