26 U.S.C. § 4911 — Tax on excess expenditures to influence legislation
submitted 50 years ago by Pub. L. 94-455 to r/title-26-INTERNAL-REVENUE-CODE · 1,664 words · no verdicts yet
This section imposes a 25-percent tax on an organization’s excess lobbying expenditures when the organization has elected the section 501(h) rules. It defines excess lobbying expenditures, sets spending thresholds, describes what counts as influencing legislation, and provides rules for expenditures and affiliated organizations.
(a) Tax imposed. (1) In general. A tax is imposed on an organization’s excess lobbying expenditures. The tax equals 25 percent of the organization’s excess lobbying expenditures for the taxable year*. (2) Organizations covered. This section applies to an organization for which an election under section 501(h), concerning lobbying expenditures by public charities, is in effect for the taxable year.
(b) Excess lobbying expenditures. “Excess lobbying expenditures” means, for a taxable year, the greater of: (1) the amount by which the organization’s lobbying expenditures exceed its lobbying nontaxable amount for that year; or (2) the amount by which its grass roots expenditures exceed its grass roots nontaxable amount for that year.
(c) Definitions. (1) Lobbying expenditures. “Lobbying expenditures” means expenditures made to influence legislation as defined in subsection (d).
(2) Lobbying nontaxable amount. For an organization and taxable year, this amount is the lesser of $1,000,000 or the amount calculated from this table: if exempt purpose expenditures are not over $500,000, the amount is 20 percent of those expenditures; if they are over $500,000 but not over $1,000,000, the amount is $100,000 plus 15 percent of the amount over $500,000; if they are over $1,000,000 but not over $1,500,000, the amount is $175,000 plus 10 percent of the amount over $1,000,000; and if they are over $1,500,000, the amount is $225,000 plus 5 percent of the amount over $1,500,000.
(3) Grass roots expenditures. “Grass roots expenditures” means expenditures made to influence legislation as defined in subsection (d), but without paragraph (1)(B) of that subsection.
(4) Grass roots nontaxable amount. For an organization and taxable year, this amount is 25 percent of the lobbying nontaxable amount determined under paragraph (2).
(d) Influencing legislation. (1) General rule. Except as paragraph (2) provides otherwise, “influencing legislation” means: (A) trying to influence legislation by trying to affect the opinions of the general public or any part of it; and (B) trying to influence legislation through communication with a member or employee* of a legislative body, or with a government official or employee who may take part in forming the legislation.
(2) Exceptions. For an organization, “influencing legislation” does not include: (A) making the results of nonpartisan analysis, study, or research available; (B) giving technical advice or assistance that would otherwise count as influencing legislation to a government body or its committee or other subdivision in response to that body’s or subdivision’s written request; (C) appearing before, or communicating with, a legislative body about a possible decision that could affect the organization’s existence, powers and duties, tax-exempt status, or the deductibility of contributions to it; (D) communications between the organization and its genuine members about legislation or proposed legislation directly affecting the organization and those members, except communications described in paragraph (3); or (E) communicating with a government official or employee, except: (i) communicating with a member or employee of a legislative body when that communication would otherwise count as influencing legislation; or (ii) communicating mainly to influence legislation.
(3) Communications with members. (A) A communication between an organization and a genuine member that directly encourages the member to communicate as described in paragraph (1)(B) is treated as a communication described in paragraph (1)(B). (B) A communication between an organization and a genuine member that directly encourages the member to urge nonmembers to communicate as described in paragraph (1)(A) or (B) is treated as a communication described in paragraph (1)(A).
(e) Other definitions and special rules. (1) Exempt purpose expenditures. (A) In general. For an organization and taxable year, “exempt purpose expenditures” means all amounts the organization paid or incurred to accomplish purposes described in section 170(c)(2)(B), concerning religious, charitable, educational, and similar purposes. (B) Included amounts. This includes (i) administrative expenses paid or incurred for those purposes, and (ii) amounts paid or incurred to influence legislation, whether or not they are for purposes described in section 170(c)(2)(B). (C) Excluded amounts. It does not include amounts paid or incurred to or for (i) a separate fundraising unit of the organization, or (ii) one or more other organizations, when the amounts are paid or incurred mainly for fundraising.
(2) Legislation. “Legislation” includes action on Acts, bills, resolutions, or similar items by Congress, a State legislature, a local council, or a similar governing body, and action by the public in a referendum, initiative, constitutional amendment, or similar procedure.
(3) Action. “Action” is limited to introducing, amending, enacting, defeating, or repealing Acts, bills, resolutions, or similar items.
(4) Depreciation and similar amounts. When calculating expenditures for influencing legislation under subsection (b)(1) or (b)(2), or exempt purpose expenditures under paragraph (1), do not count amounts properly charged to a capital account. Do count a reasonable allowance for exhaustion, wear and tear, obsolescence, or amortization. Calculate that allowance only by straight-line depreciation. To decide whether an amount is properly charged to a capital account, apply the principles used under subtitle A for amounts paid or incurred in a trade or business*.
