April 8, 2022 •
Ask the Experts – LDA Reporting Expenditures and Taxes
Question: For federal income tax purposes, our organization has been using the aggregate amounts reported on our quarterly LD-2 lobbying activity report as our non-deductible lobbying expenses. Can the expenditures we compile for LDA reporting be used interchangeably for tax purposes?
Answer: In a word: maybe – depending on the method of LDA reporting you’ve opted to follow. If you file your LD-2 report using the IRC definitions (method C), then the number you compile and report on your LD-2 can be used interchangeably for tax purposes. However, if you compile and report your quarterly lobbying expenditures using LDA definitions (method A), the results will not accurately reflect non-deductible lobbying expenses as defined by the IRS. Because the definition of “lobbying” differs between the LDA and the IRC, the two compilation methods will produce very different results. If you use LDA definitions to compile your quarterly LD-2, your organization must employ a second process by which to determine your non-deductible lobbying expenses for tax purposes. A lobbying registrant can determine each year which method they will use to compile the LD-2 report. Once a method has been selected, a registrant must use that method for all four quarterly reports during that year. The upcoming first quarter report is a good time to revisit the compilation method used and make changes if elected for 2022.
For more information about filing methods and reporting requirements visit our online publication Federal Lobbying Compliance Law section.
State and Federal Communications, Inc. provides research and consulting services for government relations professionals on lobbying laws, procurement lobbying laws, political contribution laws in the United States and Canada. Learn more by visiting stateandfed.com.