Ethics: How to properly report income

Editor's note: While this article pertains to income, new requirements related to income sources took effect in January 2017.

For anyone required to file a South Carolina Statement of Economic Interests, the task can be daunting. Many are unsure about what to report and are fearful of making errors.

Recently the Municipal Association staff met with State Ethics Commission staff to review the SEI and clarify what municipal officials need to know to properly report. The Municipal Association will share this information through articles in upcoming issues of Uptown.

Who must file?
All municipal elected officials, candidates for municipal office, chief administrative officers (regardless of the name of the position, including city administrators or city managers), chief financial and procurement officers (or similarly titled positions) must file an SEI by March 30 each year for activities in the prior calendar year. Officials must electronically file the SEIs with the State Ethics Commission.

Failing to file or intentionally misrepresenting information is a misdemeanor and could result in a fine, jail time or both. If a municipal official discovers errors or omissions after filing, he should amend his filing as soon as possible. Officials can amend their SEI forms electronically at any time.

The first section of the SEI covers income or benefits and is divided into two parts: personal and family.

Personal income/benefits
The personal portion includes information on income and benefits the official receives. The personal income amount will generally be the same as the income stated on the W-2 issued by the municipality.

If the official receives additional income or benefits (such as personal use of a publicly owned vehicle, car allowance or expense allowance of any kind, i.e., a cell phone allowance), he must add the value of this benefit to the total income and benefits reported. The municipality should issue a Form 1099 showing the value of the benefit(s) for tax purposes. 

The value of fringe benefits offered to all employees and officials of the municipality, such as contributions to health insurance, retirement and supplemental insurance, does not have to be reported if the benefit is offered uniformly to all employees. If the filer receives a higher benefit level or additional benefits, he must report the additional benefit/difference between the benefit given others and the value of his benefit.

Reimbursement for actual incurred expenses while performing as a public official or employee is not considered income and does not have to be reported. If the official receives a per diem, he must provide the municipality with supporting documentation for expenses and return unspent money.

Family income/benefits
The second section asks the filer to report income or benefits immediate family members received during the prior calendar year from any state agency/office or political subdivision of the state. This includes county, municipal, school district, special purpose district or public service district employers.

Immediate family is defined as a spouse, child or other individual claimed as a dependent for income tax purposes by the filer or spouse. Likewise, the income amount will generally be the same as the income stated on the W-2 issued to the immediate family member(s) employed by one of the covered public entities. The filer must include any additional income or benefits from a covered public entity in the income calculation of the immediate family member receiving the benefit.

Understanding the SEI requirements is the key to proper reporting. Next month's article will cover reporting gifts.