(f) Affiliated organizations. (1) In general. Except as paragraph (4) provides otherwise, if two or more section 501(c)(3) organizations are members of an affiliated group as defined in paragraph (2), and a section 501(h) election is effective for at least one of them for the year: (A) determine whether the group made excess lobbying expenditures and exceeded the section 501(h)(1) expenditure limits as if the group were one organization; (B) if the group has excess lobbying expenditures, treat each member for which the election is effective as having excess expenditures equal to its proportional share of the group’s excess; (C) if the limits are exceeded, treat each such member as not described in section 501(c)(3) because of section 501(h); and (D) apply subsections (d)(2)(C) and (D), subsection (d)(3), and subsection (e)(1)(C)(i) as if the group were one organization.
(2) Definition of affiliation. Two organizations are members of an affiliated group only if: (A) one organization’s governing instrument requires it to follow the other organization’s decisions on legislative issues; or (B) one organization’s governing board includes people who (i) are specifically designated representatives of the other organization, or are members of its governing board, officers, or paid executive staff, and (ii) together have enough voting power to cause or prevent the first organization from taking action on legislative issues.
(3) Different taxable years. If group members have different taxable years, the Secretary* must prescribe by regulation how to calculate their expenditures for this section.
(4) Limited control. If two or more organizations are affiliated under paragraph (2) without subparagraph (B), no two are affiliated under paragraph (2) without subparagraph (A), and no governing instrument requires an organization to follow another’s legislative decisions except decisions about Acts, bills, resolutions, or similar items by Congress, then: (A) for an organization whose decisions bind one or more group members directly or indirectly, determine whether it made excess lobbying expenditures and exceeded section 501(h)(1) limits as if it had also paid or incurred the amounts those members paid or incurred to influence legislation concerning congressional Acts, bills, resolutions, or similar items; and (B) for any other group member, make those determinations as if it were not a group member. This section does not define “bona fide,” “general public,” “legislative body,” “governmental body,” or “organization.”
There is hereby imposed on the excess lobbying expenditures of any organization to which this section applies a tax equal to 25 percent of the amount of the excess lobbying expenditures for the taxable year*.
This section applies to any organization with respect to which an election under section 501(h) (relating to lobbying expenditures by public charities) is in effect for the taxable year.
For purposes of this section, the term “excess lobbying expenditures” means, for a taxable year, the greater of—
the amount by which the lobbying expenditures made by the organization during the taxable year exceed the lobbying nontaxable amount for such organization for such taxable year, or
the amount by which the grass roots expenditures made by the organization during the taxable year exceed the grass roots nontaxable amount for such organization for such taxable year.
For purposes of this section—
The term “lobbying expenditures” means expenditures for the purpose of influencing legislation (as defined in subsection (d)).
The lobbying nontaxable amount for any organization for any taxable year is the lesser of (A) $1,000,000 or (B) the amount determined under the following table:
If the exempt purpose expenditures are— | The lobbying nontaxable amount is— |
|---|---|
Not over $500,000 | 20 percent of the exempt purpose expenditures. |
Over $500,000 but not over $1,000,000 | $100,000, plus 15 percent of the excess of the exempt purpose expenditures over $500,000. |
Over $1,000,000 but not over $1,500,000 | $175,000 plus 10 percent of the excess of the exempt purpose expenditures over $1,000,000. |
Over $1,500,000 | $225,000 plus 5 percent of the excess of the exempt purpose expenditures over $1,500,000. |
The term “grass roots expenditures” means expenditures for the purpose of influencing legislation (as defined in subsection (d) without regard to paragraph (1)(B) thereof).
The grass roots nontaxable amount for any organization for any taxable year is 25 percent of the lobbying nontaxable amount (determined under paragraph (2)) for such organization for such taxable year.
Except as otherwise provided in paragraph (2), for purposes of this section, the term “influencing legislation” means—
any attempt to influence any legislation through an attempt to affect the opinions of the general public or any segment thereof, and
any attempt to influence any legislation through communication with any member or employee* of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.
For purposes of this section, the term “influencing legislation”, with respect to an organization, does not include—
making available the results of nonpartisan analysis, study, or research;
providing of technical advice or assistance (where such advice would otherwise constitute the influencing of legislation) to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be;
appearances before, or communications to, any legislative body with respect to a possible decision of such body which might affect the existence of the organization, its powers and duties, tax-exempt status, or the deduction of contributions to the organization;
communications between the organization and its bona fide members with respect to legislation or proposed legislation of direct interest to the organization and such members, other than communications described in paragraph (3); and
any communication with a governmental official or employee, other than—
a communication with a member or employee of a legislative body (where such communication would otherwise constitute the influencing of legislation), or
a communication the principal purpose of which is to influence legislation.
A communication between an organization and any bona fide member of such organization to directly encourage such member to communicate as provided in paragraph (1)(B) shall be treated as a communication described in paragraph (1)(B).
