Section R2-20-109. Reporting Requirements

A.      In accordance with A.R.S. § 16-958(E), all persons obligated to file any campaign finance report under any provisions of Chapter 6, Article 2 of the Arizona Revised Statutes shall file such reports using the Secretary of State’s Internet-based finance-reporting system, except if expressly provided other- wise by another Commission rule.

B.       All participating candidates shall file campaign finance reports that include all receipts and disbursements for their current campaign account as follows:

1.        Expenditures for consulting, advising, or other such ser- vices to a candidate shall include a detailed description of what is included in the service, including an allocation of services to a particular election. When appropriate, the Commission may treat such expenditures as though made during the general election period.

2.        If a participating candidate makes an expenditure on behalf of the campaign using personal funds, the candi- date’s campaign shall reimburse the candidate within seven calendar days of the expenditure. After the 7 day period has passed, the expenditure shall be deemed an in- kind contribution subject to all applicable limits.

3.        A candidate may authorize an agent to purchase goods or services on behalf of such candidate, provided that:

a.         Expenditures shall be reported as of the date that the agent promises, agrees, contracts or otherwise incurs an obligation to pay for the goods or services;

b.        The candidate shall have sufficient funds in the can- didate’s campaign account to pay for the amount of such expenditure at the time it is made and all other outstanding obligations of the candidate’s campaign committee; and

c.         Within seven calendar days of the date upon which the amount of the expenditure is known, the candi- date shall pay such amount from the candidate’s campaign account to the agent who purchases the goods or services.

4.        A joint expenditure is made when two or more candidates agree to share the cost of goods or services. Candidates may make a joint expenditure on behalf of one or more other campaigns, but must be authorized in advance by the other candidates involved in the expenditure, and must be reimbursed within seven days. Participating can- didates may participate in joint expenditures for the cost of goods and services with one or more candidates, sub- ject to the following:

a.         Joint expenditures must be authorized in advance by all candidates sharing in the expenditure and allo- cated fairly among candidates. An allocated share of a joint expenditure paid by one candidate pursuant to such an agreement must be reimbursed within seven days.

b.        Any violator of part (a) shall be liable for a penalty pursuant to R2-20-222, in addition to penalties pre- scribed by any other law.

c.         If a fairly allocated share of any joint expenditure is not reimbursed to a candidate, the unreimbursed amount of the joint expenditure fairly allocated to that candidate shall be deemed a contribution to that candidate by the campaign committee of the candi- date obligated to reimburse the share.

d.        If a fairly allocated share of any joint expenditure is not reimbursed to a participating candidate, the can- didate obligated to reimburse the share shall reim- burse the fund for the unreimbursed amount of the joint expenditure fairly allocated to the obligated candidate, in addition to any penalty specified by law.

5.        For the purposes of the Act and Commission rules, a can- didate or campaign shall be deemed to have made an expenditure as of the date upon which the candidate or campaign promises, agrees, contracts or otherwise incurs an obligation to pay for goods or services.

C.      Timing of reporting expenditures.

1.        Except as set forth in subsection (B)(2) above, a partici- pating candidate shall report a contract, promise or agree- ment to make an expenditure resulting in an extension of credit as an expenditure, in an amount equal to the full future payment obligation, as of the date the contract, promise or agreement is made.

2.        In the alternative to reporting in accordance with subsec- tion (B)(1) above, a participating candidate may report a contract, promise or agreement to make an expenditure resulting in an extension of credit as follows:

a.         For a month-to-month or other such periodic con- tract or agreement that is terminable by a candidate at will and without any termination penalty or pay- ment, the candidate may report an expenditure, in an amount equal to each future periodic payment, as of the date upon which the candidate’s right to termi- nate the contract or agreement and avoid such future periodic payment elapses.

b.        For a contract,  promise or agreement  to provide goods or services during the general election period that is contingent upon a candidate advancing to the general election period, the candidate may report an expenditure, in an amount equal to the general elec- tion period payment obligation, as of the date upon which such contingency is satisfied.

c.         For a contract, promise or agreement to pay rent, utility charges or salaries payable to individuals employed by a candidate’s campaign committee as staff, the candidate may report an expenditure, in an amount equal to each periodic payment, as of the date that is the sooner of (i) the date upon which payment is made; or (ii) the date upon which pay- ment is due.

