IRS Form 990 or 990-EZ (Schedule C)

IRS Form 990 or 990-EZ (Schedule C) – In the world of tax-exempt organizations, transparency is key to maintaining compliance with the Internal Revenue Service (IRS). One critical component for nonprofits involved in advocacy or political engagement is IRS Form 990 Schedule C, which focuses on political campaign and lobbying activities. This schedule helps ensure that organizations report their involvement accurately, avoiding penalties and preserving their tax-exempt status. Whether you’re a section 501(c)(3) charity, a 501(c)(4) social welfare group, or a section 527 political organization, understanding Schedule C is essential for proper IRS Form 990 or 990-EZ filing.

This guide breaks down everything you need to know about Schedule C, including who must file, key definitions, and a step-by-step overview of its parts. We’ll draw from the latest IRS instructions to provide up-to-date insights for 2025 filings. For the official blank form, you can download it directly from the IRS website: IRS Form 990 Schedule C PDF.

What Is IRS Schedule C (Form 990 or 990-EZ)?

Schedule C is an attachment to IRS Form 990 or Form 990-EZ, titled “Political Campaign and Lobbying Activities.” It requires tax-exempt organizations to disclose details about their direct or indirect participation in political campaigns and lobbying efforts. The purpose is to promote accountability, as certain activities can jeopardize an organization’s tax-exempt status or trigger excise taxes.

For instance, section 501(c)(3) organizations are strictly prohibited from substantial political campaign activities but can engage in limited lobbying. Other groups, like 501(c)(4)s, have more flexibility but must report expenditures and may face proxy taxes on nondeductible dues. Failing to file or inaccurately reporting can lead to penalties under section 6652(c).

Who Must File Schedule C?

Not every nonprofit needs to complete Schedule C—it’s triggered by specific responses on the main Form 990 or 990-EZ:

  • Form 990 Filers: If you answer “Yes” to Part IV, lines 3 (political activities), 4 (lobbying activities), or 5 (section 6033(e) notice and proxy tax).
  • Form 990-EZ Filers: If “Yes” to Part V, line 46 (political activities), or Part VI, lines 35c (section 6033(e)) or 47 (lobbying activities).
  • Additional Triggers: Organizations with an ownership interest in a joint venture engaging in these activities must report their share. Even if not required to file Form 990/990-EZ, voluntary filers must include all Schedule C details if applicable.

Section 501(c) and 527 organizations are the primary filers. If your group hasn’t engaged in these activities, you can skip it—but double-check to avoid oversights.

Key Definitions for Political Campaign and Lobbying Activities

To navigate Schedule C effectively, familiarize yourself with these IRS-defined terms:

  • Political Campaign Activities: Actions to influence the selection, nomination, election, or appointment of candidates for public office. This includes endorsements, contributions, or opposition campaigns. Expenditures cover payments, loans, or gifts related to these efforts.
  • Lobbying Activities: Attempts to influence legislation, including communications with legislators, government officials, or the public. Divided into:
    • Direct Lobbying: Targeted communications to officials about specific legislation, expressing a view (e.g., meetings or letters).
    • Grassroots Lobbying: Efforts to sway public opinion, such as ads urging people to contact legislators about a bill.
  • Specific Legislation: Bills introduced in Congress or state legislatures, or proposed items like referendums.
  • Exempt Purpose Expenditures: Costs tied to your organization’s charitable, educational, or similar goals, excluding fundraising or unrelated activities.
  • Lobbying Expenditures: Total direct and grassroots costs, including allocable overhead like staff time.

Exceptions include nonpartisan research, responses to government requests, and certain member communications that don’t encourage lobbying.

Breakdown of Schedule C Parts

Schedule C is divided into four parts, each addressing different aspects of activities and reporting. Use reasonable allocation methods (e.g., time ratios) for shared expenses.

Part I: Political Campaign Activities

This section is for organizations that answered “Yes” to political activity questions. It varies by entity type:

  • Part I-A: All applicable organizations describe direct/indirect activities in Part IV and report total expenditures (Line 2) and volunteer hours (Line 3, estimated reasonably).
  • Part I-B (for 501(c)(3)s only): Report excise taxes under section 4955 (Lines 1-4) and describe corrections in Part IV.
  • Part I-C (for non-501(c)(3) 501(c)s): Detail exempt function expenditures (Line 1), transfers to related groups (Line 2), totals (Line 3), Form 1120-POL filing (Line 4), and recipient lists (Line 5).

Section 501(c)(3)s must avoid substantial campaign involvement, per Revenue Ruling 2007-41.

Part II: Lobbying Activities

Exclusive to 501(c)(3) organizations that lobbied:

  • Part II-A (with 501(h) election via Form 5768): Report grassroots (Line 1a) and direct lobbying (Line 1b) totals (Line 1c); exempt purpose expenditures and limits (Lines 1d-1i); excess calculations; 4-year averaging (Lines 2a-2f) to assess compliance. Excess triggers section 4911 taxes, and averages over 150% risk status revocation.
  • Part II-B (without 501(h) election): Yes/No questions on activities (Lines 1a-1j); report expenditures and section 4912 taxes (Lines 2a-2d).

Affiliated groups are treated as one entity for limits.

Part III: Section 6033(e) Notice and Reporting Requirements and Proxy Tax

For 501(c)(4), (5), or (6) organizations with membership dues:

  • Part III-A: Claim exemptions (e.g., Line 1 for >90% exempt dues; Line 2 for $2,000 in-house lobbying cap; Line 3 for carryover agreements).
  • Part III-B: Report dues (Line 1), lobbying/political expenses (Line 2a, including carryovers on 2b), notifications (Line 3), carryovers (Line 4), taxable amounts (Line 5), and proxy tax on Form 990-T if under-notified.

Dues thresholds are inflation-adjusted annually (e.g., $143 for low-dues members in 2025 per Revenue Procedure 2024-40).

Part IV: Supplemental Information

Provide detailed narratives here for any activities, taxes, corrections, or affiliated group lists. Reference specific parts and lines for clarity.

How to Complete and File Schedule C?

Follow these steps for accurate filing:

  1. Gather Data: Track expenditures, volunteer hours, and communications using consistent allocation methods.
  2. Review Elections: If electing under 501(h), file Form 5768; it caps lobbying without automatic status loss.
  3. Describe Activities: Be detailed in Part IV to avoid IRS scrutiny.
  4. Handle Affiliates/Joint Ventures: Report shares proportionally.
  5. File Electronically: Use IRS-approved software for Form 990/990-EZ submissions.
  6. Correct Errors: Carry forward adjustments and report taxes promptly.

Consult a tax professional for complex scenarios, as misreporting can lead to audits or revocation.

Recent Updates for 2025

The 2025 instructions emphasize checking IRS.gov for post-publication changes. Key notes include updated dues thresholds and reminders on de minimis rules (e.g., <5% staff time on lobbying = no allocation if no direct contact). No major structural changes from prior years, but ensure compliance with evolving legislation.

Conclusion

Mastering IRS Form 990 Schedule C empowers tax-exempt organizations to engage in advocacy while staying compliant. By reporting political campaign and lobbying activities transparently, you protect your status and build trust with donors and regulators. For the most current guidance, always refer to official IRS resources. If your organization is gearing up for 2025 filings, start reviewing your activities now to ensure a smooth process.