Q: We are currently reviewing our process for complying with the various reporting requirements established under the Lobbying Disclosure Act (LDA) and would like some advice on how we can improve our accuracy moving forward. I don’t think we have been capturing all the relevant expenditures that we need to include. Can you review what expenditures are required to be reported on the LD-2 quarterly activity report?

A: Thank you for your question. I applaud your effort to review and improve upon your existing processes.  Continually taking a look at how and what information is being compiled is an important part of any comprehensive compliance process. The LDA requires registrants to provide a good faith estimate of all lobbying expenditures within the organization on a quarterly basis. This seemingly simple requirement can prove to be somewhat complex given the number of moving parts involved in accurately reflecting reportable expenditures.

Relevant expenditures required to be included in the organization’s quarterly calculation:

1. The value (including compensation and associated overhead and expenses)  of any and all employee time spent on lobbying activities. This includes employees who spend 20% or more of their time engaged in lobbying activities (and are, therefore, listed by name on the report thereby becoming a “registered lobbyist”) and those who do not meet the statutory definition of a “lobbyist” (employees with activity below 20% during the quarter – non-lobbyists).

While it is often straightforward to collect this information for your registered lobbyists, it can be more nuanced to properly capture this activity for those folks under the 20% threshold. Non-lobbyist activity can come in many forms.  Generally, it includes direct (with a covered official) and indirect (internal or with an outside organization) communication such as planning activities, research, coordination, conference calls, meetings, strategy discussions and any other work that is undertaken to augment or further the lobbying objectives of the organization.

Examples of capturable indirect activities:

Research and/or preparation of talking points to be used in connection with a lobbying contact with a covered official.

Engaging in an internal discussion regarding strategic lobbying plan to support organization’s position on proposed legislation or administrative policy.

Drafting bill language, presentations, or letters to be shared with Covered Officials regarding federal policy or administrative actions.

CEO or other leadership meeting with or otherwise communicating with covered officials on the Hill or in the Administration.

Participation with an outside organization to accomplish any of the above listed ends.

2. Payments accrued to outside lobbyists and lobbying firms;
3. Federal lobbying portion of any dues or other payments made to trade associations, membership organizations and the like.

As you undoubtedly know, there are a variety of subtle reporting details that organizations must review and understand when establishing processes and procedures to ensure compliance with the federal law.  For tailored advice centered around your organizational realities, contact us directly for assistance. In addition, details regarding reporting requirements can be located in the Federal Lobbying Compliance Law section of our online publication resource.

Q: We recently hired a lobbyist that is coming to our company directly from spending a number of years as a Senate staffer. What restrictions should we be aware of as her new employer in terms of who she can contact on the Hill?

A: Both the House and the Senate have post-employment restrictions for certain individuals leaving their employment on the Hill.

Importantly, the House and Senate ethics committees will discuss with the staffer prior to their departure the restrictions under which they must operate.  That said, as her new employer, you should definitely be aware of what restrictions are applicable to her situation so neither the company nor she violates the rules. For the Senate, senior staff, defined as individuals whose annual salary is $130,500 or more, are subject to a one year Senate-wide ban. Essentially, senior staff leaving the Senate may not lobby the entire Senate for one year following their departure – this includes lobbying contact with personal, committee, and leadership offices. Staff making less than $130,500 a year are subject to a one-year ban from lobbying their particular office – whether personal, committee, or leadership office. The House restriction for senior staff is a one-year ban from lobbying the particular office for which the former staffer worked and there is no ban in the House for staffers making less than $130,500.

For more information about post-government restrictions in both the federal legislative and executive branch, please contact us directly.

What are your areas of expertise?

With a background in federal compliance, I head the company’s federal services practice and work with our clients to fully comply with federal registration and reporting requirements as well as gift and travel laws associated with both the Legislative and Executive Branch.

How long have you been at State and Federal Communications?

I have been with the company for 14 years

How do you help our clients?

I work with our clients to help them navigate the compliance landscape at the federal level.  I help establish robust processes and procedures to capture relevant activity tailored toward each clients’ needs, field a variety of questions regarding federal activity, establish best practices, manage the compilation process from start to finish and help ensure each client files a complete and accurate report with the U.S. House and Senate.

Q: Our organization is under the impression that we don’t have to register as lobbyists at the Federal level if we keep our lobbying activity isolated to our internal employees and don’t hire outside consultants.  I don’t think this is accurate.  Can you let me know the registration requirement for federal lobbying?

A: You are correct to be skeptical of this viewpoint.  Keeping lobbying activity isolated to in-house personnel does not impact the need to register.  Registration at the federal level is based on three criteria.  All three must be met in order to warrant registration, or, stated differently, registration is required when all three criteria are met.  The criteria are:

1. An organization spends or is expected to spend at least $14,000 on lobbying activity during a quarterly period;
2. An organization has at least one employee who spends 20% of their time engaged in lobbying activity; and
3. That same 20% employee makes more than one lobbying contact.

When considering whether the monetary threshold has been met, all expenses must be considered including, compensation and reimbursed expenses associated with lobbying activities of all employees (not just designated “government relations” employees), overhead, payments to outside lobbyists and the portion of any dues paid to outside membership organization that are allocated toward lobbying.  Likewise, when determining whether an individual employee meets the 20% standard, all time engaged in any activity that is intended to support lobbying contacts must be considered including background and prepatory work, research, strategy sessions and conversations inside and outside the organization.

Once your organization meets all three thresholds, registration with the House and Senate is required within 45 days.  As a federal registrant, quarterly activity reporting is required as well as semi-annual contribution reporting.

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 is sponsoring a breakfast hosted by Women In Government Relations’ PACs, Politics, & Grassroots task force with FEC Chair Hunter.  If you are in Washington next Wednesday, June 6,  join us for a conversation about FEC activities and priorities in this election year.

This particularly timely discussion will help PAC leaders, government relations staff and anyone associated with the political process understand what the landscape looks like for elections in the U.S. moving forward.  With some major nuances present this year that have never been present before, this is a great opportunity to know what to do, what not to do, what your colleagues are doing and what the FEC will be focusing on in the coming months!

Hope to see you there!

NCSL Late Night was hosted at the Buckhorn Saloon and Museum. It was a packed house in the museum which offered an eclectic mix of Texas-centric wildlife hanging from the walls, as well as an optical illusion fun-house.

It was a night of “big fun.” After all, as they say, “Everything is bigger in Texas.”

Ohio Night was a big success. We had an amazing view of San Antonio’s Riverwalk from Biga on the Banks. A variety of Ohio-based businesses and firms enjoyed the opportunity to come together.

Here are some pictures from the event: