PART 116—DEBTS OWED BY CANDIDATES AND POLITICAL COMMITTEES Authority: 52 U.S.C. 30103(d), 30104(b)(8), 30111(a)(8), 30116, 30118, and 30141. Source: 55 FR 26386, June 27, 1990, unless otherwise noted. § 116.1 Definitions. (a) Terminating committee. terminating committee (b) Ongoing committee. ongoing committee (c) Commercial vendor. commercial vendor (d) Disputed debt. disputed debt (e) Extension of credit. extension of credit (1) Any agreement between the creditor and political committee that full payment is not due until after the creditor provides goods or services to the political committee; (2) Any agreement between the creditor and the political committee that the political committee will have additional time to pay the creditor beyond the previously agreed to due date; and (3) The failure of the political committee to make full payment to the creditor by a previously agreed to due date. (f) Creditor. creditor [55 FR 26386, June 27, 1990; 55 FR 34007, Aug. 20, 1990] § 116.2 Debts owed by terminating committees, ongoing committees, and authorized committees. (a) Terminating committees. (b) Ongoing committees. (c) Authorized committees. (i) It has any outstanding debts or obligations; or (ii) It has any funds or assets available to pay part or all of the outstanding debts or obligations owed by another authorized committee of the same candidate and that other authorized committee is unable to pay such debts or obligations. (2) No transfers of funds may be made from a candidate's authorized committee to another authorized committee of the same candidate if the transferor committee has net debts outstanding at the time of the transfer under the formula described in 11 CFR 110.1(b)(3)(ii). (3) An authorized committee that qualifies as a terminating committee may assign debts to another authorized committee of the same candidate to the extent permitted under applicable state law provided that the authorized committee assigning the debts has no cash on hand or assets available to pay any part of the outstanding debts, and provided that the authorized committee assigning the debts was not organized to further the candidate's campaign in an election not yet held. If a Presidential candidate elects to receive federal funds pursuant to 11 CFR part 9001 et seq. et seq., (i) The authorized committee that has assigned the debts otherwise qualifies for termination under 11 CFR 102.3; and (ii) The authorized committee that received the assigned debts notifies the Commission in writing that it has assumed the obligation to pay the entire amount owed and that it has assumed the obligation to report the debts, and any contributions received for retirement of the assigned debts, in accordance with 11 CFR part 104. The assigned debts shall be disclosed on a separate schedule of debts and obligations attached to the authorized committee's reports. Contributions received for retirement of the assigned debts shall be disclosed on a separate schedule of receipts attached to the authorized committee's reports. See [55 FR 26386, June 27, 1990, as amended at 79 FR 77849, Dec. 29, 2014] § 116.3 Extensions of credit by commercial vendors. (a) Unincorporated vendor. (b) Incorporated vendor. (c) Ordinary course of business. (1) Whether the commercial vendor followed its established procedures and its past practice in approving the extension of credit; (2) Whether the commercial vendor received prompt payment in full if it previously extended credit to the same candidate or political committee; and (3) Whether the extension of credit conformed to the usual and normal practice in the commercial vendor's trade or industry. (d) Extension of credit by regulated industries. [55 FR 26386, June 27, 1990, as amended at 79 FR 77849, Dec. 29, 2014] § 116.4 Forgiveness or settlement of debts owed to commercial vendors. (a) Unincorporated vendor. (1) The amount forgiven is exempted from the definition of contribution in 11 CFR part 100, subpart C; or (2) The commercial vendor has treated the debt in a commercially reasonable manner and the requirements of 11 CFR 116.7 or 116.8, as appropriate, are satisfied. (b) Incorporated vendor. (1) The amount forgiven is exempted from the definition of contribution in 11 CFR part 100, subpart C; or (2) The corporation has treated the debt in a commercially reasonable manner and the requirements of 11 CFR 116.7 or 116.8, as appropriate, are satisfied. (c) Reasonable efforts by a political committee. see see (1) The amount forgiven is exempted from the definition of contribution in 11 CFR part 100, subpart C; or (2) The candidate and the political committee have undertaken all reasonable efforts to satisfy the outstanding debt and the requirements of 11 CFR 116.7 or 116.8, as appropriate, including the submission of the information specified in