When and Why a Report is Needed

Each registrant must file a quarterly report on Form LD-2 no later than 20 days (or on the first business day after such 20th day if the 20th day is not a business day) after the end of the quarterly period beginning on the first day of January, April, July and October of each year in which a registrant is registered. Lobbying firms file separate reports for each client for each quarterly reporting period, while organizations employing in-house lobbyists file one report covering their in-house lobbying activities for each quarterly reporting period. All reports must be filed electronically (with exceptions as noted previously). The Secretary and Clerk do not have the authority under the LDA to grant extensions to registrants.

The obligation to report under the LDA arises from active status as a registrant (i.e., a registration on file that has not been validly terminated). Section 5(a) of the LDA requires a registrant to file a report for the quarterly period in which it incurred its registration requirement, and for each quarterly period thereafter, through and including the reporting period encompassing the date of registration termination. A timely report using Form LD-2 is required even though the registration was in effect for only part of the reporting period. So long as a registration is on file and has not been terminated, a registrant must report its lobbying activities even if those activities during a particular quarterly period would not trigger a registration requirement in the first instance (e.g., a lobbying firm=s income from a client amounted to less than $2,500 during a particular quarterly period). A registrant with no lobbying activity during a quarterly period completes and files the first page (only) of Form LD-2.

Disclosing that a Client is a State or Local Government or Instrumentality

If the client is a state or local government or instrumentality, check the box on Line 7 of LD-1 and LD-2.

Mandatory Electronic Filing

Section 5 of the LDA was amended to require the mandatory electronic filing of all documents required by the LDA. The only exception to mandatory electronic filing is for the purpose of amending reports in the format previously filed, or for compliance with the Americans with Disabilities Act. Each electronic lobbying disclosure form provides usability for people with vision impairments who have the appropriate software and hardware. If you have questions regarding additional ADA accommodations, please contact the Senate Office of Public Records at (202) 224-0758.

Preparing to File the Quarterly Report - Income or Expense Recording

The LDA does not contain any special record keeping provisions, but requires, in the case of an outside lobbying firm (including self employed individuals), a good faith estimate of all income received from the client, other than payments for matters unrelated to lobbying activities. In the case of an organization employing in house lobbyists, the LDA requires a good faith estimate of the total expenses of its lobbying activities. As long as the registrant has a reasonable system in place and complies in good faith with that system, the requirement of reporting expenses or income would be met. Since Section 6(a)(5) requires the Secretary and Clerk to "retain registrations for a period of at least 6 years after they are terminated and reports for a period of at least 6 years after they are filed," we recommend registrants retain copies of their filings and supporting documentation for the same length of time.

Lobbying Firm Income

Lobbying firms report income earned or accrued from lobbying activities during a quarterly period, even though the client may not be billed or make payment until a later time. For a lobbying firm, gross income from the client for lobbying activities is reportable, including reimbursable expenses costs or disbursements that are in addition to fees and separately invoiced. Line 12 of LD-2 provides boxes for a lobbying firm to report income of less than $5,000, or of $5,000 or more. If lobbying income is $5,000 or more, a lobbying firm must provide a good faith estimate of the actual dollar amount rounded to the nearest $10,000.

Organization Expenses using LDA Expense Reporting Method

Organizations that employ in-house lobbyists may incur lobbying-related expenses in the form of employee compensation, office overhead, or payments to vendors which may include lobbying firms. Organizations must report expenses as they are incurred, though payment may be made later. Line 13 of LD-2 provides for an organization to report lobbying expenses of less than $5,000, or $5,000 or more. If lobbying expenses are $5,000 or more, the organization must provide a good faith estimate of the actual dollar amount rounded to the nearest $10,000. Organizations using the LDA expense reporting method mark the "Method A" box on Line 14.

To ensure complete reporting, the Secretary and Clerk have consistently interpreted Section 5(b)(4) to require such organizations to report all of their expenses incurred in connection with lobbying activities, including all payments to retained lobby firms or outside entities, without considering whether any particular payee has a separate obligation to register and report under the LDA. Logically, if an organization employing in-house lobbyists also retains a lobbying firm, the expense reported by the organization should be greater than the fees reported by the lobbying firm of which the organization is a client. All employee time spent in lobbying activities must be included in determining the organization=s lobbying expenses, even if the employee does not meet the statutory definition of a "lobbyist."

Organizations Reporting Expenses under Section 15 (Optional IRC Reporting Methods)

Section 15(a) of the LDA allows entities that are required to report and do report lobbying expenditures under section 6033(b)(8) of the Internal Revenue Code ("IRC") to use IRC definitions for purposes of LDA Sections (4)(a)(3) and 5(b)(4). Charitable organizations, as described in IRC Section 501(c)(3), are required to report to the Internal Revenue Service their lobbying expenditures in conformity with Section 6033(b)(8) of the IRC. They may treat as LDA expenses the amounts they treat for "influencing legislation" under the IRC.

Section 15(b) of the LDA allows entities that are subject to section 162(e) of the IRC to use IRC definitions for purposes of LDA Sections (4)(a)(3) and 5(b)(4). The eligible entities include for-profit organizations (other than lobbying firms) and tax-exempt organizations such as trade associations that calculate their lobbying expenses for IRC purposes with reference to Section 162(e) rules. We believe that this reporting option is available to include also a small number of trade association registrants not required by the IRC to report non-deductible lobbying expenses to their members (i.e., those whose members are tax-exempt).

