Offsets to operating expenditures

Offsets to operating expenditures, such as returns of deposits, refunds and rebates, are not considered contributions. Rebates, however, must be offered in the ordinary course of business and on the same terms and conditions as those offered to nonpolitical entities. Otherwise, the rebate may be considered a contribution—a prohibited contribution if the vendor is a corporation.

Reporting offsets to operating expenditures

Refunds, rebates and returns of deposits are considered offsets to operating expenditures. Itemize offsets on a Schedule A once the committee receives more than $200 from the same source during a calendar year. Enter the total on Line 15.

Refunds and rebates of allocable expenses

If a committee receives a refund or rebate on an allocable expense, the refund or rebate must be deposited in the federal or allocation account. The refund or rebate must then be allocated between the federal and nonfederal accounts according to the same ratio used to allocate the original disbursement. The federal account must transfer the nonfederal portion to the nonfederal account. This must be reported using one of two methods:

Reporting method 1: The committee discloses the receipt of the rebate and the federal and nonfederal shares on Schedule H4. The amounts are negative entries subtracted from total shared federal and nonfederal disbursements for the reporting period (disclosed on Lines 21a(i) and (ii) of the Detailed Summary Page). Although AO 1995-22 is no longer applicable to national party committees as of 2002, it may still apply to state, district and local party committees.

Reporting method 2: The committee reports the receipt of the rebate under the category “Offsets to Operating Expenditures” on Line 15 of the Form 3X Detailed Summary Page. The committee uses Schedule H4 to disclose the federal account’s transfer to the nonfederal account for the nonfederal share.