§ 60.6. Lobbying services.
(a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:
Administrative supplies—(i) Tangible personal property which is consumed in one of the following manners:
(A) Used but not transferred by a vendor in the performance of this service.
(B) Transferred by a vendor to another party in connection with the performance of the vendor’s services when the property is not a critical element of the service.
(ii) Examples of the property include sales invoices, receipts, contracts, estimate sheets, confirmations or other similar items.
Communication—A verbal or written message.
Expenses—Includes office supplies, travel, meals, entertainment, gifts, costs of communication, cost of maintaining an office and other costs connected with the performance of lobbying services.
Formal action—The promulgation, amendment or repeal of a ruling or regulation.
Lobbying services—The term means to advocate:(i) The passage or defeat of legislation to members or staff of the General Assembly, or approval or veto of legislation to the Governor or his staff.
(ii) To officers or employes of an agency of the Commonwealth that the agency take or refrain from taking formal action, or that an agency engage in lobbying services as defined in subparagraph (i).
Lobbyist—A natural person who is registered under the Lobbying Registration and Regulation Act (46 P. S. § § 148.1—148.76) to perform lobbying services.
Purchase price—(i) For purposes of this section, the term means compensation, expense or obligation, whether in money or property, paid or due to a lobbyist for the performance of lobbying services.
(ii) The term does not include salary or wages paid by the employer to an employe employed to perform lobbying services solely for the employer.
(iii) The term purchase price includes that portion of:
(A) An advance payment to a contract lobbyist relating to the expenditure of time and expenses by the lobbyist in the performance of lobbying services for its purchaser.
(B) The dues or fees received by an organization or firm relating to the expenditure of time and expenses by an employe of the organization or firm in the performance of lobbying services for a member or purchaser.
Total lobbying activities—The total time spent by a registered lobbyist in the performance of nontaxable and taxable lobbying services.(b) Scope. Effective October 1, 1991, the sale at retail or use of lobbying services is subject to tax if the benefit or delivery of the service occurs in this Commonwealth. The tax is imposed upon the purchase price of the lobbying service. The lobbyist or organization performing the lobbying service for its members, has the responsibility to collect and pay the tax to the Department. Purchasers of lobbying services who have not paid tax upon lobbying services to their lobbyist are required to pay the applicable tax directly to the Department.
(c) Examples of lobbying services. The following are examples of taxable lobbying services:
(1) Communications to members or staff of the General Assembly advocating the passage or defeat of legislation.
(2) Communications to the Governor or his staff advocating the approval or veto of legislation.
(3) Communications to an agency advocating the promulgation, amendment or repeal of a ruling or regulation.
(4) Communications to an agency advocating that the agency engage in performing lobbying services as defined in this section.
(d) Examples of services which are not lobbying services. The following are examples of services which are not lobbying services:
(1) Review of proposed legislation, amendments or tax journals.
(2) Communications to a client, another lobbyist, members of an association or to a private individual.
(3) Drafting proposed testimony.
(4) Attending a meeting of the General Assembly or a committee session of the General Assembly or an agency solely for the purpose of monitoring developments and not involving advocacy.
(5) Communications to members of the United States Congress and their staffs, the office of the President and his staff, and members of a Federal agency.
(6) Communications to elected and appointed officials of political subdivisions of this Commonwealth and their employes.
(7) Communications to elected and appointed officials of state governments other than the Commonwealth.
(e) Purchase price.
(1) The total purchase price paid for the performance of lobbying services is subject to tax.
(2) A lobbyist who is required to collect and remit tax upon the purchase price paid for the performance of lobbying services may elect to report and pay tax upon either the ‘‘service by service’’ or ‘‘formularly’’ methods of reporting tax.
(i) Service by service method. Under this method, taxes are collected or set aside from the advance payment each time a taxable lobbying service is performed. The total tax due is reported and paid at the time of filing the licensee’s tax return.
(ii) Formulary method.
(A) Under this method, the licensee chooses a representative sample period within a calendar year during which both nontaxable services and taxable lobbying services are performed.
(B) Utilizing the sample representative period, the licensee compares the amount representing total expenditures of time and expenses for total lobbying activities within the amount representing the total expenditures of time and expenses for taxable lobbying services.
(C) The resulting ratio or percentage is applied to total expenditures of time and expenses for total lobbying activities throughout the calendar year to establish the amount upon which the sales tax is calculated.
