Reg. § 56.4911-1 Tax on excess lobbying expenditures.
(a) In general Section imposes an excise tax of 25 percent on the excess lobbying expenditures (as defined in of this section) for a taxable year of an organization for which the expenditure test election under section is in effect (an “electing public charity”). An electing public charity's annual limit on expenditures for influencing legislation (i.e., the amount of lobbying expenditures on which no tax is due) is the lobbying nontaxable amount or, on expenditures for influencing legislation through grass roots lobbying, the grass roots nontaxable amount (see of this section). For rules concerning the application of the excise tax imposed by section to the members of an affiliated group of organizations (as defined in ), see .
(b) Excess lobbying expenditures For any taxable year for which the expenditure test election under section is in effect, the amount of an electing public charity's excess lobbying expenditures is the greater of—
(1) The amount by which the organization's lobbying expenditures (within the meaning of ) exceed the organization's lobbying nontaxable amount, or
(2) The amount by which the organization's grass roots expenditures (within the meaning of ) exceed the organization's grass roots nontaxable amount.
(c) Nontaxable amounts
(1) Lobbying nontaxable amount Under section , the lobbying nontaxable amount for any taxable year for which the expenditure test election is in effect is the lesser of—
(i) $1,000,000, or
(ii) To the extent of the electing public charity's exempt purpose expenditures (within the meaning of ) for that year, the sum of 20 percent of the first $500,000 of such expenditures, plus 15 percent of the second $500,000 of such expenditures, plus 10 percent of the third $500,000 of such expenditures, plus 5 percent of the remainder of such expenditures.
(2) Grass roots nontaxable amount Under section , an electing public charity's grass roots nontaxable amount for any taxable year is 25 percent of its lobbying nontaxable amount for that year.
(d) Examples The provisions of this section are illustrated by the examples in .