Last time in Compliance Corner, we discussed the basics of the Form BE annual pay-to-play disclosure. This form must be filed by March 30 for any business entity that received payments of $50,000 or more from New Jersey government contracts during 2020.

Today, we’ll address some of the common questions that arise when considering this filing.

Q: If my business entity did not make any political contributions in 2020, do we still need to file?

Yes, there is a filing obligation whenever the business entity met the $50,000 contracting threshold during 2020. If New Jersey government-contract receipts didn’t reach $50,000 during 2020, then no filing is required. A business that has fluctuating levels of government contracts may have a filing obligation in one year but not in another year.

The contribution history is important, though, because if a business entity with a filing obligation made at least one reportable contribution to a New Jersey candidate or recipient in 2020 (and this can include contributions made by the key people, spouses, and related entities of the business entity), a detailed report showing all contracts and contributions must be filed. In contrast, if no reportable contributions were made by covered contributors, then a one-page report without detailed contract information may be filed.

Q:  If our corporate family has multiple subsidiaries and affiliates, each with government contracts, how many pay-to-play disclosures do I need to file?

This depends on how many of these affiliated entities independently hold New Jersey government contracts. Each business entity with its own separate EIN must file its own report if that entity independently reached the $50,000 filing threshold. Therefore, one business may be required to file two, three, or even ten different disclosures if there are affiliates and subsidiaries that each hold government contracts in their own names.

Q: Which amounts from my New Jersey government contracts count toward the $50,000 filing threshold?

The focus of the Form BE disclosure is on the amount actually received from New Jersey government contracts in 2020. Therefore, if my business entity entered its only government contract in December 2020 but didn’t receive any payment until January 2021, there would be nothing to disclose because no payments were received in 2020. In this case, the business entity may have a filing obligation in March 2022 based on the amounts received in 2021.

Similarly, if my business entity entered a New Jersey government contract in 2019 or 2018 or some earlier year, we would still need to report any payments received under that contract during 2020.

Q: Do contributions to federal candidates need to be disclosed?

No, it is only contributions made during 2020 to New Jersey state and local candidates, political party committees, PACs, political committees, and legislative leadership committees that are relevant for the Form BE. Therefore, contributions to federal candidates (even if the federal candidate represents New Jersey) or to candidates in other states may be omitted.

Keep in mind that any reportable contribution in 2020 to a New Jersey recipient must be disclosed if there is a filing obligation. A contribution is reportable when it exceeds $300 per election to a candidate or $300 per calendar year to a non-candidate committee. This $300 threshold is an aggregate throughout the entire reporting period. Therefore, if I contribute $200 to Party Committee A in January 2020 and then an additional $200 to Party Committee A in December 2020, both contributions must be disclosed because they exceed $300 in the aggregate from one covered contributor during the calendar year.

This analysis is a bit more complex when it comes to candidates because the reporting period for a candidate follows the entire course of an election. Therefore, for a candidate that ran in the 2020 primary election, contributions made in 2017, 2018, 2019, and 2020 may all have counted toward the 2020 primary election. If my aggregate contributions exceeded $300 to this candidate for the 2020 primary and at least $0.01 was contributed in 2020, I would need to disclose the 2020 contribution on this year’s Form BE no matter the 2020 amount because the 2020 contribution becomes reportable (that is, it exceeds $300) in the aggregate when combined with the previous contributions. As we have discussed, election cycles are important.

Q: Contracts with which government entities count toward the $50,000 filing threshold?

It is only contracts with New Jersey government entities that are relevant for this disclosure. Therefore, government contracts with the federal government, New York, Pennsylvania, or even with such bi-state agencies as the Port Authority of New York and New Jersey aren’t relevant for this disclosure. Similarly, contracts with non-government entities aren’t subject to disclosure—contracts with New Jersey non-profits or for-profit companies may be omitted.

Q: If our company has a PAC, are the PAC’s contributions attributed to our business entity for this disclosure?

This depends on the relationship between the PAC and the business. The law attributes PAC contributions to the business entity only when the business entity directly or indirectly controls the PAC. Therefore, the contributions made by a PAC that is under the control of the business entity would be subject to disclosure on this form. However, many of the regulated-industry companies in New Jersey (such as banks, utilities, and insurance companies) have seen their employees create voluntary employee PACs that are neither supported nor controlled by the business entity. In this situation, because the business entity does not directly or indirectly control the PAC, the PAC’s contributions are not relevant for this disclosure.

Avi D. Kelin, Esq. is a Senior Associate in Genova Burns LLC’s Corporate Political Activity Law Practice Group and Chair of the firm’s Autonomous Vehicle Law Practice.

This column is for educational and informational purposes only and is not intended and should not be construed as legal advice. It is recommended that readers not rely on this column, but that professional advice be sought for individual matters.