Proxy Tax

Proxy Tax

In the United States, a tax levied on the political or lobbying activity of certain tax-exempt organizations. Subject to certain restrictions, the proxy tax applies to organizations under section 501(c)4, 501(c)5, and 501(c)6. Generally speaking, this includes labor unions, civic groups, chambers of commerce, and similar groups. Unless the organization meets exemption requirements (usually meaning the organization is a veterans' group or volunteer fire department), it must pay the proxy tax on its lobbying efforts. The proxy tax rate is 35%. An organization may avoid the proxy tax if it establishes to the IRS that members do not deduct membership dues, contributions, or other similar amounts on their personal or business taxes.
References in periodicals archive ?
The additional taxes included $16.4 million of alternative minimum tax, $1.5 million of "proxy tax" on certain nondeductible lobbying and political expenditures, and $0.54 million of "other" taxes.
Simplifying the Code will also eliminate the need for Band-Aid-like compliance measures that can impede routine, day-to-day business transactions and force law-abiding businesses to absorb the heavy proxy tax of additional recordkeeping.
An organization with more than $1,000 in gross income from UBI must file Form 990-T, Exempt Organization Business Income Tax Return (and proxy tax under section 6033(e)), and is subject to corporate tax rates on unrelated business taxable income.
Congress had not taxed lobbying as directly as Vermont had, although under the federal law the only alternative to dues non-deductibility for members of associations that engage in lobbying is a flat 35 percent tax on the associations' lobbying expenditures (the "proxy tax").
where T denotes the aggregate tax yield, [x.sub.i] denotes the proxy tax base for the K categories of taxes and the time variable t is a proxy for discretionary tax measures.
A membership organization that was tax exempt under Internal Revenue Code sections 501(c) (4), 501(c)(5), or 501(c)(6) was liable for the proxy tax if the organization did not notify its members of the shares of their dues that were allocated to the nondeductible lobbying and political expenditures, or if the notice did not include the entire amount of dues that was allocated.
"Simplifying the Code will also eliminate the need for Band-Aid-like compliance measures that can impede routine, day-to-day business transactions and force law-abiding businesses to absorb the heavy proxy tax of additional recordkeeping." TEI also warned, however, that significant tax reform that includes the broadening of the tax base and simplification will undeniably have positive effects on certain groups of taxpayers and negative effects on others.
457(b) plan is required to file Form 990, Return of Organization Exempt from Income Tax, or Form 990-T, Exempt Organization Business Income Tax Return (and proxy tax under section 6033(e)).
A new separate lobbying subsidiary could elect to pay a 35 percent proxy tax, or it could elect to inform its members that dues and contributions are not deductible.
A membership organization that was tax-exempt under Internal Revenue Code sections 501(c)(4), 501(c)(5), or 501(c)(6) was liable for the proxy tax if the organization did not notify its members of the shares of their dues that were allocated to the nondeductible lobbying and political expenditures, or if the notice did not include the entire amount of dues that was allocated.
The law requires that all Section 501 (c) (6) associations either notify their members of the portion of their dues that is nondeductible because of lobbying expenditures or pay a 35 percent proxy tax to the government.
The income from these parties is reported as unrelated business income on Form 990-T, Exempt Organization Business Income Tax Return (and proxy tax under section 6033(e)).Waitresses, bartenders and busboys employed by the club are paid by the hour and also receive tips.