Non-Allowable Lobbying Dues for 2012

Pursuant to section 6033 (e) of the Internal Revenue Codes, we are required to notify you that 1% of your 2012 membership dues ($52,500 for full members, $26,250 for associate members) are allocable to lobbying activities of NAPH and, therefore, are non-deductible as an ordinary and necessary business expense by your organization.

You may notice that this percentage is significantly lower than the ones reported with NAPH’s dues invoices in prior years. The reason for this decline is because each Fall, we estimate the non-deductible lobbying expense to be used on the upcoming calendar year dues statements. Because this calculation is an estimate which is dependent both on NAPH’s future dues revenue and lobbying expenses, the actual amounts can be quite different from these projections. This is particularly true with respect to actual lobbying expenses, which are often hard to predict 15 months in advance. Accordingly, in some years, this calculation results in overestimating the disallowance lobbying percent while in other years, it results in underestimating the percent.

Therefore, the dues notices for 2010, which were prepared in November 2009, advised members that 19% would be non-deductible (based on an estimate that was anticipated for 2010). However, in 2011 after the financial records were closed for the previous year, we determined that only 9% of 2010 dues were spent on lobbying. Because of this overstatement with respect to the 2010 notices, we are allowed to “correct” that overstatement by reducing the 2012 disallowance percent accordingly. Thus, while we expect to spend approximately 9%-10% of 2012 dues on lobbying next year, our dues disallowance percent is only 1%, which should be used for your Medicaid Cost Reports.

If you should have any questions or need further assistance, please feel free to contact Vice President for Finance and Administration Rhonda Gold at (202) 585-0109.