Holiday Gift Reminder

Transcription

1 Holiday Gift Reminder With the Holiday Season here, the City Ethics Commission is providing this annual reminder about how City and state ethics laws treat gifts to public officials. Although these provisions apply to City officials throughout the year, the festivities that occur throughout this month make this an opportune time to be reminded about the limitations and public disclosure requirements that apply to gifts that might be received this season. Remember, under the law a gift is anything you receive of value, provided no consideration of equal or greater value is provided to the gift giver. As most officials are aware, gifts that are intended to influence them in their decision-making may never be accepted. And even the most wellintentioned of gifts may create a conflict of interest for the official, or create an appearance of a conflict. Fortunately, comprehensive state and City laws help ensure that all City decision-making is, and is perceived to be, fair and impartial. Ethics laws help achieve this by limiting the value of gifts that public officials can receive from certain sources (and in some situations, by prohibiting their acceptance), and by requiring officials to publicly report gifts that meet a threshold amount. To narrow down whether City and state ethics laws permit a gift or whether it is prohibited, City officials should consider a three-step process: 1) Identify his or her relationship to the source of the gift, 2) Determine the gift s value, then 3) Conclude whether the gift is reportable on his or her Statement of Economic Interests. Step 1: Identifying the Gift Source If the Gift Source is a: Lobbyist or Lobbying Firm Since the passage of Measure R by Los Angeles voters in 2006, rules regarding gifts from lobbyists and lobbying firms are the most restrictive. A high-level official may not receive a gift of any value from any registered lobbyist, lobbying firm or lobbyist employer. A City official may not accept a gift of any value from a lobbyist or lobbying firm that lobbies his or her agency.

2 A list of lobbyists and lobbying firms is regularly updated by the City Ethics Commission and can be found on our website at Gifts from these sources must either be declined or turned over to a charitable organization within thirty days, with no tax deduction benefit taken by the official. For a complete list of positions defined as high-level officials, see the City s Governmental Ethics Ordinance [at Los Angeles Municipal Code section ], which is also available on the Commission s website at Example: Jane Doe, a City official with the Bureau of Sanitation, is presented with a gift by a lobbyist that lobbies her Bureau. Jane has two options, regardless of the gift's value. She may either decline the gift or turn the gift over to a charitable organization within thirty days. Jane, however, may not take a tax deduction on the donation. Restricted Source A City official is also limited to accepting no more than $100 in gifts from any restricted source each calendar year. Officials can determine whether a gift source is a restricted source by asking a series of questions: 1. Is the source doing or seeking to do business with my agency? 2. Is the source a registered lobbyist employer? 3. Has the source attempted to influence me on any City matter, even if the answer to the questions 1 and 2 above are no? 4. Does the source have any matter involving a license, permit or other entitlement for use pending before me, or was there such a matter pending before me in the last nine months? If the answer to any of the above questions is yes, the source is considered a restricted source to that official. For officials who are highlevel officials, however, restricted sources are defined to include any entity or individual engaging in the activities shown above at any City agency. For more information, see LAMC sec Total gifts from a restricted source must be kept within the $100 annual gift limit, may be declined, can be paid down to remain within the $100 limit, or may be turned over to a charitable organization within thirty days with no tax deduction benefit taken by the official.

3 Example: Sally Mae, a City official with the Department of Cultural Affairs, is presented with a gift basket valued at $120 by a consultant that submitted a Request for Proposal with her agency six months ago. Since the consultant is seeking to do business with Sally s agency, she is considered a restricted source to Sally. Because the restricted source gift limit is $100 per calendar year, Sally has three choices. First, Sally may decline the gift since the value exceeds the restricted source gift limit that applies to her. Second, provided she has not already accepted another gift from the consultant in 2009, Sally may accept the $120 gift basket only if she pays the consultant back the $20 difference. Under this scenario, Sally should also document the transaction for reference and she must report the gift on her next Statement of Economic Interests because the gift is valued at more than $50 (see Step 3: Disclosing Reportable Gifts). Third, as an alternative, Sally may give the gift basket to a charitable organization within thirty calendar days, provided she takes no tax deduction benefit on the donation. In that case, Sally would have no disclosure requirement because she is not considered to have received a gift under the law. Disclosable Source of Income Throughout California, a public official is limited under State law to accepting no more than $420 in gifts per calendar year from any disclosable source of income. To determine whether the source of a gift may be a disclosable source of income, City officials should consult their department s Conflict of Interest Code. For all positions designated on the Code, the Code identifies which sources of income are disclosable sources. Copies of each department s Conflict of Interest Code can be obtained from the department s Ethics Liaison or on the City Ethics Commission s website at Total gifts from any disclosable source of income must be kept within the $420 annual gift limit, may be declined, can be paid down to remain within the $420 limit, or may be turned over to a charitable organization within thirty days with no tax deduction benefit taken by the official. Example: Tom Jones, a City official with the Department of Transportation (DOT), receives a gift valued at $300 from the owner of a taxi cab company in the City of Los Angeles. According to DOT's Conflict of Interest Code, Tom s position requires him to disclose income (which includes gifts) from business entities that operate ground transportation service in the City of Los Angeles. This particular taxi company has no business with Tom s department and is not otherwise a restricted source to him. As a disclosable source of income to Tom, however, the applicable gift limit for Tom from the taxi company is $420 per calendar year. Consequently, Tom has three options. First, provided he

