Instructions For Schedule C (Form 990 Or 990-Ez)

Grassroots lobbying, and

circumstance, the organization may apply

Costs

Political campaign activities.

these costs to reduce its current year's

Basic lobbying

Allocable

allocable to

lobbying costs, but not below zero. The

There are no special rules related to

labor costs

third-party

lobbying

organization may carry forward any

of A

costs

activities

determining these costs.

amount of the costs not used to reduce its

(225% ×

$100,000

= $212,500

All methods. For all the allocation

current year's lobbying costs to

$50,000)

methods, include labor hours and costs of

subsequent years.

personnel whose activities involve

Example 1. Ratio method.

significant judgment about lobbying

Section 263A cost allocation method.

X Organization incurred:

activities.

The examples that demonstrate this

1. 6,000 labor hours for all activities,

method are found in Regulations section

Special Rules

2. 3,000 labor hours for lobbying

1.162-28(f).

activities (3 employees),

Ratio and gross-up methods. These

Part III-B, Line 1. Enter the total dues,

3. $300,000 for operational costs, and

methods may be used even if volunteers

assessments, and similar amounts

conduct activities.

4. No third-party lobbying costs.

allocable to the 2017 reporting year. Dues

are the amounts the organization requires

Ratio method. This method may

X Organization allocated its lobbying

a member to pay in order to be recognized

disregard labor hours and cost of clerical

costs as follows:

as a member.

or support personnel (other than lobbying

Allocable

Costs

personnel).

Payments that are similar to dues

Total costs

third-

allocable to

include:

Alternative gross-up method. This

Lobbying

party

lobbying

labor hrs.

operations

costs

activities

1. Members' voluntary payments,

method may disregard:

Labor hours, and

2. Assessments to cover basic

3,000

$300,000 +

$ -0-

$150,000

6,000

Costs of clerical or support personnel

operating costs, and

(other than lobbying personnel).

Total labor

3. Special assessments to conduct

hrs.

lobbying and political activities.

Third-party costs. These are:

Payments to outside parties for

Line 2. Include on line 2a the total

conducting lobbying activities,

Example 2. Gross-up method and

amount of expenses paid or incurred

Dues paid to another membership

alternative gross-up method.

during the 2017 reporting year in

organization that were declared to be

A and B are employees of Y Organization.

connection with:

nondeductible lobbying expenses, and

1. A's activities involve significant

Travel and entertainment costs for

1. Influencing legislation;

judgment about lobbying activities.

lobbying activity.

2. Participating or intervening in any

2. A's basic lobbying labor costs

political campaign on behalf of (or in

Direct contact lobbying. Treat all hours

(excluding employee benefits) are

opposition to) any candidate for any public

spent by a person in connection with

$50,000.

office;

direct contact lobbying as labor hours

3. B performs clerical and support

allocable to lobbying activities.

3. Attempting to influence any

activities for A.

segment of the general public with respect

Don’t treat as direct contact lobbying

4. B's labor costs (excluding

to elections, legislative matters, or

the hours spent by a person who engages

employee benefits) in support of A's

referendums; and

in research and other background

activities are $15,000.

activities related to direct contact lobbying,

4. Communicating directly with a

5. Allocable third-party costs are

but who makes no direct contact with a

covered executive branch official in an

$100,000.

legislator, or covered executive branch

attempt to influence the official actions or

official.

positions of such official.

If Y Organization uses the gross-up

De minimis rule. If less than 5% (0.05) of

method to allocate its lobbying costs, it

Don’t include:

a person's time is spent on lobbying

multiplies 175% (1.75) times its basic

1. Any direct lobbying of any local

activities, and there is no direct contact

labor costs (excluding employee benefits)

council or similar governing body with

lobbying, an organization may treat that

for all of the lobbying of its personnel and

respect to legislation of direct interest to

person's time spent on lobbying activities

adds its allocable third-party lobbying

the organization or its members;

as zero.

costs as follows:

2. In-house direct lobbying

Purpose for engaging in an activity.

expenditures, if the total of such

Costs

The purpose for engaging in an activity is

allocable

expenditures is $2,000 or less (excluding

based on all the facts and circumstances.

Basic lobbying

Allocable

allocable overhead); or

If an organization's lobbying

labor costs of A

third-party

lobbying

3. Political expenditures for which the

communication was for both a lobbying

+ B

costs

activities

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

and a non-lobbying purpose, the

1120-POL).

organization must make a reasonable

(175% ×

$100,000

$213,750

allocation of cost to influence legislation.

$65,000)

Reduce the current year's lobbying

expenditures, but not below zero, by costs

Correction of prior year lobbying

previously allocated in a prior year to

costs. If in a prior year, an organization

If Y Organization uses the alternative

lobbying activities that were cancelled

treated costs incurred for a future lobbying

gross-up method to allocate its lobbying

after a return reporting those costs was

communication as a lobbying cost to

costs, it multiplies 225% (2.25) times its

filed.

influence legislation, but after the

basic labor costs (excluding employee

organization filed a timely return, it

Carryforward any amounts not used as

benefits) for all of the lobbying hours of its

appears the lobbying communication will

a reduction to subsequent years.

lobbying personnel and adds its

not be made under any foreseeable

Include the following on line 2b.

third-party lobbying costs as follows:

Instructions for Schedule C (Form 990 or 990-EZ)

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Instructions For Schedule C (Form 990 Or 990-Ez) - 2016 Page 7

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