D.      Transportation expenses.

1.        Except as otherwise provided in this subsection (D), the costs of transportation relating to the election of a partici- pating statewide or legislative office candidate shall not be considered a direct campaign expense and shall not be reported by the candidate as expenditures or as in-kind contributions.

2.        If a participating candidate travels for campaign purposes in a privately owned automobile, the candidate may:

a.         Use campaign funds to reimburse the owner of the automobile at a rate not to exceed the state mileage reimbursement rate in which event the reimburse- ment shall be considered a direct campaign expense and shall be reported as an expenditure and reported in the reporting period in which the expenditure was incurred. If a candidate chooses to use campaign funds to reimburse, the candidate shall keep an itin- erary of the trip, including name and type of events(s) attended, miles traveled and the rate at which the reimbursement was made. This subsection applies to candidate owned automobiles in addition to any other automobile.

b.        Use campaign funds to pay for direct fuel purchases for the candidate’s automobile only and shall be reported. If a candidate chooses to use campaign funds for direct fuel purchases, the candidate shall keep an itinerary of the trip, including name and type of events(s) attended, miles traveled and the rate at which the reimbursement could have been made.

3.        Use of airplanes.

a.         If a participating candidate travels for campaign pur- poses in a privately owned airplane, within 7 days from the date of travel, the candidate shall use cam- paign funds to reimburse the owner of the airplane at a rate of $150 per hour of flying time, in which event the reimbursement shall be considered a direct cam- paign expense and shall be reported as an expendi- ture. If the owner of the airplane is unwilling or unable to accept reimbursement, the participating candidate shall remit to the fund an amount equal to

$150 per hour of flying time.

b.        If a participating candidate travels for campaign pur- poses in a state-owned airplane, within 7 days from the date of travel, the candidate shall use campaign funds to reimburse the state for the portion allocable to the campaign in accordance with subsection (3)(a), above. The portion of the trip attributable to state business shall not be reimbursed. If payment to the State is not possible, the payment shall be remit- ted to the Clean Elections Fund.

4.        If a participating candidate rents a vehicle or purchases a ticket or fare on a commercial carrier for campaign pur- poses, the actual costs of such rental (including fuel costs), ticket or fare shall be considered a direct campaign expense and shall be reported as an expenditure.

E.       Reports and Refunds of Excess Monies by Participating Can- didates

1.        In addition to the campaign finance reports filed pursuant to A.R.S. §16-913, participating candidates shall file the following campaign finance reports and dispose of excess monies as follows:

a.         Prior to filing the application for funding pursuant to

A.R.S. §16-950, participating candidates shall file a campaign finance report with the names of the per- sons who have made qualifying contributions to the candidate.

b.        At the end of the qualifying period, a participating candidate shall file a campaign finance report con- sisting of all early contributions received, including personal monies and the expenditures of such mon- ies.

i.         The campaign finance report shall be filed with the Secretary of State no later than five days after the last day of the qualifying period and shall include all campaign activity through the last day of the qualifying period.

ii.        If the campaign finance report shows any amount unspent monies, the participating can- didate, within five days after filing the cam- paign finance  report,  shall remit  all  unspent contributions to the Fund, pursuant to A.R.S.

§16-945(B). Any unspent personal monies shall be returned to the candidate or the candi- dates’ family member within five days.

2.        Each participating candidate shall file a campaign finance report consisting of all expenditures made in connection with an election, all contributions received in the election cycle in which such election occurs, and all payments made to the Clean Elections Fund. If the campaign finance report shows any amount unspent, the participat- ing candidate, within five days after filing the campaign finance report, shall send a check from the candidate’s campaign account to the Commission in the amount of all unspent monies to be deposited the Fund.

a.         The campaign finance report for the primary elec- tion shall be filed within five days after the primary election day and shall reflect all activity through the primary election day.

b.        The campaign finance report for the general election shall be considered filed upon the filing of the post- general campaign finance report filed in accordance with A.R.S. § 16-913(B)(3).

3.        In the event that a participating candidate purchases goods or services from a subcontractor or other vendor through an agent pursuant to subsection (A)(3), the candi- date’s campaign finance report shall include the same detail as required in A.R.S. § 16-948(C) for each such subcontractor or other vendor. Such detail is also required when petty cash funds are used for such expenditures.

