970 CMR, § 1.03

Current through Register 1536, December 6, 2024

Section 1.03 - Debts

(1)Corporate Debts. Debts owed to business corporations or other entities subject to M.G.L. c. 55, § 8 for goods and services may not be settled by candidates or political committees other than ballot question committees or independent expenditure PACs for less than the amount owed unless both the business corporation or other entity subject to M.G.L. c. 55, § 8 and the political committee treat the debt in a commercially reasonable manner. A corporation which settles a debt for less than the amount owed has made an in-kind contribution to the ballot question committee or independent expenditure PAC, and the ballot question committee or PAC must disclose the receipt of the in-kind contribution on its campaign finance reports. 970 CMR 1.03 shall not apply to a debt which is the subject of a dispute between a political committee and a creditor involving questions of satisfactory delivery of goods or services, or the amount owed. In order for a settlement of such a debt to occur all of the following requirements must be met:

(a) Credit was extended in the ordinary course of business similar to terms granted to other political and non-political debtors.

(b) The committee has made commercially reasonable efforts to satisfy the debt.

(c) The creditor has pursued remedies to seek payment in the same manner it normally takes against debtors in a financial condition similar to the committee.

(d) The settlement is similar to others the creditor has made with other debtors, and similar to settlements the committee has proposed to its other creditors.

(e) The length of time prior to settlement is consistent with normal business and trade practice.

(f) A political committee or candidate must file with this office a Statement of Settlement, which is subject to review, within 30 days of any such settlement. All Statements of Settlement must be signed by the Treasurer and Candidate of the political committee, and a duly authorized agent of the corporation.

(2)Noncorporate Debts. Debts to individuals or unincorporated proprietors not subject to M.G.L. c. 55, § 8 may be settled for less than the amount owed in the same manner as provided in 970 CMR 1.03(1), or by meeting each of the following requirements:

(a) The amount forgiven is set forth in a letter of forgiveness and when considered together with amounts contributed from the same individual, is no more than the amount said individual may contribute in accordance with M.G.L. c. 55 or 970 CMR.

(b) The political committee must report any debt which is forgiven as an in-kind contribution.

(3)Definition of "Liability". For purposes of M.G.L. c. 55, a "liability" is an obligation to make an expenditure which arises when a candidate or political committee, or person acting on behalf of a candidate or political committee, receives the proceeds of a loan or a good or service for the purpose of influencing the nomination or election of a candidate or for the purpose of promoting or opposing a question submitted to the voters, or is otherwise legally obligated to make a payment.

(4) Where a debt has been reported as a liability by a candidate or political committee for at least six years, and the candidate or committee does not have funds to make a payment and does not expect to have such funds available, or the creditor is no longer in business or cannot be located, an affidavit may be submitted to OCPF by the candidate or treasurer, to indicate that the liability is no longer in effect. In order for a debt to no longer be in effect after six years, the following requirements must be met:

(a) At the time the liability was incurred, the candidate and committee treasurer intended that the amount due would be paid in full;

(b) Credit was extended in the ordinary course of business similar to terms granted to other political and nonpolitical debtors;

(c) The committee has made commercially reasonable efforts to satisfy the debt;

(d) To the best of the candidate or treasurer's knowledge, the creditor has pursued remedies to seek payment in the same manner it normally takes against debtors in a financial condition similar to the committee;

(e) To the best of the candidate or treasurer's knowledge, the goods or services provided by the creditor were not intended by the creditor as an in-kind contribution to the candidate or committee; and

(f) Payment on the full amount owed has not been made because the candidate or committee has no funds to make such payment and has no reasonable expectation of being able to make such payment in the future, or because the creditor is no longer in business or cannot be located.