A communication between an organization and any bona fide member of such organization to directly encourage such member to urge persons other than members to communicate as provided in either subparagraph (A) or subparagraph (B) of paragraph (1) shall be treated as a communication described in paragraph (1)(A).
For purposes of this section—
The term “exempt purpose expenditures” means, with respect to any organization for any taxable year, the total of the amounts paid or incurred by such organization to accomplish purposes described in section 170(c)(2)(B) (relating to religious, charitable, educational, etc., purposes).
The term “exempt purpose expenditures” includes—
administrative expenses paid or incurred for purposes described in section 170(c)(2)(B), and
amounts paid or incurred for the purpose of influencing legislation (whether or not for purposes described in section 170(c)(2)(B)).
The term “exempt purpose expenditures” does not include amounts paid or incurred to or for—
a separate fundraising unit of such organization, or
one or more other organizations, if such amounts are paid or incurred primarily for fundraising.
The term “legislation” includes action with respect to Acts, bills, resolutions, or similar items by the Congress, any State legislature, any local council, or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure.
The term “action” is limited to the introduction, amendment, enactment, defeat, or repeal of Acts, bills, resolutions, or similar items.
In computing expenditures paid or incurred for the purpose of influencing legislation (within the meaning of subsection (b)(1) or (b)(2)) or exempt purpose expenditures (as defined in paragraph (1)), amounts properly chargeable to capital account shall not be taken into account. There shall be taken into account a reasonable allowance for exhaustion, wear and tear, obsolescence, or amortization. Such allowance shall be computed only on the basis of the straight-line method of depreciation. For purposes of this section, a determination of whether an amount is properly chargeable to capital account shall be made on the basis of the principles that apply under subtitle A to amounts which are paid or incurred in a trade or business*.
Except as otherwise provided in paragraph (4), if for a taxable year two or more organizations described in section 501(c)(3) are members of an affiliated group of organizations as defined in paragraph (2), and an election under section 501(h) is effective for at least one such organization for such year, then—
the determination as to whether excess lobbying expenditures have been made and the determination as to whether the expenditure limits of section 501(h)(1) have been exceeded shall be made as though such affiliated group is one organization,
if such group has excess lobbying expenditures, each such organization as to which an election under section 501(h) is effective for such year shall be treated as an organization which has excess lobbying expenditures in an amount which equals such organization’s proportionate share of such group’s excess lobbying expenditures,
if the expenditure limits of section 501(h)(1) are exceeded, each such organization as to which an election under section 501(h) is effective for such year shall be treated as an organization which is not described in section 501(c)(3) by reason of the application of 501(h), and
subparagraphs (C) and (D) of subsection (d)(2), paragraph (3) or subsection (d), and clause (i) of subsection (e)(1)(C) shall be applied as if such affiliated group were one organization.
For purposes of paragraph (1), two organizations are members of an affiliated group of organizations but only if—
the governing instrument of one such organization requires it to be bound by decisions of the other organization on legislative issues, or
the governing board of one such organization includes persons who—
are specifically designated representatives of another such organization or are members of the governing board, officers, or paid executive staff members of such other organization, and
by aggregating their votes, have sufficient voting power to cause or prevent action on legislative issues by the first such organization.
If members of an affiliated group of organizations have different taxable years, their expenditures shall be computed for purposes of this section in a manner to be prescribed by regulations promulgated by the Secretary*.
If two or more organizations are members of an affiliated group of organizations (as defined in paragraph (2) without regard to subparagraph (B) thereof), no two members of such affiliated group are affiliated (as defined in paragraph (2) without regard to subparagraph (A) thereof), and the governing instrument of no such organization requires it to be bound by decisions of any of the other such organizations on legislative issues other than as to action with respect to Acts, bills, resolutions, or similar items by the Congress, then—
in the case of any organization whose decisions bind one or more members of such affiliated group, directly or indirectly, the determination as to whether such organization has paid or incurred excess lobbying expenditures and the determination as to whether such organization has exceeded the expenditure limits of section 501(h)(1) shall be made as though such organization has paid or incurred those amounts paid or incurred by such members of such affiliated group to influence legislation with respect to Acts, bills, resolutions, or similar items by the Congress, and
in the case of any organization to which subparagraph (A) does not apply, but which is a member of such affiliated group, the determination as to whether such organization has paid or incurred excess lobbying expenditures and the determination as to whether such organization has exceeded the expenditure limits of section 501(h)(1) shall be made as though such organization is not a member of such affiliated group.
Source credit: (Added Pub. L. 94–455, title XIII, § 1307(b), Oct. 4, 1976, 90 Stat. 1723; amended Pub. L. 95–600, title VII, § 703(g)(1), Nov. 6, 1978, 92 Stat. 2940.)
- 1976Enacted · Pub. L. 94-455 · 90 Stat. 1723
- 1978Amended · Pub. L. 95-600 · 92 Stat. 2940
A history note hasn’t been published yet. The record shows enactment by Pub. L. 94-455 on 1976-10-04.
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