If an eligible organization elects to report under Section 15, it must do so consistently for all reports covering a calendar year. The electing organization also must report all expenses that fall within the applicable Internal Revenue Code definition. The total that is ultimately reportable to the Internal Revenue Service is the figure that would be used for Line 13 reporting. Line 13 of LD-2 would require any organization to report if the amount of lobbying expenses were less than $5,000, or $5,000 or more. If the expense amount is $5,000 or more, it should be rounded to the nearest $10,000. Line 14 of LD-2 requires the electing organization to mark as applicable, either the "Method B" box (IRC Section 6033(b)(8)) or the "Method C" box (IRC Section 162(e)). The Secretary and Clerk are aware that the IRC and LDA are not harmonized in terms of expense reporting, and registrants are advised that backing out grass roots and state and local lobbying expenses out of the LDA expenses, thereby altering the IRS reportable total, is not permitted.

Quarterly Reporting of Lobbying Activities - Contents of Report

The two core disclosures required by Section 5(b) and 5(c) of the LDA and incorporated into Form LD-2 are: (1) lobbying income or expenses; and (2) lobbying issues. LD-2 has been designed to allow registrants the greatest flexibility in terms of document length to correspond with the varying amounts of information relating to the core disclosures. The following examples illustrate how the nature of the core disclosures builds the form.

Section 5(b) requires specific information on the nature of the lobbying activities. Page 2 of Form LD-2 requires the registrant to:

1. Disclose the general lobbying issue area code (list 1 code per page).
2. Identify the specific issues in which the lobbyist(s) engaged in lobbying activities.
3. Identify the Houses of Congress and Federal Agencies contacted.
4. Disclose the lobbyists who had any activity in the general issue area.
5. Describe the interest of a foreign entity if applicable.

When reporting specific lobbying issues, some registrants have listed only House or Senate bill numbers on the issues page without further indication of their clients' specific lobbying issues. Such disclosures are not adequate, for several reasons. First, Section 5(b)(2)(A) of the LDA requires disclosure of "specific issues upon which a lobbyist employed by the registrant engaged in lobbying activities, including...bill numbers[.]" As we read the law, a bill number is a required disclosure when the lobbying activities concern a bill, but is not in itself a complete disclosure. Further, in many cases, a bill number standing alone does not inform the public of the client's specific issue. Many bills are lengthy and complex, or may contain various provisions that are not always directly related to the main subject or title. If a registrant's client is interested in only one or a few specific provisions of a much larger bill, a lobbying report containing a mere bill number will not disclose the specific lobbying issue. Even if a bill concerns only one specific subject, a lobbying report disclosing only a bill number is still inadequate, because a member of the public would need access to information outside of the filing to ascertain that subject. In our view, the LDA contemplates disclosures that are adequate to inform the public of the lobbying client's specific issues from a review of the LD 2, without independent familiarity with bill numbers or the client's interest in specific subject matters within larger bills. The disclosures on Line 16 must include bill numbers, where applicable, but must always contain information that is adequate, standing alone, to inform the public of the specific lobbying issues.

The Houses of Congress and Federal agencies contacted by lobbyists during the reporting period must be disclosed on Line 17 of Form LD-2, picking from the list of government entities provided on the form. If the list does not display the government entity contacted, then select the department in which the entity is housed. In the event that no lobbying contacts were made, the registrant must mark the "Check if None" box.

Previously identified lobbyists and new lobbyists for this reporting period must be listed on Line 18 of LD-2 if they had any lobbying activities during the reporting period, whether or not they made lobbying contacts. The issue page is only intended to reflect lobbying activity by lobbyists, and not activity of those who are not lobbyists. Once an individual has met the definition of a lobbyist and has been disclosed or identified as such, he or she does not need to meet that standard every reporting period in order to trigger the required disclosure of his or her lobbying activities. The registrant does not report the names of individuals who may perform some lobbying activities, but who do not and are not expected to meet the LDA definition of a lobbyist.

New lobbyists should be disclosed on the appropriate issue(s) page(s) for the reporting period in which the individual first meets the definition of lobbyist. Filers must also disclose whether a new lobbyist has served as a "covered executive or legislative branch official" within twenty (20) years of first acting as a lobbyist for the client and state the executive and/or legislative position in which the person served.

We are aware that there will be situations in which a registrant expects an individual to become a lobbyist and wishes to disclose the name of that individual as a matter of public record. Section 5 of the LDA, however, provides that updated registration information is contained in the registrant=s next quarterly report. Therefore, there may be a period of time in which an individual is legitimately making lobbying contacts but is not identified on the public record until the next quarterly report is filed. In such cases, the registrant reports updated information as the LDA requires.

A foreign entity is reported on Line 19 if both of two circumstances apply: 1) the foreign entity must be an entity that is required to be identified on Form LD 1 or on the registration information update page. That, in turn, depends on whether the entity meets one of the three conditions of Section 4(b)(4) of the LDA; and 2) the entity must have an interest in the specific lobbying issues listed on Line 16. If a foreign entity has an interest in the specific issues, Line 19 requires a description of that interest. For the sake of clarity the registrant should indicate whether the foreign entity(s) is/are the same as identified on the registration.

For additional information (including examples) visit the source for this material: Clerk of the House; U.S. House of Representatives