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HomeMy WebLinkAboutFL League of Cities Memo on Form 6 Requirements1 MEMORANDUM TO: Florida League of Cities University FROM: Randy Mora, City Attorney DATE: June 15, 2023 RE: CS/CS/SB 774 – Form 6 Requirements1 On May 11, 2023, Governor DeSantis signed CS/CS/SB 774 into law addressing Ethics Requirements for Public Officials. Having received multiple inquiries concerning the bill’s specific requirements relative to financial disclosure, please accept this memorandum in response. Currently, specified local government officials, including elected officials of municipalities, are required to file a Form 1 statement of financial interests on an annual basis. Form 1 requires, by July 1 of each year, the disclosure of limited information related to sources of income, real property, intangible personal property, liabilities, and interests in specified businesses. Form 1 filers are not required to report specific dollar values of incomes, property, or liabilities, but must report which assets or liabilities exceed certain dollar thresholds. Other governmental officers, including the governor, lieutenant governor, and county commissioners, are required to file annually a full and public disclosure of financial interests on Form 6. The primary change effected by the passage of SB 774 is that certain local officers, including mayors and elected members of the governing body of a municipality, will be required as of January 1, 2024, to file annually a full and public disclosure of financial interests utilizing Form 6. 1 This Memorandum is intended for educational purposes only, to provide an overview of recently adopted legislation. This is not intended as legal advice to be relied upon by any reader or recipient. Elected officials should contact their own jurisdiction’s attorney for the interpretation and administration of this statute in their respective jurisdictions. THOMAS J. TRASK, B.C.S.* JAY DAIGNEAULT, B.C.S.* ERICA F. AUGELLO, B.C.S.* RANDY D. MORA, B.C.S.* ROBERT ESCHENFELDER, B.C.S.* NANCY S. MEYER, B.C.S.* JEREMY SIMON MEGAN R. HAMISEVICZ * Board Certified by the Florida Bar in City, County and Local Government Law 2 Effective Date Many public officials have questioned when the requirement to file a Form 6 attaches under SB 774. Section 11 of the bill provides that “[t]his act shall take effect upon becoming law” which, as noted above, occurred with the Governor’s signature on May 11, 2023. But the Governor’s signature does not immediately impose a requirement to file a Form 6 because the statutes amended by SB 774 provide differently. Local government officials are made subject to the Form 6 financial disclosure requirement via amendment to § 112.3144, Fla. Stat. Subsection (1) (d) is added to the statute to read as follows: Beginning January 1, 2024, the following local officers must comply with the financial disclosure requirements of s. 8, Art. II of the State Constitution and this section: 1. Mayors. 2. Elected members of the governing body of a municipality. (Emphasis supplied). SB 774 also amends subsection (5) of § 99.061, Fla. Stat., by requiring a candidate at the time of qualifying for office to file a full and public financial disclosure if the office sought is subject to such disclosure by way of § 112.3144, Fla. Stat. Again, the Form 6 filing obligation is not imposed upon local government officials until January 1, 2024. Considering the foregoing, it is my opinion that elected municipal officials currently holding office are not subject to the Form 6 filing requirement until January 1, 2024. If an elected municipal official holds office on or after January 1, 2024, he or she will be required to file Form 6 by July 1, 2024, or within sixty days of resigning the office. If any such official wishes to avoid altogether the filing of the Form 6 disclosure, he or she must resign the office effective no later than December 31, 2023.2 3 Any person elected or appointed to fill a vacant office on or after January 1, 2024 will also be required to the Form 6 disclosure. This analysis is complicated in the case of candidates seeking to qualify for office who were not subject to any disclosure requirement prior to qualifying. Currently, if a person not otherwise subject to any financial disclosure requirement seeks to qualify for municipal office, he or she would file a Form 1 financial disclosure which would satisfy the annual disclosure requirement.4 For example, a candidate who qualified for office in December would file a Form 1 2 Local officers leaving office are still required to file a final statement of financial interests within sixty (60) days after vacating office. § 112.3145 (2) (b), Fla. Stat. This final statement is to cover “the period between January 1 of the year in which the person leaves and last day of office or employment. . .” so if the resignation is effective in 2023 then only the Form 1 final disclosure will need to be filed. 