F.       Independent Expenditure Reporting Requirements.

1.        Any person making independent expenditures cumula- tively exceeding the amount prescribed in A.R.S. § 16- 941(D) in an election cycle shall file campaign finance reports in accordance with A.R.S. § 16-958 and Commis- sion rules.

2.        Any person required to comply with A.R.S. § 16-917 shall provide a copy of the literature and advertisement to the Commission at the same time and in the same manner as prescribed by A.R.S. § 16-917(A) and (B). For pur- poses of this subsection (F), “literature and advertise- ment” includes electronic communications, including emails and social media messages or postings, sent to more than 1,000 people.

3.        Any person making an independent expenditure on behalf of a candidate, participating or non-participating, and not timely filing a campaign finance report as required by A.R.S. § 16-941(D), A.R.S. § 16-958, or A.R.S. § 16-913 shall be subject to a civil penalty as described in A.R.S. § 16-942(B). An expenditure advocating against one or more candidates shall be considered an expenditure on behalf of any opposing candidate or candidates. This sub- section and A.R.S. § 16-942(B) applies to any political committee that accepts contributions or makes expendi- tures on behalf of any candidate, participating or nonpar- ticipating, regardless of any other contributions taken or expenditures made. Penalties imposed pursuant to this subsection shall not exceed twice the amount of expendi- tures not reported. Penalties shall be assessed as follows:

a.         For an election involving a candidate for statewide office, the civil penalty shall be $300 per day.

b.        For an election involving a legislative candidate, the civil penalty shall be $100 per day.

c.         The penalties in (a) and (b) shall be doubled if the amount not reported for a particular election cycle exceeds ten (10%) percent of the applicable one of the adjusted primary election spending limit or adjusted general election spending limit.

d.        The dollar amounts in items (a) and (b), and the spending limits in item (c) are subject to adjustment of A.R.S. § 16-959.

4.        Any corporation, limited liability company, or labor orga- nization that is both (a) not registered as a political com- mittee and (b) in compliance with or intends to comply with A.R.S. § 16-920(A)(6) and A.R.S. § 16- 914.02(A)(2) may seek an exemption from the reporting requirements of A.R.S. § 16-941(D) and A.R.S. § 16- 958(A) and (B) for an election cycle by applying to the Commission for an exemption using a form specified by the Commission’s Executive Director.

5.        The form shall contain, at a minimum, a sworn statement by a natural person authorized to bind the corporation, limited liability company, or labor organization certifying that the corporation, limited liability company, or labor organization:

a.         is in compliance with, and intends to remain in com- pliance with, the reporting requirements of A.R.S. § 16-914.02(A)-(J); and

b.        has or intends to spend more than the applicable threshold prescribed by A.R.S. § 16-914.02(A)(1) and (A)(2).

6.        A corporation, limited liability company, or labor organi- zation that does not receive an exemption from the Com- mission must file the Clean Elections Act independent expenditure reports specified by A.R.S. § 16-941(D) and A.R.S. § 16-958(A)-(B).

7.        Unless the request for an exemption is incomplete or the Executive Director is aware that any required statement is untrue or incorrect, the Executive Director shall grant the exemption. Civil penalties shall not accrue during the pendency of a request for exemption.

a.         If the Executive Director deems the application for exemption is incomplete the person may reapply within two weeks of the Executive Director's deci- sion by filing a completed application for exemp- tion.

b.        The denial of an exemption pursuant to this subsec- tion is an appealable agency action. The Executive Director shall draft and serve notice of an appealable agency action pursuant to A.R.S. § 41-1092.03 and § 41-1092.04 on the respondent. The notice shall iden- tify the following:

i.         The specific facts constituting the denial;

ii.        A description of the respondent’s right to request a hearing and to request and informal settlement conference; and

iii.      A description of what the respondent may do if the respondent wishes to remedy the situation without appealing the Commission’s decision.

8.        A corporation, limited liability company, or labor organi- zation that has received an exemption is exempt from the filing requirements of A.R.S. § 16-941(D) and A.R.S. § 16-958 and the civil penalties outlined in A.R.S. § 16- 942, provided that the exempt entity, during the election cycle (a) remains in compliance with the reporting requirements of A.R.S. § 16-914.02 (A)-(J) and (b) remains in compliance with section part (2) of this sub- section (F). All Commission rules and statutes related to enforcement apply to exempt entities. The Commission may audit these entities.

