Home » 2014 Issues » August 20, 2014 » LAW-33-14-00005-EP Contents of Annual Financial Reports Filed with the Attorney General by Certain Nonprofits
LAW-33-14-00005-EP Contents of Annual Financial Reports Filed with the Attorney General by Certain Nonprofits
8/20/14 N.Y. St. Reg. LAW-33-14-00005-EP
NEW YORK STATE REGISTER
VOLUME XXXVI, ISSUE 33
August 20, 2014
RULE MAKING ACTIVITIES
DEPARTMENT OF LAW
EMERGENCY/PROPOSED RULE MAKING
NO HEARING(S) SCHEDULED
I.D No. LAW-33-14-00005-EP
Filing No. 694
Filing Date. Jul. 31, 2014
Effective Date. Jul. 31, 2014
Contents of Annual Financial Reports Filed with the Attorney General by Certain Nonprofits
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Proposed Action:
Repeal of section 91.6 of Title 13 NYCRR.
Statutory authority:
Executive Law, section 177(1); and Estates, Powers and Trust Law, section 8-1.4(h)
Finding of necessity for emergency rule:
Preservation of general welfare.
Specific reasons underlying the finding of necessity:
The specific reasons underlying the finding of necessity, above, are as follows. On June 1, 2014, section 14-107 of the Election Law and applicable rules promulgated by the New York State Board of Elections (“BOE”) became effective. These provisions have made the requirements of 13 N.Y.C.R.R. section 91.6 (hereinafter “section 91.6”) largely redundant, and in some cases contradictory, and place an unnecessary burden on covered organizations. Section 14-107 of the Election Law and the applicable rules require any person or corporation that makes an election related expenditure (defined as an “independent expenditure”) above certain thresholds to disclose information about such expenditures and related contributions to the BOE. Accordingly, covered organizations that are required to make election related disclosures pursuant to section 91.6 are currently required to make similar election related disclosures to the BOE. The differences in the required disclosures between section 91.6 and section 14-107 of the Election Law are not significant enough to justify requiring covered organizations to incur the expense of complying with both regulatory regimes. Having determined that section 91.6 currently imposes a redundant, contradictory, and unnecessary reporting requirement on not-for-profits, the Department of Law has further determined that it is necessary to promote the general welfare to immediately repeal section 91.6, and that it is against the public interest to delay eliminating the unnecessary burden.
Subject:
Contents of annual financial reports filed with the Attorney General by certain nonprofits.
Purpose:
To repeal rule requiring that nonprofits disclose information about election advocacy to the Attorney General.
Text of emergency/proposed rule:
13 N.Y.C.R.R. Section 91.6 is hereby repealed.
This notice is intended:
to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire October 28, 2014.
Text of rule and any required statements and analyses may be obtained from:
Gregory Krakower, Department of Law, 120 Broadway, New York, NY 10271, (212) 416-8030, email: gregory.krakower@ag.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
1. Statutory Authority. Article 7-A of the Executive Law (hereinafter “Article 7-A”) and Article 8 of the Estates, Powers & Trusts Law (hereinafter “EPTL”) require certain organizations and trusts to file annual financial reports and other disclosures with the Attorney General, and require the Attorney General to establish and maintain a register of such disclosures. Section 177(1) of the Executive Law and section 8-1.4(h) of the EPTL empower the Attorney General to make rules and regulations necessary for the administration of these provisions.
2. Legislative Objectives. The rule would repeal 13 N.Y.C.R.R. section 91.6 (hereinafter “section 91.6”). Section 91.6 requires certain not-for-profit organizations and trusts that are registered with the Attorney General and that may participate or intervene in political campaigns (hereinafter “covered organizations”) to disclose certain election related expenditures and election related donations in annual financial reports that are submitted to the Attorney General.
