IRS Instruction 990 (Schedule C) – In the world of tax-exempt organizations, maintaining compliance with IRS regulations is crucial for preserving nonprofit status and avoiding penalties. One key component of this compliance is accurately reporting political campaign and lobbying activities using Schedule C (Form 990). This schedule is essential for section 501(c) organizations and section 527 organizations that engage in activities influencing elections or legislation. Whether you’re a 501(c)(3) public charity, a 501(c)(4) social welfare group, or another qualifying entity, understanding the IRS instructions for Schedule C (Form 990) can help ensure your filings are accurate and timely.
This guide breaks down the purpose, filing requirements, definitions, and step-by-step instructions for completing Schedule C. We’ll draw from the latest 2025 IRS instructions to provide up-to-date insights for tax years beginning in 2025. As of February 2026, these instructions remain the most current, with no major legislative changes noted in recent IRS updates.
What is Schedule C (Form 990)?
Schedule C (Form 990), titled “Political Campaign and Lobbying Activities,” is a supplemental schedule attached to Form 990 or Form 990-EZ. It requires organizations to disclose details about their involvement in political campaigns and lobbying efforts. The IRS uses this information to monitor compliance with rules that limit or prohibit certain activities for tax-exempt entities, particularly to prevent abuse of tax-exempt status for political purposes.
The schedule is divided into three main parts:
- Part I: Focuses on political campaign activities.
- Part II: Details lobbying activities (for 501(c)(3) organizations only).
- Part III: Addresses section 6033(e) notice, reporting requirements, and proxy tax for certain membership organizations.
Failing to file or inaccurately reporting on Schedule C can result in excise taxes, loss of exempt status, or other penalties. For instance, 501(c)(3) organizations are strictly prohibited from political campaign intervention, while others like 501(c)(4)s have more flexibility but still face reporting obligations.
Who Must File Schedule C?
Not every tax-exempt organization needs to file Schedule C. Filing is triggered by responses to specific questions on the main form:
- On Form 990, if you answer “Yes” to Part IV, lines 3 (political campaign activities), 4 (lobbying activities), or 5 (proxy tax liability).
- On Form 990-EZ, if you answer “Yes” to Part V, line 46 (political activities), Part VI, line 47 (lobbying), or Part V, line 35c (proxy tax).
Specific requirements by organization type:
- Section 501(c)(3) organizations: Complete Parts I-A, I-B, and II (either A or B based on election status).
- Other Section 501(c) organizations (e.g., 501(c)(4), (5), or (6)): Complete Parts I-A, I-C, and III if applicable.
- Section 527 organizations: Complete Part I-A only.
If your organization participates in a joint venture engaging in these activities, report your share on Schedule C. Even voluntary filers of Form 990 or 990-EZ must complete it fully if required.
Organizations should review IRS Revenue Ruling 2007-41 for guidance on what constitutes prohibited campaign activities for 501(c)(3)s.
Key Definitions in IRS Schedule C Instructions
Understanding IRS terminology is vital for accurate reporting. Here are essential definitions from the instructions for Schedule C (Form 990):
- Political Campaign Activities: Efforts to influence the selection, nomination, election, or appointment of individuals to public office, including section 527 exempt function activities.
- Lobbying Activities: Attempts to influence legislation through direct communication with legislators or grassroots efforts to sway public opinion.
- Political Expenditures: Any payments, loans, or promises for political campaign activities, including contracts or gifts.
- Specific Legislation: Includes introduced bills or proposals the organization supports or opposes.
- Exempt Purpose Expenditures (for Part II-A): Costs incurred for the organization’s core mission, such as charitable or educational activities, including allowable lobbying but excluding certain fundraising.
- Direct Lobbying: Communications with legislators or officials reflecting a view on specific legislation.
- Grassroots Lobbying: Efforts to influence public opinion on legislation, often by encouraging action like contacting lawmakers.
Exceptions include nonpartisan analysis, responses to government requests, and certain member communications. Affiliated groups are treated as one entity for measuring expenditures.
Part I: Reporting Political Campaign Activities
Part I is for disclosing involvement in political campaigns. It’s split into subparts based on organization type.
Part I-A: Description of Political Campaign Activities
All filers describe direct or indirect political activities, volunteer hours, and whether activities were conducted through a separate segregated fund. Provide a brief narrative of actions like endorsements, ads, or voter guides.
Part I-B: Section 501(c)(3) Organizations Only
Report if the organization engaged in prohibited political activities. If “Yes,” disclose excise taxes paid under section 4955 and any corrective actions. File Form 4720 if taxes are due.
Part I-C: Non-501(c)(3) Organizations
Detail taxes on political expenditures under section 527(f)(1), amounts paid to section 527 organizations, and whether Form 1120-POL was filed. List names, EINs, and amounts transferred to political groups.
Part II: Lobbying Activities for 501(c)(3) Organizations
This part applies only to 501(c)(3)s and focuses on lobbying expenditures.
Part II-A: Electing Organizations (Form 5768 Filed)
Organizations electing under section 501(h) report total lobbying expenditures, grassroots amounts, and exempt purpose expenditures. Use the expenditure test to check limits (e.g., lobbying nontaxable amount based on gross receipts). Calculate any excess and related excise taxes over a 4-year average. Affiliated groups aggregate data.
| Filing Year | Lobbying Ceiling (150% of Nontaxable Amount) | Grassroots Ceiling (150% of Grassroots Nontaxable Amount) |
|---|---|---|
| 2022 | [Calculated based on prior filings] | [Calculated based on prior filings] |
| 2023 | … | … |
| 2024 | … | … |
| 2025 | … | … |
If excesses occur, file Form 4720.
Part II-B: Non-Electing Organizations
Report detailed lobbying expenditures without the 501(h) safe harbor. List direct and grassroots amounts, describe methods for allocation (e.g., time or cost-based), and confirm if substantial part of activities involved lobbying.
Part III: Section 6033(e) Reporting and Proxy Tax
For 501(c)(4), (5), or (6) organizations with dues: Report nondeductible lobbying/political expenses, notice to members, and proxy tax liability. Use Rev. Proc. 98-19 for definitions. Calculate tax on line 9 and report on Form 990, Part IX.
Tips for Filing IRS Schedule C (Form 990)
- Track Expenses Carefully: Allocate costs accurately using reasonable methods like time logs.
- Review Elections: Ensure Form 5768 is on file if electing 501(h).
- Avoid Common Errors: Don’t confuse political activities with voter education; consult IRS guidelines.
- Stay Updated: Check IRS.gov for future developments, as no significant changes were noted for 2025-2026.
- Seek Professional Help: Complex activities may require a tax advisor to avoid penalties.
By following these IRS Form 990 Schedule C instructions, nonprofits can maintain transparency and compliance. For the full official document, visit the IRS website or download the PDF. Always consult the latest IRS resources for your specific situation.