9.        Any person may file a complaint with the Commission alleging that (a) any corporation, limited liability com- pany, or labor organization that has applied for or received an exemption under this subsection has provided false information in an application or violated the terms of the exemption stated in part (8) of this subsection (F); or (b) any person that has not applied for or received an exemption has violated A.R.S. § 16-941(D), § 16-958, or parts (1), (2), or (6) of this subsection (F). Complaints shall be processed as prescribed in Article 2 of these rules. If the Commission finds that a complaint is valid, the person complained of shall be liable as outlined in

A.R.S. § 16-942(B) and part (3) of this subsection (F), in addition to any other penalties applicable pursuant to rule or statute.

10.     Neither a form filed seeking an exemption pursuant to this subsection (F) nor a Clean Elections Act independent expenditure report filed as specified by A.R.S. § 16-9958 constitutes an admission that the filer is or should be con- sidered a political committee. The grant of an exemption pursuant to this subsection (F) does not constitute a find- ing or determination that the filer is or should be consid- ered a political committee.

11.     Any entity that has been granted an exemption as of Sep- tember 11, 2014 is deemed compliant with the require- ments of subpart (5) of this subsection (F) for the election cycle ending in 2014.

12.     For the purposes of this rule, the following apply:

a.         An entity shall not be found to be a political commit- tee under A.R.S. § 16-901(20)(f) unless, a prepon- derance of the evidence establishes that during a two-year legislative election cycle, the total report- able contributions made by the entity plus the total reportable expenditures made by the entity exceeds both $500 and fifty percent (50%) of the entity’s total spending during the election cycle.

i.         For purposes of this provision, a “reportable contribution” or “reportable expenditure” shall be limited to a contribution or expenditure, as defined in title 16 of the Arizona revised stat- utes, that must be reported to the Arizona secre- tary of state, the Arizona citizens clean elections commission, or local filing officer in Arizona. A contribution or expenditure that must be reported to the federal election com- mission or to the election authority of any other state, but not to the Arizona secretary of state, the Arizona citizens clean elections commis- sion or a local filing officer in Arizona, shall not be considered a reportable contribution or reportable expenditure.

ii.        For purposes of this provision, “total spending” shall not include volunteer time or fundraising and administrative expenses but shall include all other spending by the organization.

iii.      For purposes of this provision, grants to other organizations shall be treated as follows:

(1)     A grant made to a political committee or an organization organized under section 527 of the internal revenue code shall be counted in total spending and as a report- able contribution or reportable expendi- ture, unless expressly designated for use outside Arizona or for federal elections, in which case such spending shall be counted in total spending but not as a reportable contribution or reportable expenditure.

(2)     If the entity making a grant takes reason- able steps to ensure that the transferee does not use such funds to make a report- able contribution or reportable expendi- ture, such a grant shall be counted in total spending but not as a reportable contribu- tion or reportable expenditure.

vi. If the entity making a grant earmarks the grant for reportable contributions or reportable expenditures, knows the grant will be used to make reportable contributions or reportable expenditures, knows that a recipient will likely use a portion of the grant to make reportable contributions or reportable expenditures, or responds to a solicitation for reportable contri- butions or reportable expenditures, the grant shall be counted in total spending and the rele- vant portion of the grant as set forth in subsec- tion (F)(12)(a)(v) shall count as a reportable contribution or reportable expenditure.

v.     Notwithstanding subsections (F)(12)(a)(iii) and

(iv) the amount of a grant counted as a report- able contribution or reportable expenditure shall be limited to the lesser of the grant or the following:

(1)     The amount that the recipient organization spends on reportable contributions and reportable expenditures, plus

(2)     The amount that the recipient organization gives to third parties but not more than the amount that such third parties fund report- able contributions or reportable expendi- tures.

b.        Notwithstanding subsection (F)(12)(a), the commis- sion may nonetheless determine that an entity is not

a political committee if, taking into account all the facts and circumstances of grants made by an entity, it is not persuaded that the preponderance of the evi- dence establishes that the entity is a political com- mittee as defined in title  16 of Arizona Revised Statutes.

