IRS LOBBYINGRULESFOR501(c)3 NONPROFIT CHARITIES
Rules /
Charities using the501h expenditure test /
Charities using the default insubstantial part test - LobbyingLimits
/ All lobbying must be under an IRS pre-set limit of an organization’s expenses only. / All lobbying must be, as determined afterwards by the IRS, an“insubstantial”partof an organization’s activities and expenses.
- Volunteers and Donated Items
/ NO limit on volunteers, free or donateditems. / ALL volunteers, free and donated activities must be tracked and reported.
- How is Lobbying Limit Determined
/ 20% of first $500,000 of org expenses
15% of next $500,000 of org expenses
10% of next $500,000 of org expenses
5% of rest of org expenses
up to $1 million lobbying cap / By an IRS agent based on their view of whether the organization conducted more than insubstantial lobbying.
- LobbyingDefinition
/ Lobbying consists of communications that are intended to influence specific legislation/ballot initiatives. / Notdefined,nospecificexclusions instatuteorregulations
- Types of Lobbying
/ Direct (D) – communication with someone who will vote or can affect legislation.
Grassroots (G) - encouraging others to communicate with someone who will vote or can affect legislation. / Not well defined.
- What makes it Lobbying?
/
- Communication
- With Legislators (D) or General Public (G)
- Expressing view about specific legislation
- Call to action (G)
/ Not well defined.
- Other Limits
/ Grass roots lobbying expenses must be less than 25% of total lobbying limit. / Nothing defined or stated.
- ExcessiveLobbying PenaltyforOrganization
/ 25%taxonlobbying expensesover the limitinanyyear. / 5%taxonalllobbying expensesif substantiallobbying determined.
- ExcessiveLobbying PenaltyforOfficers and Board
/ Noindividualliability. / 5% fine to individual officers & directors if org is found to have willfully done more than “insubstantial”lobbying.
- RevocationofTaxStatus
/ If lobbyingexceeds150%of limitsover4 years, tax status could be revoked. / If more than “insubstantial”lobbyinginany single year could lose 501(c)3 tax status.
- Recordkeeping
/ Mustdocumentalllobbying expenses (not activities),bothgrassrootsand direct. / Mustdocumentalllobbying activitiesandexpenses.
- Reporting
/ Must report actual lobbying expenses on the annual 990 tax return. / Must report detaileddescriptionofthe free/volunteer activitiesandlobbying expensespaid, on the annual 990 tax return.
- Audit Exposure
/ According to the Alliance for Justice, there is no difference in your audit exposure
whether you elect the 501h or not.
2017 Coalition for a Strong Nebraska
