Section 501(c) and 527 organizations must use Schedule C to furnish additional information on political campaign activities or lobbying activities.
Who must file Schedule C?
An organization that answered “Yes” on Form 990-EZ , Part V, line 46 or Form 990, Part VI, line 47, must complete the appropriate parts of Schedule C and attach Schedule C to Form 990-EZ or Form 990. An organization that answered "Yes" to Form 990-EZ, Part V, line 35c, because it is subject to the section 6033(e) notice and reporting requirements and proxy tax, must complete Part III of Schedule C and attach Schedule C to Form 990-EZ or Form 990.
If an organization has an ownership interest in a joint venture that conducts political campaign
activities or lobbying activities, the organization must report its share of such activity occurring
in its tax year on
What is a Lobbying Activity?
The IRS defines "lobbying activity" as attempts to influence legislation by propaganda or otherwise, presentation of testimony at public hearings held by legislative committees, correspondence and conferences with legislators and their staffs, communications by electronic means, and publication of documents advocating specific legislative action.
What is Grassroots Lobbying?
A grassroots lobbying communication is any attempt to influence any legislation through an attempt to affect the opinions of the general public or any part of the general public. A communication is generally not a grassroots lobbying communication unless (in addition to referring to specific legislation and reflecting a view on that legislation) it encourages recipients to take action about the specific legislation.
What is Direct Lobbying?
A direct lobbying communication is any attempt to influence any legislation through communication with:
- A member or employee of a legislative or similar body
- A governmental official or employee (other than a member or employee of a legislative body) who may participate in the formulation of the legislation, but only if the principal purpose of the communication is to influence legislation
- The public in a referendum, initiative, constitutional amendment, or similar procedure
What are Lobbying Expenditures?
Lobbying expenditures are expenditures (including allocable overhead and administrative costs) paid or incurred for the purpose of attempting to influence legislation:
- Through communication with any member or employee of a legislative or similar body, or with any government official or employee who may participate in the formulation of the legislation.
- By attempting to affect the opinions of the general public.
What is considered Political Campaign Activity of an Exempt Organization?
Political campaign activities have occurred if the organization participated or intervened in (including the publishing of statements) any political campaign on behalf of (or in opposition to) any candidate for public office, directly or indirectly.
Section 501(h), the lobbying expenditure test, defines and limits the amount a public charity may spend on direct and grassroots lobbying.
Section 527 defines political organizations, meaning a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.
The Internal Revenue Code section 501(c)(4) provides for the exemption of two very different types of organizations with their own distinct qualification requirements. These are social welfare organizations and local associations of employees.
Section 501(c)(5) provides for exemption of labor, agricultural, or horticultural organizations. The requirements to be considered an exempt organization under this section are as follows:
- The net earnings of the organization may not inure to the benefit of any member (private benefits to any individual).
- The objects of the organization must be the betterment of conditions of those engaged in the pursuits of labor, agriculture, or horticulture, the improvement of the grade of their products, and the development of a higher degree of efficiency in their respective occupations.
Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.
- The initial taxes on private foundations and self-dealers for self-dealing, failure to distribute income, excess business holdings, investments that jeopardize charitable purpose, and taxable expenditures
- The initial tax on certain supporting organizations and donor advised funds for excess business holdings
- The section 4911 tax on excess lobbying expenditures by public charities that have elected to be subject to section 501(h) regarding expenditures to influence legislation
- The section 4912 tax on excess lobbying expenditures that result in loss of section 501(c)(3) tax-exempt status
- The section 4955 tax imposed on any amount paid or incurred by a section 501 (c)(3) organization that participates or intervenes in any political campaign on behalf of, or in opposition to, any candidate for public office
- The section 4958 initial taxes on disqualified persons and organization managers of section 501(c)(3) (except private foundations), section 501(c)(4), and section 501(c)(29) organizations that engage in excess benefit transactions
- Section 4959, 4965, 4966, 4967, 170(f)(10), and 664(c)(2) taxes
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