(D) Organizations performing lobbying services for their members may also utilize the formulary method in reporting tax.
(I) The organization which has paid salary and expenses for an employe lobbyist should follow the procedures in this subparagraph by comparing the total gross salary and expenses of its employe lobbyist relating to total lobbying activities with the gross salary and expenses of the employe lobbyist relating to taxable lobbying services.
(II) The resulting ratio or percentage would then be applied by the organization to the total gross salary and expenses relating to total lobbying activities performed by the employe lobbyist throughout the calendar year to establish the amount upon which the sales tax is calculated.
(III) Gross salary and expenses paid to the lobbyist employe for services rendered to the organization which do not involve lobbying activities would not be used in calculating the ratio or percentage.
(IV) An organization need not make a specific charge to the member for lobbying services and collect the applicable tax.
(V) The organization may accrue tax based upon method 1 or 2 and remit the tax directly to the Department.
(E) In the event of an audit of the records of the organization or lobbyist, the Department will verify the representativity of the ‘‘sample.’’ If the representativity of the ‘‘sample’’ is not verifiable, the lobbyist will be assessed on a transaction by transaction basis.
(F) An organization or a lobbyist utilizing the formulary reporting method shall establish a new ratio or percentage for each calendar year. The mixing of methods within a calendar year is not permitted.
(G) Lobbyists who maintain their principal office within the city of Philadelphia are required to collect the 1% Philadelphia sales tax in addition to the 6% State sales tax upon the expenditures of time and expenses in the performance of lobbying services.
Example: Lobbyist ‘‘L,’’ located in Pittsburgh, received $1,000 from A company to perform lobbying activities. ‘‘L’’ elects to collect and pay tax on the formulary basis. ‘‘L’’ chooses the month of March as the representative period. During March, ‘‘L’’ incurred $100 in time and expenses in performing total lobbying activities. Of this amount, $75 represented time and expenses in performing taxable lobbying services. ‘‘L’s’’ ratio or percentage is .75 ($75 ÷ $100 = .75). ‘‘L’’ files quarterly tax returns. From January to March, ‘‘L’’ incurred $300 in time and expenses in performing total lobbying activities. ‘‘L’s’’ 1st quarter tax return would reflect the following: Gross Sales $300, Nontaxable Sales $75, taxable sales $225 ($300 x .75 = $225). Sales tax would be calculated on $225. ‘‘L’’ would use the same procedure at the time of filing his remaining quarterly sales tax returns during the calendar year.
(3) Purchasers of lobbying services who have not paid tax upon lobbying services to their lobbyist and are required to pay tax directly to the Department may elect to pay tax in accordance with subsection (b).
(f) Exclusions.
(1) Exempt purchases. Lobbying services are exempt if purchased by qualified charitable organizations, volunteer fire companies, religious organizations and nonprofit educational institutions, except if used in an unrelated trade or business. The services are also exempt if purchased by the Federal government or its instrumentalities; the Commonwealth, its instrumentalities or subdivisions including public school districts. The manufacturing, printing, publishing, processing, farming, dairying, mining or public utility exclusion does not apply.
(2) Resale exemption.
(i) The vendor of lobbying services may claim the resale exemption upon the purchase of tangible personal property which is transferred to its purchaser of the service in the performance of its lobbying services.
(A) The resale exemption does not apply to the transfer of property to the individual to whom the lobbying services are directed.
(B) A lobbyist may also claim the resale exemption upon the purchase of lobbying services from another lobbyist which the purchasing lobbyist resells to its purchaser.
(C) A lobbyist may not claim the resale exemption upon the purchase of administrative supplies or the purchase of other taxable services which the lobbyist may use in the performance of lobbying services.
(ii) The following are examples of property which may be purchased exempt for resale when transferred to the purchaser in the performing of lobbying services:
(A) Writing or typing paper.
(B) Envelopes.
(C) Labels.
(D) Typewriter ribbons.
(iii) The following are examples of property which are taxable when used in the performing of lobbying services:
(A) Telephones.
(B) Fax machines.
(C) Typewriters.
(D) Word processors.
(E) Administrative supplies.
(F) Postage meter devices.
(G) Meals, gifts and other property or service provided to the individual to whom the lobbying service is directed.
Source The provisions of this § 60.6 adopted January 8, 1993, effective January 9, 1993, 23 Pa.B. 183.
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