those sections and Commission review, are satisfied. (d) Commercially reasonable. (1) The initial extension of credit was made in accordance with 11 CFR 116.3; (2) The candidate or political committee has undertaken all reasonable efforts to satisfy the outstanding debt. Such efforts may include, but are not limited to, the following— (i) Engaging in fundraising efforts; (ii) Reducing overhead and administrative costs; and (iii) Liquidating assets; and (3) The commercial vendor has pursued its remedies as vigorously as it would pursue its remedies against a nonpolitical debtor in similar circumstances. Such remedies may include, but are not limited to, the following— (i) Oral and written requests for payment; (ii) Withholding delivery of additional goods or services until overdue debts are satisfied; (iii) Imposition of additional charges or penalties for late payment; (iv) Referral of overdue debts to a commercial debt collection service; and (v) Litigation. (e) Settlement or forgiveness not required. (f) Reporting. [55 FR 26386, June 27, 1990, as amended at 67 FR 78682, Dec. 26, 2002] § 116.5 Advances by committee staff and other individuals. (a) Scope. (b) Treatment as contributions. (1) The payment is for the individual's transportation expenses incurred while traveling on behalf of a candidate or political committee of a political party or for usual and normal subsistence expenses incurred by an individual, other than a volunteer, while traveling on behalf of a candidate or political committee of a political party; and (2) The individual is reimbursed within sixty days after the closing date of the billing statement on which the charges first appear if the payment was made using a personal credit card, or within thirty days after the date on which the expenses were incurred if a personal credit card was not used. For purposes of this section, the closing date shall be the date indicated on the billing statement which serves as the cutoff date for determining which charges are included on that billing statement. In addition, “subsistence expenses” include only expenditures for personal living expenses related to a particular individual traveling on committee business, such as food or lodging. (c) Treatment as debts. (d) Settlement or forgiveness of the debt. See See (e) Reporting. [55 FR 26386, June 27, 1990, as amended at 56 FR 35911, July 29, 1991; 67 FR 78682, Dec. 26, 2002] § 116.6 Salary payments owed to employees. (a) Treatment as debts or volunteer services. (b) Settlement or forgiveness of the debt. (c) Reporting. [55 FR 26386, June 27, 1990, as amended at 67 FR 78682, Dec. 26, 2002] § 116.7 Debt settlement plans filed by terminating committees; Commission review. (a) Procedures for filing debt settlement plans. (1) Has been paid in full; (2) Has been settled and the requirements of this section, including Commission review, have been satisfied; (3) Has been forgiven by the creditor and the requirements of 11 CFR 116.8, including Commission review, have been satisfied; (4) Has been determined not to be payable pursuant to 11 CFR 116.9; or (5) Has been otherwise extinguished or discharged. (b) Debts subject to settlement. (1) Amounts owed to commercial vendors ( See (2) Debts arising from advances by committee staff and other individuals ( See (3) Salary owed to committee employees ( See (4) Debts arising from loans from political committees or individuals, including candidates, to the extent permitted under 11 CFR part 110. (c) Debts that shall not be settled; Disputed debts. (2) Disputed debts are not subject to the debt settlement and Commission review requirements and procedures. ( See (d) Reporting. (e) Contents of debt settlement plans. (i) The terms of the initial extension of credit and a description of the terms under which the creditor has extended credit to nonpolitical debtors of similar risk and size of obligation; (ii) A description of the efforts made by the candidate or the terminating committee to satisfy the debt; (iii) A description of the remedies pursued by the creditor to obtain payment of the debt and a comparison to the remedies customarily pursued by the creditor in similar circumstances involving nonpolitical debtors; and (iv) The terms of the debt settlement and a comparison to the terms of the creditor's other debt settlements involving nonpolitical debtors in similar circumstances, if any. (2) Each debt settlement plan filed under this section shall include a signed statement from each creditor covered indicating agreement to the terms of the settlement of the debt owed to that creditor. (3) The debt settlement plan shall include a statement as to whether the terminating committee has sufficient cash on hand to pay the total amount indicated in the debt settlement plan, and if not, a statement as to what