Understanding the Grass Roots Ceiling Amount in Legal Terms
Definition & Meaning
The grass roots ceiling amount refers to a specific financial limit set for organizations under U.S. tax law. According to the Internal Revenue Code, this amount is calculated as one hundred fifty percent of the grass roots nontaxable amount for a given organization in a taxable year. This calculation is important for organizations that engage in lobbying or other political activities, as it helps determine how much they can spend on these activities without incurring tax penalties.
Legal Use & context
This term is primarily used in the context of tax law and nonprofit organizations. It applies to organizations classified as tax-exempt under the Internal Revenue Code, particularly those involved in lobbying efforts. Understanding the grass roots ceiling amount is essential for these organizations to ensure compliance with federal tax regulations and to avoid exceeding limits that could jeopardize their tax-exempt status.
Real-world examples
Here are a couple of examples of abatement:
For instance, if a nonprofit organization has a grass roots nontaxable amount of $10,000 for the year, its grass roots ceiling amount would be $15,000. This means the organization can spend up to $15,000 on lobbying without facing tax penalties.
(Hypothetical example) If another organization has a grass roots nontaxable amount of $20,000, their ceiling would be $30,000, allowing them to engage in more extensive lobbying efforts.
Relevant laws & statutes
The primary statute governing the grass roots ceiling amount is found in the Internal Revenue Code, specifically under 26 USCS § 501 and § 4911. These sections outline the regulations regarding tax-exempt organizations and their lobbying activities.