Excessive Lobbying Case Study

Excise taxes started to be implemented on some of the organization for breaking the no substantial lobbying rule in 1987. This was due to the fact that congress concluded that the revocation of tax exemption for excessive lobbying was an ineffective deterrent in some cases. This was due to some charitable organization that raised money from tax deductible contributions under the 501 (c) (3) tax exemption for a substantial lobbing effort and then just ceased operation. The organizations were indifferent to their 501 (c) (3) tax exempt status being revoked after their political objectives were met because it was receiving little or no taxable income. Also earlier charitable contributions by it donors would most likely be unaffected. Without the threat of an excise tax there was nothing to stop people from form these organizations with intention to do substantial lobbying for their own political objectives with the knowledge that the only repercussions that they would have to face would be the revocation of their 501 (c) (3) tax exempt status would be revoked in which they would not care because they already had their money. …show more content…
In addition to these penalties an additional five percent excise tax can be imposed on the manager or managers of an organization that agreed to make lobbying expenditures even though they knew that those expenditures may cause revocation of the organization 501 (c) (3) tax exempt status. This applies to all organizations who have the 501 (c) (3) tax exemption status with the exception of private organizations, churches, and other organizations that have elected to be governed under the 501 (h) expenditure