steps the terminating committee will take to obtain the funds needed to make the payments. (4) If a debt settlement plan does not include settlements for all of the terminating committee's outstanding debts and obligations, the debt settlement plan shall include a separate list of all of the terminating committee's remaining debts and obligations, including debts that are not subject to debt settlement as set forth in paragraph (c) of this section. The debt settlement plan shall indicate— (i) Whether the terminating committee intends to pay the entire amount still owed on each remaining debt or obligation or to settle such debts and obligations, and if settlement is contemplated, the terms that were or will be offered to the creditor(s); and (ii) Whether the terminating committee has sufficient cash on hand to pay such remaining debts and obligations, or to pay a lesser portion of such amounts, and if not, what steps the terminating committee will take to obtain the funds needed to make such payments. (5) If the terminating committee expects to have residual funds or assets after disposing of all its outstanding debts and obligations, the debt settlement plan shall include a statement as to the purpose for which such residual funds or assets will be used. See (6) The political committee filing the debt settlement plan shall demonstrate in the debt settlement plan that such political committee qualifies as a terminating committee under 11 CFR 116.1(a) and shall state when the political committee expects to file a termination report under 11 CFR 102.3. (7) Upon the Commission's request, the candidate, the terminating committee or the creditor shall provide such additional information as the Commission may require to review the debt settlement plan. The Commission may also require the submission of additional debt settlement agreements prior to Commission review of the debt settlement plan. (f) Commission review of debt settlement plans. (1) The information provided by the terminating committee and the creditors under this section; (2) The amount of each debt that remains unpaid and the length of time each debt has been overdue; (3) The amount and percentage of each debt that would be forgiven under the plan; (4) The total amount of debts and obligations owed by the terminating committee to all creditors, compared to the total amount of cash on hand and other amounts available to pay those debts and obligations; (5) The year to date expenditures and receipts of the terminating committee; and (6) Whether the total percentage that was or will be repaid on any loans made by the candidate to the terminating committee is comparable to the total percentage that was or will be paid to other creditors. (g) Debts dischargeable in bankruptcy. § 116.8 Creditor forgiveness of debts owed by ongoing committees; Commission review. (a) General requirements. (1) The creditor has exercised reasonable diligence in attempting to locate the ongoing committee and has been unable to do so; or (2) The ongoing committee— (i) Does not have sufficient cash on hand to pay the creditor; (ii) Has receipts of less than $1000 during the previous twenty-four months; (iii) Has disbursements of less than $1000 during the previous twenty-four months; and (iv) Owes debts to other creditors of such magnitude that the creditor could reasonably conclude that the ongoing committee will not pay this particular debt. (b) Procedures for forgiving debts. (1) The terms of the initial extension of credit and a description of the terms under which the creditor has extended credit to nonpolitical debtors of similar risk and size of obligation; (2) A description of the efforts made by the candidate or the ongoing committee to satisfy the debt; (3) A description of the remedies pursued by the creditor to obtain payment of the debt and a comparison to the remedies customarily pursued by the creditor in similar circumstances involving nonpolitical debtors; and (4) An indication that the creditor has forgiven other debts involving nonpolitical debtors in similar circumstances, if any. (c) Commission review. [55 FR 26386, June 27, 1990, as amended at 89 FR 218, Jan. 2, 2024] § 116.9 Creditors that cannot be found or that are out of business. (a) General requirements. (1) The creditor has gone out of business and no other entity has a right to be paid the amount owed; or (2) The political committee has exercised reasonable diligence in attempting to locate the creditor and has been unable to do so. Reasonable diligence in attempting to locate the creditor (b) Terminating committees. (c) Ongoing committees. (d) Reporting. [55 FR 26386, June 27, 1990, as amended at 89 FR 218, Jan. 2, 2024] § 116.10 Disputed debts. (a) Reporting disputed debts. See also (b) Disputed debts owed by terminating committees.