Bernero's City Administrative Account takes in another $8,500 in last half of 2014

February 7, 2015




Mayor Virg Bernero spent $441 on juice in the last half of 2014. The juice was purchased at Juice Nation, 111 Washington Square in Lansing. I know because that is what he reported to the IRS:


Date Amount  
7/1/2014 6
7/2/2014 10
7/7/2014 12
7/8/2014 17
7/9/2014 12
7/10/2014 8
7/15/2014 12
7/16/2014 11
7/16/2014 5
7/17/2014 10
7/21/2014 6
7/23/2014 6
7/31/2014 10
8/6/2014 8
8/6/2014 12
8/11/2014 18
8/26/2014 6
9/2/2014 6
9/3/2014 19
9/5/2014 14
9/18/2014 6
9/19/2014 6
10/9/2014 6
10/10/2014 13
10/14/2014 6
10/15/2014 6
10/15/2014 13
10/22/2014 5
10/23/2014 30
10/27/2014 6
10/28/2014 6
11/4/2014 6
11/6/2014 6
11/18/2014 12
11/20/2014 13
11/20/2014 6
11/25/2014 20
11/26/2014 7
12/5/2014 34
12/12/2014 26
TOTAL: $441    


That $441 wasn't his own money, of course. It came out of the City Administrative Account, the mayor's 527 account. In all, he spent $10,397 in 6 months. The entire list of expenditures for that period is here. Contributions to the account totaled $8,500:


Contributor Employer Date Amount
CHARLES J CLARK Clark Construction 7/3/2014 2000
Investor's Equity Group Investor's Equity Group 7/18/2014 1000
Blue Cross Blue Shield Blue Cross Blue Shield 9/8/2014 2000
Sam Eyde Management Company Sam Eyde Management Company 10/23/1014 1500
E. T. Mackenzie Company E. T. Mackenzie Company 11/5/2014 2000
    TOTAL: $8,500


Blue Cross Blue Shield's $2000 contribution brings its total since 2006 - when the fund was established - to $24,500, second only to the Christman Company at $27,000. The E. T. McKenzie Company is sixth on the list at $12,500.


Bernero has a balance in his City Administrative Account of $46,846. (He also has $50,132 in his mayoral campaign account.)


I compiled this data from reports for the third and fourth quarters of 2014. You can see them for yourself by going to this page on the IRS' website. Check the box for Form 8872. In the box for Employer Identification Number (EIN), enter 20-3950788 and click Submit Basic Search. Then click "City Administrative Account".


Section 527 of the U.S. Tax Code says that political organizations can collect unlimited contributions, and they don't have to pay income tax on the amount of those contributions that are spent on "exempt functions:"

The term “exempt function” means the function of influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. Such term includes the making of expenditures relating to an office described in the preceding sentence which, if incurred by the individual, would be allowable as a deduction under section 162 (a).

Since the first sentence above addresses election activities, it doesn't apply to Bernero's City Administrative Account. Campaign finance is governed by state campaign finance law. For campaign contributions and expenditures, Bernero has a political action committee (PAC) called "Virg Bernero for Lansing" that submits reports to the Ingham County Clerk.


It is the second sentence that applies to the City Administrative Account. It applies to expenditures by an elected official relating to his office - expenditures that "would be allowable as a deduction under section 162 (a)."  Section 162 is referred to specifically under "purpose" on the Form 881, Political Organization Notice of Section 527 Status that Bernero filed with the IRS:

To collect and administer funds to pay expenses incidental to the holding of the Office of Mayor for the City of Lansing, which if incurred by Mayor Virgil Bernero, would be allowable as a deduction under Section 162 of the Code; To sponsor and organize activities in connection with the Lansing mayoral inauguration, and other acts incidental thereto; and To organize and conduct activities in connection with the Lansing mayoral transition to Lansing Mayor-Elect Bernero, and other acts incidental thereto.

Section 162 applies to trade or business expenses:

There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including—

(1) a reasonable allowance for salaries or other compensation for personal services actually rendered;

(2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and

(3) rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity.

Note that juice is not included, nor are any meals consumed other than while travelling. In addition to the Juice Nation expenditures, Bernero spent $2,136 on local meals:


Recipient City Purpose Date Amount
Culver's of Lansing Lansing Meals 7/1/2014 8
Biggby Coffee Lansing Meals 7/9/2014 3
The Waterfront Bar and Grill Lansing Meals 7/10/2014 30
The Waterfront Bar and Grill Lansing Meals 7/18/2014 20
The Waterfront Bar and Grill Lansing Meals 7/21/2014 62
The Waterfront Bar and Grill Lansing Meals 7/24/2014 48
Tavern on the Square Lansing Meals 7/28/2014 47
Mitchell's Fish Market Lansing Meals 7/30/2014 166
Soup Spoon Cafe Lansing Meals 7/30/2014 30
The Waterfront Bar and Grill Lansing Meals 8/1/2014 51
The Waterfront Bar and Grill Lansing Meals 8/5/2014 84
Soup Spoon Cafe Lansing Meals 8/7/2014 25
Steakhouse Philly Bar & Grill Lansing Meals 8/19/2014 19
Lansing Airport Lansing Meals 8/20/2014 4
Mediterranean Grill Lansing Meals 8/20/2014 15
Mediterranean Grill Lansing Meals 8/26/2014 48
Detroit Frankie's Wood Fire Pizza Lansing Meals 8/27/2014 15
Red Haven Restuarant Okemos Meals 9/3/2014 422
Mediterranean Grill Lansing Meals 9/11/2014 30
Cravings Gourmet Popcorn Lansing Meals 9/20/2014 25
The Waterfront Bar and Grill Lansing Meals 9/25/2014 52
Biggby Coffee Lansing Meals 10/10/2014 4
Restaurant Mediteran Lansing Meals 10/14/2014 154
Restaurant Mediteran Lansing Meals 10/14/2014 37
Cravings Gourmet Popcorn Lansing Meals 10/17/2014 32
Eden Rock Restaurant Lansing Meals 10/29/2014 28
Soup Spoon Cafe Lansing Meals 11/3/2014 13
Thai Village Lansing Meals 11/5/2014 26
TABOOLI  Lansing Meals 11/6/2014 21
Restaurant Mediteran Lansing Meals 11/10/2014 20
TROPPO Lansing Meals 11/24/2014 84
Thai Village Lansing Meals 11/26/2014 26
Thai Village Lansing Meals 11/28/2014 12
Restaurant Mediteran Lansing Meals 12/3/2014 24
EDMUND'S Lansing Meals 12/4/2014 108
Soup Spoon Cafe Lansing Meals 12/5/2014 24
Restaurant Mediteran Lansing Meals 12/8/2014 19
Thai Village Lansing Meals 12/8/2014 25
EDMUND'S Lansing Meals 12/11/2014 17
EDIBLE ARRANGEMENTS Lansing Meals 12/22/2014 165
Restaurant Mediteran Lansing Meals 12/22/2014 50
      TOTAL: $2,136


And what about that $150 paid to Sparrow Home Services for "medical" (9/9/2014)? And that $500 paid to McLaren Health for "healthcare" (10/30/2014)? The entire list of expenditures is here.


I've been keeping track of Bernero's 527 account since 2009, providing complete lists of contributions and expenditures since the account was established in 2006. The full story is here. In 2012, I submitted a complaint to the IRS using a form on its website. I did get a reply, but have heard nothing since. As understaffed as the IRS is, these matters are unlikely to get much attention.


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