Instructions For Schedule C (Form 990 Or 990-Ez) - Political Campaign And Lobbying Activities - 2010 Page 7
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8X Organization allocated its lobbying
3. Special assessments to conduct
line 2b (carryover lobbying and political
costs as follows:
lobbying and political activities.
expenses), or its equivalent, on the 2011
Schedule C (Form 990 or 990-EZ).
Line 2. Include on line 2a the total
Costs
If the organization did not send notices
amount of expenses paid or incurred
allocable
to its members, enter “-0-” on line 4.
during the 2010 reporting year in
Lobbying
Total
Allocable to
Line 5. The taxable amount reportable
labor
costs of
third-party lobbying
connection with:
on line 5 is the amount of dues,
hrs.
operations
costs
activities
1. Influencing legislation;
assessments, and similar amounts
3,000
2. Participating or intervening in any
× $300,000 + $ -0- = $150,000
received:
6,000
political campaign on behalf of (or in
Total
1. Allocable to the 2010 reporting
opposition to) any candidate for any
labor
year, and
public office;
hrs.
2. Attributable to lobbying and political
3. Attempting to influence any
Example 2. Gross-up method and
expenditures that the organization did not
segment of the general public with
alternative gross-up method.
timely notify its members were
respect to elections, legislative matters, or
A and B are employees of Y
nondeductible.
referendums; and
Organization.
4. Communicating directly with a
Report the tax on Form 990-T.
1. A’s activities involve significant
covered executive branch official in an
If the amount on line 1 (dues,
judgment with respect to lobbying
attempt to influence the official actions or
assessments, and similar amounts) is
activities.
positions of such official.
greater than the amount on line 2c (total
2. A’s basic lobbying labor costs
lobbying and political expenditures), then
Do not include:
(excluding employee benefits) are
subtract the nondeductible dues shown in
$50,000.
1. Any direct lobbying of any local
notices (line 3) and the carryover amount
3. B performs clerical and support
council or similar governing body with
(line 4) from the total lobbying and
activities for A.
respect to legislation of direct interest to
political expenditures (line 2c) to
4. B’s labor costs (excluding
the organization or its members;
determine the taxable amount lobbying
employee benefits) in support of A’s
2. In-house direct lobbying
and political expenditures (line 5).
activities are $15,000.
expenditures, if the total of such
5. Allocable third-party costs are
If the amount on line 1 (dues,
expenditures is $2,000 or less (excluding
$100,000.
assessments, and similar amounts) is
allocable overhead); or
less than the amount on line 2c (total
3. Political expenditures for which the
If Y Organization uses the gross-up
lobbying and political expenditures), then
section 527(f) tax has been paid (on Form
method to allocate its lobbying costs, it
subtract the nondeductible dues shown in
1120-POL).
multiplies 175% times its basic labor
notices (line 3) and the carryover amount
costs (excluding employee benefits) for all
Reduce the current year’s lobbying
(line 4) from dues, assessments, and
of the lobbying of its personnel and adds
expenditures, but not below zero, by
similar amounts (line 1) to determine the
its allocable third-party lobbying costs as
costs previously allocated in a prior year
taxable lobbying and political
follows:
to lobbying activities that were
expenditures (line 5).
cancelled after a return reporting those
Subtract dues, assessments, and
Basic
Costs
costs was filed.
similar amounts (line 1) from lobbying and
lobbying
Allocable
allocable to
Carryforward any amounts not used as
political expenditures (line 2c) to
labor costs
third-party
lobbying
a reduction to subsequent years.
determine the excess amount to be
of A + B
costs
activities
carried over to the following tax year and
175% ×
Include the following on line 2b.
+ $100,000
=
$213,750
reported on Part III-B, line 2b (carryover
$65,000
1. Lobbying and political expenditures
lobbying and political expenditures), or its
If Y Organization uses the alternative
carried over from the preceding tax year.
equivalent, on the next year Schedule C
gross-up method to allocate its lobbying
2. An amount equal to the taxable
(Form 990 or 990-EZ) along with the
costs, it multiplies 225% times its basic
lobbying and political expenditures
amounts the organization agreed to
labor costs (excluding employee benefits)
reported on Part III-B, line 5 for the
carryover on line 4.
for all of the lobbying hours of its lobbying
preceding tax year, if the organization
Underreporting of lobbying expenses.
personnel and adds its third-party
received a waiver of the proxy tax
An organization is subject to the proxy tax
lobbying costs as follows:
imposed on that amount.
for the 2010 reporting year for
underreported lobbying and political
Basic
Costs
Line 3. Enter the total amount of dues,
expenses only to the extent that these
lobbying
Allocable
allocable to
assessments, and similar amounts
labor costs
third-party
lobbying
expenses (if actually reported) would
received, allocable to the 2010 reporting
of A
costs
activities
have resulted in a proxy tax liability for
year, for which members were timely
225% ×
that year. A waiver of proxy tax for the tax
notified were nondeductible under section
+
$100,000
= $212,500
$50,000
year only applies to reported
162(e).
expenditures.
Example.
Section 263A cost allocation method.
•
An organization that underreports its
Membership dues: $100,000 for the
The examples that demonstrate this
lobbying and political expenses is also
2010 reporting year,
method are found in Regulations section
•
subject to the section 6652(c) daily
Organization’s timely notices to
1.162-28(f).
penalty for filing an incomplete or
members: 25% of membership dues
Part III-B, Line 1. Enter the total dues,
inaccurate return. See H. Failure To File
nondeductible, and
assessments, and similar amounts
•
Penalties in the instructions for Form 990.
Line 3 entry: $25,000.
allocable to the 2010 reporting year. Dues
Examples. Organizations A, B, and C:
Line 4. If the amount on line 2c exceeds
are the amounts the organization requires
the amount on line 3 and the organization
1. Reported on the calendar year
a member to pay in order to be
sent dues notices to its members at the
basis,
recognized as a member.
time of assessment or payment of dues,
2. Incurred only grassroots lobbying
Payments that are similar to dues
include the amount on line 4 that the
expenses (did not qualify for the under
include:
organization agrees to carryover to the
$2,000 in-house lobbying exception (de
1. Members’ voluntary payments,
reasonable estimate of nondeductible
minimis rule)), and
2. Assessments to cover basic
lobbying and political expenditure next
3. Allocated dues to the tax year in
operating costs, and
year and include the amount in Part III-B,
which they were received.
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