Staying Out of Trouble - What is Allowed and What is Not Allowed
"Rules and Regulations for Lobbyists and Organizations that Lobby"
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Lesson 9 Staying Out of Trouble - What is Allowed and What is Not Allowed "Rules and Regulations for Lobbyists and Organizations that Lobby" |
Introduction: |
Jack
Abramoff. Need we say more about the
importance of following the
lobbying rules and regulations? Unethical lobbyists and unethical
legislators
have given the profession of lobbying and, in some case, public
service, a bad
name. And, this is quite sad. A few years ago, I heard a
prominent
political journalist and campaign leader say that public service should
be one
of the most revered professions in the world … but because of a few
unethical
people, public servants are often treated with disrespect and as
political
cartoons. As long as I’ve been working in public policy and advocacy, I’ve heard people, including many teachers, say that they are not allowed to lobby because they work for the state or for a school system or for some corporation that prohibits employee lobbying. The fact is that every American citizen and tax payer has the right … and responsibility … to advocate for things that are important to them. Government employees can advocate just as much as anyone else. However, they many need to exercise some common sense in doing so. For example, an extension agent who chooses to communicate with a legislator to express his/her opinion on a given issue probably would be wise to not write the letter on Cooperative Extension Service letterhead … or call a legislator on the office phone … or do any of this work during working hours. The same holds for teachers and other public employees. However, extension professionals, teachers, and others are most welcome to communicate with elected officials on their own time and at their own expense. Another common myth is that organizations with federal tax exemption under Section 501(c)(3) of the Internal Revenue Code cannot lobby. These tax exempt organizations can, indeed, engage in direct and grassroots lobbying activities. But, there are restrictions and limits to what they can do. You’ll learn more about this in this lesson.  There are two major categories of
reporting requirements that organizations that lobby and individuals
who are
lobbyists must complete. The first
related to federal income tax reporting and the second relates to
required
reporting to the U.S. Congress. Failure
to complete tax reporting and Lobbying Disclosure Act reporting can
result in
severe fines and penalties and/or loss of federal tax exempt status.
In this lesson, we will explore lobbying rules and restrictions and the reporting requirements to the Internal Revenue Service and to the U.S. Congress. The readings for this lesson are intensive, and some of them can be a challenge to comprehend. We will only be able to hit the high spots during this lesson. For anyone who wishes to work as an association executive with government relations responsibilities or for anyone who wishes to be a professional lobbyist, much more study will be required.
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Learning
Objectives:  |
 Review the types
of federal tax exempt organizations and the lobbying restrictions for
each of
them (emphasis on 501(c)(3) and 501(c)(6) organizations). Understand the
reporting
requirements to the United States Congress for lobbyists and
organizations that
lobby. Understand
the reporting
requirements to the Internal Revenue Service for federal tax exempt
organizations to maintain their tax exempt status even if they engage
in
lobbying activities. Understand the
differences between
direct and grassroots lobbying and the respective limitations for
federal tax
exempt organizations.
Understand the
reporting
requirements to the respective state legislature for lobbyists and
organizations that lobby.
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| Instructional Activities:  |
Read
chapter 2 in the text.
Read the “Lobbyists’ Code of Ethics,” appendix 6 in the text.
Read the “Amendments to the Lobbying
Disclosure Act, the Foreign Agents Registration Act, and the Federal
Election
Campaign Act, by Showing Changes to Previous Law Made by The Honest
Leadership
and Open Government Act of 2007 (HLOGA), appendix
7 in the text.
Review the Clerk of the U. S. House of
Representatives’ Guidance to
the
Lobbying Disclosure Act, revised
June 9, 2009 (http://lobbyingdisclosure.house.gov/amended_lda_guide.html).
Examine lobbying
reports (LD-1, LD-2, and LD-203)
that must be filed with the United States
Congress by organizations that lobby and by lobbyists (http://lobbyingdisclosure.house.gov/). (A blank LD-2 may be downloaded
here http://lobbyingdisclosure.house.gov/forms_archive.html.)
Examine previously
filed lobbying reports (LD-2)
and contribution filings (LD-203) that have
been filed with the United States Congress by organizations that lobby
and by
lobbyists (http://lobbyingdisclosure.house.gov/
under “Public Disclosure Search”).
Search for agricultural or extension education associations AND search
for prominent organizations that might be thought of as major lobbying
organizations (such as National Rifle Association, American Association
for
Retired Persons, etc.).
Read Internal
Revenue Service Publication 557 – Tax Exempt Status for Your
Organization –
(http://www.irs.gov/pub/irs-pdf/p557.pdf)
to explore types of federal tax exempt organizations and the lobbying
restrictions for these respective types of organizations. Pay
special attention to 501(c)(3) and
501(c)(6) organizations; however, notice all of the types of federal
tax exempt
organizations (you might be surprised to learn there are so many types
of
federal tax exempt organizations).