G.      Non-participating Candidate Reporting Requirements and Contribution Limits. Any person may file a complaint with the Commission alleging that any non-participating candidate or that candidate’s campaign committee has failed to comply with or violated A.R.S. § 16-941(B). Complaints shall be pro- cessed as prescribed in Article 2 of these rules. In addition to those penalties outlined in R2-20-222(B), a non-participating candidate or candidate’s campaign committee violating A.R.S.

§ 16-941(B) shall be subject to penalties prescribed in A.R.S.

§ 16-941(B) and A.R.S. § 16-942(B) and (C) as applicable:

1.        Penalties under A.R.S. § 16-942(B), for a violation by or on behalf of any non-participating candidate or that can- didate’s campaign committee of any reporting require- ment imposed by chapter 6 of title 16, Arizona Revised Statutes, in association with any violation of A.R.S. § 16- 941(B):

a.         For an election involving a candidate for statewide office, the civil penalty shall be $300 per day.

b.        For an election involving a legislative candidate, the civil penalty shall be $100 per day.

c.         The penalties in (G)(1)(a) and (b) shall be doubled if the amount not reported for a particular election cycle exceeds ten percent (10%) of the applicable one of the adjusted primary election spending limit or adjusted general election spending limit.

d.        The dollar amounts in items (G)(1)(a) and (b), and the spending limits in item (G)(1)(c) are subject to adjustment of A.R.S. § 16-959.

2.        Penalties under A.R.S. § 16-942(C): Where a campaign finance report filed by a non-participating candidate or that candidate’s campaign committee indicates a violation of A.R.S. § 16-941(B) that involves an amount in excess of ten percent (10%) of the sum of the adjusted primary election spending limit and the adjusted general election spending limit specified by A.R.S. § 16-961(G) and (H) as adjusted pursuant to A.R.S. § 16-959, that violation shall result in disqualification of a candidate or forfeiture of office.

3.        Penalties under A.R.S. § 16-941(B): Regardless of whether or not there is a violation of a reporting require- ment, a person who violates A.R.S. § 16-941(B) is sub- ject to a civil penalty of three times the amount of money that has been received, expended, or promised in viola- tion of A.R.S. § 16-941(B) or three times the value in money for an equivalent of money or other things of value that have been received, expended, or promised in violation of A.R.S. § 16-941(B).

Historical Note

New Section adopted by exempt rulemaking at 6 A.A.R. 1567, effective June 21, 2000 (Supp. 00-2). Section repealed; new Section made by exempt rulemaking at 8

A.A.R. 588, effective October 17, 2001 (Supp. 02-1). Amended by exempt rulemaking at 11 A.A.R. 4518, effective May 28, 2005 (Supp. 05-4). Amended by

exempt rulemaking at 13 A.A.R. 3597, effective January 1, 2008 (Supp. 07-4). Amended by exempt rulemaking at

15 A.A.R. 1156, effective August 31, 2009 (Supp. 09-2). Amended by exempt rulemaking at 16 A.A.R. 152, effec- tive January 29, 2010 (Supp. 10-1). Subsections R2-20- 109(A), (A)(4), and (B) through (E) amended by exempt

rulemaking at 19 A.A.R. 2923, effective October 6, 2011; Subsections R2-20-109(A) and (C)(2) amended by exempt rulemaking at 19 A.A.R. 2923, effective August 29, 2013; Subsection R2-20-109(C)(3) amended by exempt rulemaking at 19 A.A.R. 2923, effective January 1, 204 (Supp. 13-3). Amended by exempt rulemaking at

19 A.A.R. 3519, effective September 27, 2013 (Supp. 13-

4). Amended by exempt rulemaking at 20 A.A.R. 1329,

effective May 22, 2014 (Supp. 14-2). Amended by exempt rulemaking at 20 A.A.R. 2804, effective Septem- ber 11, 2014 (Supp. 14-3). Subsection R2-20-109(D) amended by final exempt rulemaking at 21 A.A.R. 3168 effective October 29, 2015; subsection R2-20-109(F) amended by final exempt rulemaking at 21 A.A.R. 3168 effective October 30, 2015 (Supp. 15-4).