IRS Form 5768 Guide: 501(h) Nonprofit Lobbying Election

Introduction: What Is IRS Form 5768?

IRS Form 5768, titled Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation, is a one-page federal tax form published by the Internal Revenue Service (IRS). It is governed by Section 501(h) and Section 4911 of the Internal Revenue Code (IRC).

This form allows eligible 501(c)(3) public charities to formally elect the Section 501(h) expenditure test to measure their lobbying activity. Making this election provides the nonprofit with clear, objective mathematical dollar limits on how much it can spend to influence public policy and legislation.

Form 5768 is also used if a nonprofit organization that previously made the 501(h) election decides to revoke it and return to the default IRS lobbying standard.

Purpose of the Form

Under default federal tax law, all 501(c)(3) organizations are subject to the vague “Substantial Part Test.” Under this default rule, an organization risks losing its tax-exempt status if a “substantial part” of its total activities involves attempting to influence legislation. The IRS has never defined what constitutes a “substantial part,” leaving charities vulnerable to subjective audits based on volunteer hours, public statements, or organizational effort.

Form 5768 solves this problem by allowing eligible public charities to opt out of the subjective test and opt into the 501(h) expenditure test. Under Section 501(h), the IRS evaluates lobbying compliance strictly on dollars spent, completely ignoring volunteer time, social media posts by unpaid advocates, and non-financial activities.

By filing Form 5768, a charity secures clear statutory spending thresholds (up to $1 million annually for direct lobbying) and gains an essential safety net: exceeding spending limits results in a manageable excise tax rather than the immediate loss of 501(c)(3) status.

Who Needs to File / Use This Form

Form 5768 is used by eligible 501(c)(3) public charities that wish to engage in legislative advocacy and want clear, predictable legal boundaries. You are eligible to file Form 5768 if your organization is a 501(c)(3) entity and is classified as one of the following:

• Educational Institutions: Non-profit schools, colleges, and universities described in Section 170(b)(1)(A)(ii).
• Hospitals & Medical Research Organizations: Non-profit medical care and research facilities described in Section 170(b)(1)(A)(iii).
• Publicly Supported Charities: Nonprofits that receive substantial public support under Section 170(b)(1)(A)(vi) or Section 509(a)(2).
• Supporting Organizations: Section 509(a)(3) organizations supporting eligible public charities (other than organizations testing for public safety).

Who Is Ineligible / Not Allowed to File

Certain tax-exempt organizations are legally prohibited from making the 501(h) election under federal tax law. You cannot file Form 5768 if you are:

• Churches and Religious Organizations: Under IRC Section 501(h)(5), churches, conventions or associations of churches, and integrated auxiliaries of churches cannot make the 501(h) election. They remain governed exclusively by the default Substantial Part Test.
• Private Foundations: Private foundations are strictly prohibited from engaging in any lobbying under IRC Section 4945.
• Public Safety Testing Organizations: Charities classified under Section 509(a)(4).
• Non-501(c)(3) Organizations: Social welfare groups under 501(c)(4), trade associations under 501(c)(6), and political action committees (PACs) under Section 527.

When to File

Form 5768 follows flexible filing rules depending on whether you are making an election or revoking one:

• To Make the Election: You can file Form 5768 at any point during your organization’s tax year. To be effective for that tax year, it must be filed on or before the last day of the tax year (e.g., by December 31st for calendar-year nonprofits).
• Ongoing Validity: Once submitted and accepted, the 501(h) election remains in effect automatically for all future tax years until formally revoked. You do not need to re-file annually.
• To Revoke the Election: If you wish to revoke an existing 501(h) election, Form 5768 must be filed before the first day of the tax year for which the revocation is intended to take effect.

Where and How to File

Form 5768 is a standalone document that is submitted independently to the IRS:

• Mailing Address: Mail the signed, physical paper Form 5768 directly to the designated IRS processing center address as per the official Form 5768 instructions (Department of the Treasury, Internal Revenue Service Center, Ogden, UT).
• Do Not Attach to Form 990: Form 5768 must be mailed separately to the IRS; do not attach it to your annual Form 990 or Form 990-EZ return.
• No User Fee: The IRS does not charge any application or processing fee to file Form 5768.

Step-by-Step Instructions to Fill Form 5768

Form 5768 is one of the simplest forms published by the IRS. It consists of organizational identity fields, two checkable options, and an authorized signature.

Section / Field	Key Focus Areas	What to Enter / Select
Header Section	Nonprofit Identity	Enter the exact legal name of the organization (as recognized on your 501(c)(3) determination letter), physical mailing address, and federal Employer Identification Number (EIN).
Part I	Election Option	Check the box in Part I to make the 501(h) election. Enter the exact beginning date of the tax year for which the election is to be first effective (e.g., “01/01/2026”).
Part II	Revocation Option	Check the box in Part II only if you are revoking a prior election. Enter the beginning date of the upcoming tax year for which the revocation is to take effect.
Signature Block	Authorized Signature	An authorized officer or trustee (such as the Board President, Executive Director, or Treasurer) signs, dates, and provides their official title.

