§ 4911. — Tax on excess expenditures to influence legislation.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 26USC4911]
TITLE 26--INTERNAL REVENUE CODE
Subtitle D--Miscellaneous Excise Taxes
CHAPTER 41--PUBLIC CHARITIES
Sec. 4911. Tax on excess expenditures to influence legislation
(a) Tax imposed
(1) In general
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.
(2) Organizations to which this section applies
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.
(b) Excess lobbying expenditures
For purposes of this section, the term ``excess lobbying
expenditures'' means, for a taxable year, the greater of--
(1) 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
(2) 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.
(c) Definitions
For purposes of this section--
(1) Lobbying expenditures
The term ``lobbying expenditures'' means expenditures for the
purpose of influencing legislation (as defined in subsection (d)).
(2) Lobbying nontaxable amount
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 $100,000, plus 15 percent of the
$1,000,000. excess of the exempt purpose
expenditures over $500,000.
Over $1,000,000 but not over $175,000 plus 10 percent of the excess
$1,500,000. 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.
(3) Grass roots expenditures
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).
(4) Grass roots nontaxable amount
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.
(d) Influencing legislation
(1) General rule
Except as otherwise provided in paragraph (2), for purposes of
this section, the term ``influencing legislation'' means--
(A) any attempt to influence any legislation through an
attempt to affect the opinions of the general public or any
segment thereof, and
(B) 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.
(2) Exceptions
For purposes of this section, the term ``influencing
legislation'', with respect to an organization, does not include--
(A) making available the results of nonpartisan analysis,
study, or research;
(B) 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;
(C) 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;
(D) 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
(E) any communication with a governmental official or
employee, other than--
(i) a communication with a member or employee of a
legislative body (where such communication would otherwise
constitute the influencing of legislation), or
(ii) a communication the principal purpose of which is
to influence legislation.
(3) Communications with members
(A) 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).
(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).
(e) Other definitions and special rules
For purposes of this section--
(1) Exempt purpose expenditures
(A) In general
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).
(B) Certain amounts included
The term ``exempt purpose expenditures'' includes--
(i) administrative expenses paid or incurred for
purposes described in section 170(c)(2)(B), and
(ii) amounts paid or incurred for the purpose of
influencing legislation (whether or not for purposes
described in section 170(c)(2)(B)).
(C) Certain amounts excluded
The term ``exempt purpose expenditures'' does not include
amounts paid or incurred to or for--
(i) a separate fundraising unit of such organization, or
(ii) one or more other organizations, if such amounts
are paid or incurred primarily for fundraising.
(2) Legislation
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.
(3) Action
The term ``action'' is limited to the introduction, amendment,
enactment, defeat, or repeal of Acts, bills, resolutions, or similar
items.
(4) Depreciation, etc., treated as expenditures
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.
(f) Affiliated organizations
(1) In general
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--
(A) 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,
(B) 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,
(C) 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
(D) 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.
(2) Definition of affiliation
For purposes of paragraph (1), two organizations are members of
an affiliated group of organizations but only if--
(A) the governing instrument of one such organization
requires it to be bound by decisions of the other organization
on legislative issues, or
(B) the governing board of one such organization includes
persons who--
(i) 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
(ii) by aggregating their votes, have sufficient voting
power to cause or prevent action on legislative issues by
the first such organization.
(3) Different taxable years
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.
(4) Limited control
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--
(A) 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
(B) 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.
(Added Pub. L. 94-455, title XIII, Sec. 1307(b), Oct. 4, 1976, 90 Stat.
1723; amended Pub. L. 95-600, title VII, Sec. 703(g)(1), Nov. 6, 1978,
92 Stat. 2940.)
Amendments
1978--Subsec. (c)(2). Pub. L. 95-600 substituted ``exempt purpose
expenditures'' for ``proposed expenditures'' in heading of table.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-600 effective Oct. 4, 1976, see section
703(r) of Pub. L. 95-600, set out as a note under section 46 of this
title.
Section Referred to in Other Sections
This section is referred to in sections 162, 501, 6033, 9907 of this
title; title 2 section 1610; title 7 section 4809.
