Disclosing Government Relations Expenditure

One frequently asked question in the chamber government relations realm is, “Are we required to disclose to members our government affairs expenditure for their own tax purposes?” Everyone wants to be compliant with federal tax code, and organization members cannot take a business expense deduction on their tax return for a portion of membership dues allocable to lobbying. But what activities in your government affairs program constitute ‘lobbying’ by IRS standards?

Thankfully this is one area where IRS rules are actually pretty clear. The instructions for form 990 schedule C will tell you all you need to know in a mere 8 pages -

While it shouldn’t replace a thorough read through the 990 schedule C instructions, this summary will give you a flavor of the rules for 501(c)(6) entities:

In general, policy-related communication to members is not lobbying, provided it does not include a “pick up the phone” call to action. Neither is relationship building with public officials. Non-partisan analysis, study or research about a public policy issue is also not lobbying. Only activities intended to influence passage or rejection of a specific piece of legislation or election of a candidate is lobbying.

Here are two key definitions taken directly from the 2015 form 990 instructions glossary:
  • Lobbying activities - All activities intended to influence foreign, national, state or local legislation. Such activities include direct lobbying (attempting to influence the legislators) and grassroots lobbying (attempting to influence legislation by influencing the general public).
  • Legislation - Includes action by Congress, any state legislature, any local council, or similar governing body about acts, bills, resolutions, or similar items or by action by the the public in referenda, ballot initiatives, constitutional amendments or similar procedures. It does not include actions by executive, judicial, or administrative bodies.

Even for actives that are indeed lobbying, there is a de minimums threshold of $2,000 for in-house lobbying below which the organization is not obligated to disclose. That $2,000 excludes overhead and lobbying local officials regarding legislation of direct interest to members. For direct lobbying expense above that threshold you are required to disclose.For more on this subject check out these great articles/resources from Venable LLP:

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Last Updated: 7/21/2017