Instructions For Schedule C (Form 990 Or 990-Ez) 2008 (Page 7 of 8) in pdf

multiplies 175% times its basic labor

Reduce the current year’s lobbying

Subtract dues, etc. (line 1) from

costs (excluding employee benefits) for all

expenditures, but not below zero, by

lobbying and political expenses (line 2c)

of the lobbying of its personnel and adds

costs previously allocated in a prior year

to determine the excess amount to be

its allocable third-party lobbying costs as

to lobbying activities that were cancelled

carried over to the following tax year and

follows:

after a return reporting those costs was

reported on Part III-B, line 2b (carryover

filed.

lobbying & political expenses), or its

Basic

Costs

equivalent, on the next year Form 990

Carry forward any amounts not used

lobbying

Allocable

allocable to

along with the amounts the organization

as a reduction to subsequent years.

labor costs

third-party

lobbying

agreed to carryover in line 4.

of A + B

costs

activities

Include on line 2b:

175% ×

Underreporting of lobbying expenses.

+ $100,000

$213,750

1. Lobbying and political expenditures

An organization is subject to the proxy tax

$65,000

carried over from the preceding tax year.

for the 2008 reporting year for

If Y Organization uses the alternative

2. An amount equal to the taxable

underreported lobbying and political

gross-up method to allocate its lobbying

lobbying and political expenditures

expenses only to the extent that these

costs, Y multiplies 225% times its basic

reported on line 85f for the preceding tax

expenses (if actually reported) would

labor costs (excluding employee benefits)

year, if the organization received a waiver

have resulted in a proxy tax liability for

for all of the lobbying hours of its lobbying

of the proxy tax imposed on that amount.

that year. A waiver of proxy tax for the tax

personnel and adds its third-party

year only applies to reported

lobbying costs as follows:

Line 3. Enter the total amount of dues,

expenditures.

assessments, and similar amounts

Basic

Costs

received, allocable to the 2008 reporting

An organization that underreports its

lobbying

Allocable

allocable to

year that members were notified were

lobbying and political expenses is also

labor costs

third-party

lobbying

nondeductible under section 162(e).

subject to the section 6652(c) daily

of A

costs

activities

penalty for filing an incomplete or

225% ×

Example.

$100,000

= $212,500

•

inaccurate return. See H. Failure To File

$50,000

Membership dues: $100,000 for the

Penalties, in the Instructions for Form

2008 reporting year,

•

Section 263A cost allocation method.

990.

Organization’s timely notices to

The examples that demonstrate this

members: 25% of membership dues

Examples. Organizations A, B, and C:

method are found in Regulations section

nondeductible, and

1. Reported on the calendar year

•

1.162-28(f).

Line 3 entry: $25,000.

basis,

Line 1. Enter the total dues,

Line 4. If the amount on line 2c exceeds

2. Incurred only grassroots lobbying

assessments, and similar amounts

the amount on line 3 and the organization

expenses (did not qualify for the under

allocable to the 2008 reporting year. Dues

sent dues notices to its members at the

$2,000 in-house lobbying exception (de

are the amounts the organization requires

time of assessment or payment of dues,

minimis rule)), and

a member to pay in order to be

include the amount on line 4 that the

3. Allocated dues to the tax year in

recognized as a member.

organization agrees to carryover to the

which they were received.

Payments that are similar to dues

reasonable estimate of nondeductible

include:

lobbying and political expenditure next

Organization A. Dues, assessments,

year and include the amount in Part III-B,

1. Members’ voluntary payments,

and similar amounts received in 2008

line 2b (carryover lobbying and political

2. Assessments to cover basic

were greater than its lobbying expenses

expenses), or its equivalent, on the 2009

operating costs, and

for 2008.

Schedule C (Form 990 or 990-EZ).

3. Special assessments to conduct

lobbying and political activities.

If the organization did not send notices

Workpapers (for 2008 Form 990) —

Organization A

to its members, enter zero on line 4.

Line 2. Include on line 2a the total

amount of expenses paid or incurred

Line 5. The taxable amount reportable

1. Total dues, assessments,

during the 2008 reporting year in

on line 5 is the amount of dues,

etc., received

$800

connection with:

assessments, and similar amounts

2. Lobbying expenses paid or

received:

1. Influencing legislation;

incurred

$600

2. Participating or intervening in any

1. Allocable to the 2008 reporting

3. Less: Total nondeductible

political campaign on behalf of (or in

amount of dues notices

100

year, and

opposition to) any candidate for any

4. Subtract line 3 from both

2. Attributable to lobbying and political

lines 1 and 2

$700 $500

public office;

expenditures that the organization did not

5. Taxable amount of lobbying

3. Attempting to influence any

timely notify its members were

expenses (smaller of the

segment of the general public with

nondeductible.

two amounts on line 4)

$500

respect to elections, legislative matters, or

referendums; or

Report the tax on Form 990-T.

4. Communicating directly with a

The amounts on lines 1, 2, 3, and

If the amount on line 1 (dues, etc.) is

covered executive branch official in an

TIP

5 of the workpapers were entered

greater than the amount on line 2c

attempt to influence the official actions or

on lines 1, 2c, 3, and 5 of the 2008

(lobbying & political expenses), then

positions of such official.

Schedule C (Form 990 or 990-EZ), Part

subtract dues shown in notices (line 3)

III-B.

and the carryover amount (line 4) from

Do not include:

the total lobbying and political expenses

Because dues, etc., received were

1. Any direct lobbying of any local

(line 2c) to determine the taxable lobbying

greater than lobbying expenses, there is

council or similar governing body with

and political expenses to be shown on

no carryover of excess lobbying expenses

respect to legislation of direct interest to

line 5.

to Part III-B, line 2b, 2008 Form 990.

the organization or its members;

2. In-house direct lobbying

If the amount on line 1 (dues, etc.) is

See the instructions for Part III-B, line

expenditures, if the total of such

less than the amount on line 2c (lobbying

5, for the treatment of the $500.

expenditures is $2,000 or less (excluding

& political expenses), then subtract dues

allocable overhead); or

shown in notices (line 3) and the

Organization B. Dues, assessments,

3. Political expenditures for which the

carryover amount (line 4) from dues, etc.

and similar amounts received in 2008

section 527(f) tax has been paid (on Form

(line 1) to determine the taxable lobbying

were less than lobbying expenses for

1120-POL).

& political expenses.

2008.

-7-

Instructions For Schedule C (Form 990 Or 990-Ez) 2008 Page 7

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