3 Our office has received an informal verbal opinion from a Commission on Ethics staff attorney that this conclusion is accurate. 4 See §§ 112.3144 (3) and 112.3145 (2) (a), Fla. Stat. 3 upon qualifying but would not be required to file another disclosure prior to the annual July 1 deadline. But, if that is to be the case following the passage of SB 774, a candidate who qualifies for municipal office in 2023 but is not elected until 2024 may arguably not be required to file a Form 6 disclosure until they file their 2025 disclosure, no later than July 1, 2025. Form 6 disclosure requirements Form 6 differs from Form 1 in many respects.5 First, Form 6 requires that filers disclose their net worth as of the end of the preceding year. Net worth for purposes of the filing is not calculated by subtracting reported liabilities from reported assets and must be calculated according to the form’s instructions.6 The Form 6 then requires reporting of the aggregate value of household goods and personal effects if their value exceeds $1,000.00, and specific description of any asset individually valued over $1,000.00, again according to the detailed instructions on the form. Filers are not required to disclose assets owned solely by a spouse, and specific instructions govern how to report jointly held assets.7 The asset must be described and its value stated. Likewise, Form 6 requires the reporting of liabilities in excess of $1,000.00. The name and address of each creditor must be disclosed along with the amount owed. Filers are not required to disclose liabilities which are solely the responsibility of a spouse and, in the case of joint and several liability, only the portion of liability corresponding to the filer is to be reported. Form 6 also requires the reporting of the amount of income for any source which exceeded $1,000.00 in the reporting period. A spouse’s sole income need not be reported, but all joint income (such as dividends or interest from a bank account or stocks) must be reported. Form 6’s instructions provide that “[w]here income is derived from a business activity you should report the income to you, as calculated for income tax purposes, rather than the income to the business.” Income from investments cannot be aggregated. Form 6 requires the disclosure of major customers, clients, and other sources of income to businesses in which you own an interest. These secondary sources and amounts must be disclosed if, during the reporting period, the filer owned more than 5% of the total assets or stock of a business entity and received more than $1,000.00 in gross income from that business entity during the reporting period. If these thresholds are met, the filer must list every source of income for the business entity which exceeded 10% of the entity’s gross income, but the filer is not required to list the amount of income derived from the source. Subsection (6) (c) of § 112.3144, Fla. Stat., is revised to require the Commission to accept federal income tax returns for the purpose of reporting income, provided that all attachments and schedules associated with such income are included. 5 The following is an overview. It is not intended to be an exhaustive review of Form 6 or its requirements. Indeed, many Form 6 filers obtain professional accounting or legal assistance in completing it due to its complexity and the penalties associated with insufficient reporting. 6 All applicable forms can be found on the COE’s website at: https://ethics.state.fl.us/FinancialDisclosure/DownloadAForm.aspx 7 Generally, filers must report the value of their own legal interest in a jointly held asset, but assets held as tenants by the entirety or jointly with right of survivorship must be reported at 100% of their value. 4 Disclosure of social security numbers and personal account information is not required by Form 6 and should not be included. If such disclosure is made in error, the information will be publicly available unless a request for redaction is made with the Commission on Ethics. The maximum civil penalty allowed under § 112.317 (1), Fla. Stat., for violating Chapter 112, Part III has increased from $10,000 to $20,000. Miscellaneous provisions • Because electronic filing is now required for Form 1 and Form 6, the local supervisors of elections are no longer involved in the filing process. • The Commission on Ethics is permitted to dismiss any complaint or referral which states a de minimus violation of the financial disclosure requirements. As always, please do not hesitate to contact me directly should you have any questions or concerns about this memo or any other matter. Respectfully, TRASK DAIGNEAULT, LLP. Randy D. Mora, Esq.