Understanding the 501(h) Spending Limits

Once you make the election, your annual lobbying spending limit (the “lobbying nontaxable amount”) is calculated on a sliding scale based on your total exempt purpose expenditures:

• First $500,000 of budget: 20% can be spent on lobbying.
• Next $500,000 of budget: 15% can be spent on lobbying.
• Next $500,000 of budget: 10% can be spent on lobbying.
• Remaining expenditures: 5% can be spent on lobbying.
• Maximum Overall Cap: The absolute maximum lobbying limit is $1,000,000 per year (reached at $17 million of total exempt expenditures).
• Grassroots Lobbying Cap: Spending on grassroots lobbying (urging the general public to contact legislators) is capped at 25% of your overall lobbying limit.

Required Documents and Information Needed Before Filling

Before completing and submitting Form 5768, assemble the following records:

• Board of Directors Resolution: Official board meeting minutes or a signed board resolution approving the decision to make the 501(h) election.
• IRS Determination Letter: Your 501(c)(3) recognition letter confirming your organization’s legal name, EIN, and public charity classification.
• Tax Year Beginning Date: The exact start date of the organization’s operational accounting year (calendar or fiscal year).

Common Mistakes to Avoid

• Filing After the Tax Year Ends: Submitting Form 5768 after the close of the tax year. If you file on January 5th, the election cannot apply retroactively to the prior year.
• Attaching Form 5768 to Form 990: Enclosing Form 5768 inside your annual Form 990 filing. It must be mailed separately to the IRS Ogden Center to be processed.
• Ineligible Entities Filing: Churches and private foundations attempting to file Form 5768, which will be rejected by the IRS.
• Confusing Lobbying with Political Campaigns: Believing the 501(h) election allows a nonprofit to endorse political candidates. 501(c)(3) organizations remain strictly 100% prohibited from supporting or opposing candidates for public office.
• Failing to Track Grassroots Spending: Neglecting to track grassroots lobbying separately from direct lobbying in your accounting records.

Penalties and Compliance Risks

Making the 501(h) election provides significant protection against the loss of tax-exempt status, but financial penalties apply if spending limits are exceeded:

• 25% Excise Tax on Excess Spending: Under IRC Section 4911, if your organization spends more than its allowable lobbying limit, it must pay a 25% excise tax on the excess amount (reported and paid on Form 4720).
• Revocation Only for Substantial Violations: Unlike the default test, an electing charity does not lose its tax-exempt status for a one-time spending overrun. Tax exemption is only revoked if the organization exceeds 150% of its lobbying limits over a four-year rolling average.
• Default Test Risks: If you do not file Form 5768, the IRS can revoke your 501(c)(3) status and assess a 5% excise tax on both the organization and its managers under IRC Section 4912 for violating the Substantial Part Test.

Related Forms and Schedules

When managing lobbying activities and public policy advocacy, nonprofit leaders work with these related IRS documents:

• Form 990 / Form 990-EZ: Return of Organization Exempt From Income Tax.
• Schedule C (Form 990): Political Campaign and Lobbying Activities (electing charities complete Part II-A to report their 501(h) spending).
• Form 4720: Return of Certain Excise Taxes Under Chapters 41 and 42 of the IRC (used to pay the 25% excise tax under Section 4911 if limits are exceeded).
• Form 1023: Application for Recognition of Exemption Under Section 501(c)(3).
• Form 8868: Application for Automatic Extension of Time To File an Exempt Organization Return.

Frequently Asked Questions (FAQs)

1. What is the main advantage of filing Form 5768?

The primary advantage is legal certainty. It replaces the ambiguous “substantial part” standard with clear mathematical dollar limits and ensures that volunteer time and unpaid public advocacy cannot be counted against your organization.

2. Does the 501(h) election allow my nonprofit to endorse political candidates?

No. The 501(h) election applies exclusively to lobbying (influencing legislation). 501(c)(3) organizations are strictly prohibited by federal law from participating in any political campaigns for or against candidates for public office.

3. What is the difference between direct lobbying and grassroots lobbying?

Direct lobbying involves communicating directly with legislators, legislative staff, or government officials to influence specific legislation. Grassroots lobbying involves urging the general public to contact their representatives about specific legislation.

4. How much can our nonprofit spend on lobbying under Form 5768?

Depending on your budget, an electing charity can spend up to 20% of its first $500,000 in exempt expenditures, scaled up to an absolute ceiling of $1,000,000 per year for direct lobbying and $250,000 for grassroots lobbying.

5. Do we need to re-file Form 5768 every year?

No. Once Form 5768 is accepted by the IRS, the election remains in effect automatically for all future tax years until your board of directors decides to formally revoke it.

6. What happens if our charity exceeds its 501(h) lobbying budget?

If you exceed your spending limit, you pay a 25% excise tax on the excess expenditure on Form 4720. Your 501(c)(3) tax-exempt status remains safe unless your spending exceeds 150% of your limit over a four-year average.

Conclusion

IRS Form 5768 is one of the most powerful and underutilized compliance tools available to 501(c)(3) public charities. By opting into the Section 501(h) expenditure test, nonprofit organizations replace subjective IRS scrutiny with clear, objective financial benchmarks that empower them to advocate for their missions with confidence.

To establish safe lobbying practices, secure a formal board resolution approving the 501(h) election, submit Form 5768 before the close of your current tax year, track direct and grassroots lobbying expenses separately in your accounting records, and report your expenditures annually on Schedule C of Form 990.