The Small Business Administration has released updated guidance on what constitutes lobbying for 501(c)(6) organizations — which include local and state home builders associations — that seek forgivable loans under the Paycheck Protection Program (PPP).
Question No. 57 in the guidance document states that the term "lobbying activities" is defined in section 3 of the Lobbying Disclosure Act (LDA) of 1995.
Under the new law approved at the end of December, 501(c)(6) organizations, including state and local HBAs, are eligible to receive a PPP loan if:
- The organization does not receive more than 15% of receipts from lobbying;
- The lobbying activities do not comprise more than 15% of activities;
- The organization has 300 or fewer employees and
- The cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to Feb. 15, 2020.
The updated guidance clarifies lobbying activities concerning the latter bullet.
The LDA definition of lobbying activities differs from the tax code’s definition. For example, the LDA does not require organizations to report state lobbying and grassroots lobbying expenses. In determining the $1 million threshold for the most recent tax year, an organization should look to the most recent tax year that ended before Feb. 15, 2020.