HomeMy WebLinkAbout87-004 SullivanMr. Eugene Sullivan
6243 Marsden Street
Philadelphia, PA 19135
II. Factual Basis for Determination:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
OPINION OF THE COMMISSION
DATE DECIDED: July 21, 1987
DATE MAILED: July 28, 1987
87 -004
Re: Source of Income, Gross Income, Income
Dear Mr. Sullivan:
This responds to your appeal of the Advice of Counsel (87 -566) issued May
14, 1987.
I. Issue:
Whether under Section 405(b)(5) of the State Ethics Act, a public
employee is required to include income from sources other than his public
employment and secondly, whether the term income includes receipt of income
totalling in the aggregate of $500.00 or more even though there may be an
offsetting loss which would result in no net income.
On April 18, 1987, you requested the advice of the State Ethics
Commission as to whether you, in your capacity as a police inspector, were
required to file a Financial Interests Statement and secondly, whether you
were required to report certain types of income. Pursuant to your letter of
request, you were advised that as a public employee you were required to file
a Financial Interests Statement. You were also advised that the State Ethics
Act requires you, as a public employee, to report all sources of income
totalling in the aggregate of $500.00 or more. On May 27, 1987, you appealed
the Advice of Counsel specifically as it related to the requirement that all
sources of income totalling in the aggregate of $500.00 or more had to be
included in the Financial Interests Statement. Since you have not challenged
the Advice of Counsel that you are a public employee within the purview of the
State Ethics Act, that issue is now final. Therefore, as per your request,
the full Commission will review the previously issued Advice of Counsel only
as it relates to the issues of whether income you received from sources other
than your public employment is includable and secondly whether a gross
receipt, which is offset by a loss resulting in no net income, is income for
the purpose of filing your Financial Interests- Disclosure.
Mr. Eugene Sullivan
Page 2
III. Discussion:
Section 402 of the Ethics Act defines income as follows:
Section 2. Definitions.
"Income." Any money or thing of value received, or to be
received as a claim on future services, whether in the
form of a fee, salary, expense, allowance, forbearance,
forgiveness, interest, dividend, royalty, rent, capital
gain or any other form of recompense or any combination
thereof. 65 P.S. 402.
Section 405(b)(5) provides:
Section 5. Statement of financial interests.
(b) The statement shall include the following information
for the prior calendar year with regard to the person
required to file the statement and the members of his
immediate family:
(5) The name and address of any person who is the
direct or indirect source of income totalling in
the aggregate of $500 or more. However, this
provision shall not be construed to require the
divulgence of confidential information protected
by statute or existing professional codes of
ethics.
Lastly, the Commission has promulgated regulations which in part sets
forth the definition of income as follows:
Section 1.1. Definitions.
Income - -- As defined in the act, but the term
refers to gross income; prize winnings constitute income,
not gifts; the term includes tax exempt income. The term
does not include social security; welfare; general
assistance; domiciliary care programs; retirement,
pension, and annuity payments funded totally by
contributions of the public official /employe; unemployment
compensation, including employer and union funded
programs; worker's compensation; or miscellaneous,
incidental income of minor dependent children from
newspaper routes, babysitting, lawn- mowing and the like.
51 Pa. Code 1.1.
Mr. Eugene Sullivan
Page 3
Both the State Ethics Act and the regulations of the State Ethics
Commission are clear in that all sources of income, direct or indirect, must
be listed in the Financial Interests Statement provided the income totals in
the aggregate of $500.00 or more.
It is noted that the above quoted definitions of income conform to
judicial precedent wherein that term has been defined in general terms. See
Stratton's Independence v. Howbert, 231 U.S. 399 (1913):
"...income may be defined as the gain derived from
capital, from labor, or from both combined..." 231 U.S. at
415.
See also, Ritter v. U.S., 393 F.2d 823 (1968), wherein the court held
that reimbursements of indirect expenses relative to an employee's relocation,
involving realty appraisal fees, closing costs and house upkeep pending sale
constituted income for federal tax purposes, noting:
"The term income, however, is a broad concept which
includes any economic gain from whatever source, and
deduction and exclusions from it are specifically defined
and must be strictly construed." 393 F.2d at 832.
Based upon the clear, broad definition of the term "income" as found in
the State Ethics Act Section 402, the definition contained in the regulations
of this Commission, 51 Pa. Code 1.1 and the broad application of that general
term by the courts, we are constrained to find that the term income must
encompass a receipt or gain received by you even though there is an offsetting
loss in that same classification of income which would result in no net
income.
As to the second issue of whether the term "income" would encompass
monies or anything of value received by you which does not relate to or come
about from your public employment, we must again be guided by the statutory
definition of income and our regulations. Since the statute or the
regulations do not set forth any exclusions as to income from sources other
than your public employment, it is clear that you are required to include
those sources of income under section 405(b)(5) of our Act provided that
income totals in the aggregate of $500.00 or more. See also, 1 Pa. C.S.A.
§1903.
Lastly, we note that the Commonwealth Court in Phillips v. State Ethics
Commission, 79 Pa. Comwlth. 491, 470 A.2d 659 (1984) directed that coverage
should be broadly applied under the Ethics Act while exclusions should be
narrowly construed.
Mr. Eugene Sullivan
Page 4
For the above reasons the Advice of Counsel is affirmed.
IV. Conclusions:
As a public employee you are required to file the Financial Interests
Statement and list all direct or indirect sources of income totalling in the
aggregate of $500.00 or more regardless of whether it arises from public
employment or from any other source. Furthermore, the term "income" applies
to, but is not limited to, all monies received even though there may be an
offsetting loss which would result in no net income. The Advice of Counsel is
affirmed.
Pursuant to Section 7(9)(i), this opinion is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any civil or criminal proceeding, providing the requestor has
disclosed truthfully all the material facts and committed the acts complained .
of in reliance of the advice given.
This letter is a public record and will be made available as such.
Finally, any person may request within 15 days of service of the opinion
that the Commission reconsider its opinion. The person requesting reconside-
ration should present a detailed explanation setting forth the reasons why the
opinion requires reconsideration.
By the Commission,
ri.. rci, �aM
G. Sieber Pancoast
Chairman