3. Needs and Benefits. The Department of Law believes that section 91.6 should be repealed. On June 1, 2014, section 14-107 of the Election Law and applicable rules promulgated by the New York State Board of Elections (“BOE”) became effective. These provisions make the requirements of section 91.6 largely redundant, and in some cases contradictory, and place an unnecessary burden on covered organizations. Section 14-107 of the Election Law and the applicable rules require any person or corporation that makes an election related expenditure (defined as an “independent expenditure”) above certain thresholds to disclose information about such expenditures and related contributions to the BOE. Accordingly, covered organizations that are required to make election related disclosures pursuant to section 91.6 are now required to make similar election related disclosures to the BOE. The differences in the required disclosures between section 91.6 and section 14-107 of the Election Law (e.g. different threshold amounts, the definitions of certain forms of election advocacy, membership exemptions, waiver provisions, etc.) are not significant enough to justify requiring covered organizations to incur the expense of complying with both regulatory regimes. Furthermore, while section 91.6, in accordance with the limitations of Article 7-A and the EPTL, only requires covered organizations to make election related disclosures to the Attorney General on an annual basis, section 14-107 of the Election Law and the applicable rules require such organizations to report disclosures more frequently, and nearly in “real time” as elections approach. Thus, section 14-107 adequately fulfills the policy and regulatory objectives of section 91.6.
4. Costs. This rule will save covered organizations the costs of having to track and disclose information on their election related activity to the Attorney General. In light of the new Election Law and applicable rules, requiring covered organizations to incur such costs is no longer necessary to effectuate the central purposes of section 91.6. The proposed repeal of section 91.6 will also result in the Department of Law not having to incur costs associated with processing filings of the new disclosure schedule by covered organizations, and with reviewing and making determinations concerning any applications for exemption from disclosure.
5. Paperwork. The repeal of section 91.6 will ensure that covered organizations will not have to make duplicative or unnecessary filings with the Attorney General pursuant to section 91.6, given the disclosure requirements of section 14-107 of the Election Law and applicable rules.
6. Local Government Mandates. None.
7. Duplications. The repeal of section 91.6 will ensure that covered organizations will not have to make duplicative or unnecessary filings with the Attorney General pursuant to section 91.6, given the disclosure requirements of section 14-107 of the Election Law and applicable rules.
8. Alternatives. As an alternative to repealing section 91.6, the Department of Law contemplated amending the rule to grant an exemption to any covered organization that complies with section 14-107 of the Election Law. However, this alternative was rejected as not adequately reducing unnecessary burdens on covered organizations in light of section 14-107 of the Election Law and applicable rules.
9. Federal Standards. There are no federal standards implicated by the repeal of section 91.6.
10. Compliance Schedule. Covered organizations will not have to make any additional disclosures in their annual report immediately upon the proposed repeal becoming effective.
Regulatory Flexibility Analysis
A Regulatory Flexibility Analysis is not required. The repeal of 13 N.Y.C.R.R. § 91.6 will not impose any adverse economic impact or reporting, recordkeeping or other compliance requirements on small businesses or local governments. 13 N.Y.C.R.R. § 91.6 requires nonprofit organizations that are registered with the Attorney General and that are legally allowed to engage in election-related advocacy to include in their annual financial report a calculation of the percentage of total expenses spent on such election advocacy. That section also requires nonprofit organizations that spend over $10,000 in any fiscal year to influence state or local elections in New York to include an additional schedule in their annual report filed with the Attorney General that itemizes specific information regarding expenditures and donations related to such election advocacy, unless the information is reported to another public agency and made available to the public. 13 N.Y.C.R.R. § 91.6 thus imposes minor recordkeeping and compliance costs on such nonprofit corporations. The repeal of this section will eliminate these costs and will not result in the imposition of any recordkeeping or compliance costs on small businesses or local governments.
Rural Area Flexibility Analysis
A Rural Area Flexibility Analysis is not required. The repeal of 13 N.Y.C.R.R. § 91.6 will not impose any adverse impact on rural areas or reporting, recordkeeping or other compliance requirements on public or private entities in rural areas. 13 N.Y.C.R.R. § 91.6 requires nonprofit organizations that are registered with the Attorney General and that are legally allowed to engage in election-related advocacy to include in their annual financial report a calculation of the percentage of total expenses spent on such election advocacy. That section also requires nonprofit organizations that spend over $10,000 in any fiscal year to influence state or local elections in New York to include an additional schedule in their annual report filed with the Attorney General that itemizes specific information regarding expenditures and donations related to such election advocacy, unless the information is reported to another public agency and made available to the public. 13 N.Y.C.R.R. § 91.6 thus imposes minor recordkeeping and compliance costs on such nonprofit corporations. The repeal of this section will eliminate these costs and will not result in the imposition of any recordkeeping or compliance costs on nonprofits in rural areas.