Review Internal Revenue Service Form 5768 – Election/Revocation
of Election by an Eligible Section 501(c)(3) Organization To Make
Expenditures
To Influence Legislation – (http://www.irs.gov/pub/irs-pdf/f5768.pdf)
to explore the 501(h) election for 501(c)(3) organizations that wish to
engage
in lobbying activities. IRS code states
that a 501(c)(3) organization may jeopardize its federal tax exempt
status if a
“substantial part of its activities are
carried on to influence legislation.” The
term “substantial” in this IRS code has always been rather ambiguous. The 501(h) election eliminated this
ambiguity and gives 501(c)(3) organizations a clear understanding of
allowable
lobbying activities without putting federal tax exempt status at risk.
Review Internal
Revenue Service Form 990 – Return of Organization Exempt From Income Tax
– (http://www.irs.gov/pub/irs-pdf/f990.pdf). This is the federal tax return
that must be
completed by federal tax exempt organizations.
a. Note, on page 3 of the 990 form, Part IV Item 3 regarding the reporting of direct or indirect political campaign activities for federal tax exempt organizations (excluding 501(c)(3) organizations); if these organizations had direct or indirect political campaign activities, they must complete Form 990 Schedule C Part I (http://www.irs.gov/pub/irs-tege/f990rschc.pdf). b. Note, on page 3 of the 990 form, Part IV Item 4 regarding the reporting of lobbying activities for 501(c)(3) organizations; these organizations must complete Form 990 Schedule C Part II (http://www.irs.gov/pub/irs-tege/f990rschc.pdf) if they engage in lobbying activities; Part II-A is for 501(c)(3) organizations that have filed the 501(h) election; Part II-B is for 501(c)(3) organizations that have not filed the 501(h) election. |
Assignments: |
The
assignment
for this week includes a lot of reading … sorry about the reading load. You will want to do some detailed reading and
some quick skimming; you’ll be able to tell fairly easily what needs to
be read
carefully and what can be skimmed over quickly.
As for what you will turn in this week, note the items following this paragraph. Please write brief double-spaced responses for items 1-7; write about a 1-page double-spaced response to item 8; and complete the True/False section. Please send this assignment as an e-mail attachment to Jay Jackman at JJackman.NAAE@uky.edu. This assignment may be completed and submitted any time on or prior to Friday, July 24. 1. What types of organizations may be eligible for federal tax exempt status under Section 501(c)(3) of the Internal Revenue Service code and what are the lobbying restrictions for this type of organization? 2. What types of organizations may be eligible for federal tax exempt status under Section 501(c)(6) of the Internal Revenue Service code and what are the lobbying restrictions for this type of organization? 3. As it relates to lobbying activities, what are three advantages and three disadvantages of an organization having federal tax exempt status under Section 501(c)(3) of the Internal Revenue Service code? 4. As it relates to lobbying activities, what are three advantages and three disadvantages of an organization having federal tax exempt status under Section 501(c)(6) of the Internal Revenue Service code? 5. As per the Lobbying Disclosure Act requirements, what is the LD-1 (lobbyist registration form), who has to file it, and how often must it be filed? 6. As per the Lobbying Disclosure Act requirements, what is the LD-2 (lobbying activities form), who has to file it, and how often must it be filed? 7. As per the Lobbying Disclosure Act requirements, what is the LD-203 (gifts and campaign contributions form), who has to file it, and how often must it be filed? 8. Provide a brief summary of the lobbying restrictions for your respective state legislature. Please just hit the major points; you’ll probably write no more than one page double-spaced. It is acceptable for you to collaborate with other students in this course in completing this item. True/False Items: Please indicate if the following statements are true or false. If a statement is true, write true for the respective item number. If a statement is false, so indicate, then rewrite the statement to make it a true statement. 9. A 501(c)(3) organization cannot lobby the U.S. Congress. 10. A 501(c)(3) organization cannot make campaign contributions. 11. A 501(c)(6) organization can make campaign contributions. 12. The LD-1 must be filed annually. 13. The LD-2 must be filed quarterly. 14. The LD-203 must be filed twice per year by both the organization that has lobbying activity and by the individual lobbyist. 15. The Lobbying Disclosure Act is monitored by the Clerk of the U.S. House Representatives and the Secretary of the U.S. Senate. 16. Direct lobbying is when a lobbyist influences a legislator. 17. Grassroots lobbying is when an organization encourages its members to influence a legislator. 18. The 501(h) election helps clarify lobbying restrictions for 501(c)(6) organizations. 19. A 501(c)(6) organization must notify its members regarding the amount of the annual membership dues that is used for lobbying activities and, therefore, is not deductible on members’ individual income tax returns. 20. Federally appropriated funds may be used to lobby the U.S. Congress (Byrd Amendment). 21. The Honest Leadership and Open Government Act of 2007 (HLOGA) made substantial changes to the Lobbying Disclosure Act, and other related federal legislation, pertaining to lobbying activities of organizations and individual lobbyists. 22. A surefire way to build a positive relationship with a member of the U.S. Congress is to offer large gifts and gratuities to the member and his/her staff. 23. This readings and assignments for this week were a bit overwhelming. |