Ethics Question of the Month

FINANCIAL DISCLOSURE QUESTIONS FOR

STATE EMPLOYEES & PUBLIC OFFICIALS

QUESTION:

I just realized that I omitted something on my 2007 financial disclosure statement. How can I amend the 2007 statement?

ANSWER:

Log onto the system at https://efds.ethics.state.md.us. This takes you to the User Application Activity screen. Click on the “History” button near the top left hand side of the screen then choose which year’s form you would like to amend. At the bottom right hand of the screen, click on “Add Amendment” then “Continue Amendment.” Choose which Schedule you need to amend from the list on the left, make the addition or correction, then SAVE. When you have completed all of your additions or corrections, click “Verify Amendment” in the column to the left of the dialogue box and follow the directions to complete and submit the amendment.

IMPORTANT INFORMATION – PLEASE READ!!

Now that we have gathered experience in the electronic filing process for annual financial disclosure statements, we recognize some questions that arise frequently. We are working with the contractor to constantly improve and simplify the software and process. We are currently working on several issues that should make the electronic process even easier for filers. We will post the improvements as they are implemented.

Some people found the process quite intuitive, easier to use than the paper process, and less intrusive. Initially, many filers did not read the directions carefully and, as a result, experienced problems with completing the account information, and there still appears to be a general misunderstanding with regard to interests in real property.

The most common questions asked were:

1. When I verify the application, I am told to update the Account Information. How do I do that?

Answer: At the top of the dialogue box, in the dark border, you click on Edit Account Information (it has a picture of a pencil), then re-enter your password, click submit, and then click on the word edit (which appears in red) to the right of “personal details.” This will bring you to the edit screen for Account Information. You select your agency (if your agency’s name is not on the list, click on “other” and, in the field below, type in the name of your agency; in the next field, type in your agency’s current address; in the next field, type in your title or position. Each field must have a response in it. Check the box that asks if you wish to be informed if anyone reviews your financial disclosure statement and then click “save.”

2. Do I need to complete Schedule A if I rent rather than own my home?

Answer: Yes. You need to report all interests you have in real property, whether you rent or own, whether the property is located in Maryland or not, whether it is a residential or commercial property, and regardless of whether it is a vacant lot, farm land, a time share, or a ground rent.

3. If I own the property with my spouse, do I own it jointly or as tenants by the entirety?

Answer: If you own the property with your spouse, you probably own it as tenants by the entirety. This is an undivided interest in real property with the right of survivorship. If you own it with siblings, parents, children, or others, it will likely be jointly held.

4. In simple language, what is an attributable interest?

Answer: Although there is a definition in the glossary of terms that you can access just by clicking on the term as it is used on the form, the easiest way to answer this is as follows: if your name is on the deed or the lease, the interest is direct. If you own part of a corporation or are in a partnership that owns real property and your interest in the corporation or partnership is 30% or more, your interest in the real property owned by that partnership or corporation is an attributable interest. Also, if the property is in another person’s name but you are responsible for the payments or contribute toward the payments, taxes or maintenance, the interest in that property is attributable.

5. Do I need to report mutual funds that I own?

Answer: If the mutual funds are owned within your 401, 403, 457 or 529 plans, you do not need to report your interest in them. On April 24, 2007, Governor O’Malley signed into law SB 885, which amended the definition of “interest” in § 15-102t (iv)(2) of the Public Ethics Law. Thus “interest” no longer includes any common trust fund or a trust that forms part of a pension or a profit-sharing plan that has more than 25 participants and is determined by the Internal Revenue Service to be a qualified trust. You no longer need to include your holdings in any of the above identified pension or profit-sharing plans if the plans meet the requirements of § 15-102t (iv)(2) of the Public Ethics Law.

6. On Schedule F, Question #6 asks if there is collateral for the loan. How do I respond to this question?

Answer: If the loan is a home mortgage, a second mortgage, a home equity loan or any other type of loan involving your home, the collateral for that loan is your home. Thus, you would answer “yes” and click on “home” in the drop down box. If the loan is for a car or a boat, the answer to the question is “yes” and you would click on “boat” or “vehicle.” If the loan were a personal signature loan, you would answer “no.”

7. On Schedule F, Question #7 asks if the indebtedness is in the name of another person but the filer is responsible for the debt. Exactly what does that mean?

Answer: For example, your child obtains a car loan or student loan in his or her name, but you, the filer, co-signed for that loan. In this case, your response t o question #7 would be yes, and in the fields below the question you would put your child’s name and the type of loan.

There was a software problem with this question in that if you answered “no” to question #7, you needed to put “N/A” in both of the fields below the question. If not, you would be told that you needed to update an Item on Schedule F. There would be two small red asterisks by the empty fields after question #7 that would have alert you to the fact that the fields needed to be completed. This problem will be corrected for the next required filings.

8. On Schedule H, if the filer (or his spouse or dependent child) owns or partially owns a business by which he or she also is also employed and earns both a salary and some profits from the ownership of the business, must he respond to both question #1 (employment income) and question #2 (income from ownership of the business)?

Answer: The simple answer would be yes. If the filer or his spouse owns or has partial ownership of a business by which he or she is also employed, the filer would complete questions 1 and 2. With regard to earned income by a dependent child, the filer needs to report this only if the source of the earned income is from an entity that does business with or is regulated by the filer’s agency. If the dependent child’s earned income is from a source that is unrelated (does not do business with and is not regulated by) to the filer’s agency, there is no requirement to report that source of earned income.

9. I need to add an amendment to a previously filed financial disclosure statement, and I can’t see how to get to it in order to add the amendment. How can I add an amendment to a previously filed statement?

Answer: To add an amendment to the most recently filed financial disclosure statement, click on “add amendment” at the bottom right of the dialogue box. To add an amendment to an older financial disclosure statement, click on “History” at the top of the column to the left of the dialogue box. There is drop-down box with dates: click on the year in which you filed the statement rather than the filing year. For example, for a 2004 financial disclosure statement, click on 2005; for 2005 statement, click on 2006, etc. When the correct statement appears, click on “add amendment” and make the desired edits and then click “save amendment.” When you have completed your edits, click “verify amendment” and then follow the directions to complete and submit the amendment.

MOST COMMON MISTAKES

1. Some individuals thought that they were completing the electronic financial disclosure statement, when, in fact they had downloaded the paper form (a Word document), completed it and then were unable to “submit” the form electronically. Electronic filing can be accessed only by going directly to the electronic filing site, https://efds.ethics.state.md.us, or by clicking on “Electronic Filing” from our web site, http://ethics.gov.state.md.us.

2. Some individuals had difficulty logging into the electronic filing form, and this was a result of various mistakes:

a. Some individuals did not enter their email addresses correctly, and therefore, they did not receive an email providing them with their user name and password.

b. Some individuals did not input the user name and password exactly as provided. The password had eight characters made up of six letters and two numbers, symbols or a combination of number and symbol. The program requires that the user name and password be inputted exactly and it is case specific (generally all lower case) and generally without any spaces.

c. When changing a password, some filers did not select a new password that had eight characters consisting of six letters and two numbers or symbols or a combination of number and symbol.

3. In the Account Information, some filers did not read the questions carefully, and in the field provided for the current agency address, they repeated their title or position. Other than more careful reading by filers, there is little that can be done to correct this problem.

4. On Schedule E, several filers used this schedule to put their own employment with the State. This schedule is used to disclose any employment or position entity (as an employee, partner, director, officer, etc) with a non-profit or any other entity that did business with the State during the reporting year. The Account Information provides the information related to your employment with the State.

June 2008