Lobbying Rules for Electing And

Lobbying Rules for Electing And

IRS LOBBYINGRULESFOR501(c)3 NONPROFIT CHARITIES

Rules / Charities using the501h
expenditure test / Charities using the default
insubstantial part test
  1. 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.
  1. Volunteers and Donated Items
/ NO limit on volunteers, free or donateditems. / ALL volunteers, free and donated activities must be tracked and reported.
  1. 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.
  1. LobbyingDefinition
/ Lobbying consists of communications that are intended to influence specific legislation/ballot initiatives. / Notdefined,nospecificexclusions instatuteorregulations
  1. 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.
  1. What makes it Lobbying?
/
  1. Communication
  2. With Legislators (D) or General Public (G)
  3. Expressing view about specific legislation
  4. Call to action (G)
/ Not well defined.
  1. Other Limits
/ Grass roots lobbying expenses must be less than 25% of total lobbying limit. / Nothing defined or stated.
  1. ExcessiveLobbying PenaltyforOrganization
/ 25%taxonlobbying expensesover the limitinanyyear. / 5%taxonalllobbying expensesif substantiallobbying determined.
  1. ExcessiveLobbying PenaltyforOfficers and Board
/ Noindividualliability. / 5% fine to individual officers & directors if org is found to have willfully done more than “insubstantial”lobbying.
  1. 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.
  1. Recordkeeping
/ Mustdocumentalllobbying expenses (not activities),bothgrassrootsand direct. / Mustdocumentalllobbying activitiesandexpenses.
  1. 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.
  1. 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

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