Q: I want to sell my company’s product to a state or local government entity. Do I need to register as a lobbyist?

A: Jurisdictions approach the issue of procurement lobbying differently and registration requirements can vary widely from one jurisdiction to the next.

Some jurisdictions completely exempt procurement activities from their definition of lobbying. For example, in Maine, registration is not required for procurement-related activities because those activities are not considered lobbying. On the other hand, jurisdictions like Idaho require registration for procurement-related activities, subject only to the state’s general registration threshold.

To complicate matters further, some jurisdictions set different registration thresholds for procurement lobbying activities than they do for other lobbying activities. In Florida, for example, employees engaged in procurement activities on behalf of their employer are required to register as executive branch lobbyists if they lobby to procure a contract with a value of more than $20,000.

Additionally, even if a state’s law doesn’t cover a particular procurement activity, local entities and municipalities may have more stringent registration requirements that do reach your contemplated activities. Certain hospital systems and school districts in Florida, for example, require representatives of companies hoping to do business with them to register as lobbyists prior to meeting with them to discuss potential procurement opportunities.

Though sales teams often function separately from government affairs teams, if your company is selling to a governmental entity, you should carefully consider whether any lobbying laws will apply to your procurement efforts.

More information about procurement lobbying requirements can easily be found on our website in the Registration section of the Procurement Lobbying Compliance Guidebook.

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.