4 has not accepted another gift from this taxi company in 2009, Tom may accept the gift as it does not exceed the annual $420 limit. If he accepts the gift, Tom must remember to report it on his next Statement of Economic Interests because it is valued at more than $50 (see Step 3: Disclosing Reportable Gifts). Second, although not a restricted source to him, Tom may decline the gift to avoid any appearance of a conflict of interest. Third, Tom may turn the gift over to a charitable organization within thirty days, provided he takes no tax deduction benefit on the donation. Family member and/or persons with whom an official has a bona fide dating relationship Gifts from the following sources are not restricted and do not need to be reported under City law: a spouse or registered domestic partner, child, parent, grandparent, grandchild, brother, sister, aunt, uncle, niece, nephew, or first cousin; a spouse or domestic partner s children, parents, brothers, and sisters; and the spouse or registered domestic partner of the individuals listed above. These exceptions do not apply, however, if the family member is acting as an agent or intermediary for another person who is the true source of the gift. Example: John Doe, a City official with the Information Technology Agency, receives a gift valued at $200 from Ann, the wife of his first cousin, Bob. John may accept Ann's gift and is not required to report it on his Statement of Economic Interests, as long as Ann was not acting as an intermediary for another source. Step 2: Determining the Gift s Value Once the source of a gift has been identified, it is important to determine the value of the gift. This helps City officials understand whether or not a gift from a particular source is permitted under the law. If the value falls within the applicable gift limit for that source, the gift is permitted. When determining whether a gift is permissible, it is important to remember that all gifts received from that source in the calendar year must be considered.

5 Generally, the easiest way to determine a gift s value is to ask the giver. If that is not possible, make a good faith estimate of the item s fair market value by reviewing the value of similar items at a store or on the internet. Please note that state law may require certain types of gifts, such as tickets or passes to certain events to be valued differently. Also, in some instances a gift to a spouse or dependent child may be considered a gift to the official. Step 3: Disclosing Reportable Gifts For any gift from a source that is reportable, the official receiving a gift valued at $50 or more must report that gift on his or her next Statement of Economic Interests. In addition, if a reportable gift is presented through an intermediary, the recipient must disclose the name, address, and business activity of both the donor and the intermediary. List of commonly reportable gifts: Tickets/passes to sporting or entertainment events Tickets/passes to amusement parks Food, beverages, and accommodations, including those provided in direct connection with your attendance at a convention, conference, meeting, social event, or meal, where you did not give a speech, participate in a panel or seminar, or provide a similar service Rebates/discounts not made in the regular course of business to members of the public without regard to official status Wedding gifts Forgiveness of a loan Parking passes Please note in some limited circumstances, an item of value a City official may receive may not be limited or disclosable because it is considered a gift to a public agency. Generally, these can include items given to an agency for official City business that the agency determines who ultimately receives or uses them. Under state law, while those individuals do not have a reporting requirement, the agency has specific public disclosure requirements and may require City Council approval. Please contact the City Ethics Commission for more information. For further guidance in determining whether a gift is permitted, restricted, or prohibited, please refer to the City Ethics Commission s gift acceptance flow chart. Officials are also encouraged to keep a log of any gifts they are presented with, whether they are accepted, turned over to a charitable organization, paid down, or declined. A gift log can prove to be a helpful tool when completing a Statement of Economic Interests. Please note that the above explanation is a broad overview of the law regarding gifts and additional restrictions or exceptions may apply depending on the type of gift and your circumstances.

6 The City Ethics Commission is committed to helping City officials and employees understand their requirements under the law. For questions regarding gifts or any of the laws the Commission administers or enforces, please call (213) , or contact the City Attorney s office with any questions about state law at (213)

7 Lobbyist/Lobbying Firm Restricted Source Disclosable Source Accepted Paid Down Given to Charity Declined Gift Receipt Log Date Gift Giver Contact Information Gift Description Value Type of Source Action Taken