In 1993, the U.S. Congress enacted the Omnibus Budget Reconciliation Act of 1993 which contains a provision affecting trade associations like NCHBA. The act provides that for tax years beginning in 1994, taxpayers will no longer be able to deduct from their federal income taxes any portion of their association dues attributable to that association’s “lobbying activities” as an ordinary and necessary cost of doing business. The law further requires NCHBA to notify you as to the percentage of your 2015 state dues that are non-deductible for calendar year 2015. NCHBA has performed the required estimated calculations and have determined that 47% of the 2015 state dues will be non-deductible as a business expense on your 2015 federal taxes. Thus, they are providing you with the notice as follows:
“Dues paid to the North Carolina Home Builders Association (NCHBA) are not tax deductible as charitable contributions for income tax purposes. However, they may be tax deductible as ordinary and necessary business expenses subject to restrictions imposed as a result of association lobbying activities. The NCHBA estimates that the non-deductible portion of your 2015 dues – the portion which is allocable to lobbying – is 47%.”
For a member who pays their regular NCHBA dues of $60.00 in 2015, 47% or $28.20 will not be eligible for deduction as a business expense, and $31.80 of the NCHBA dues may be tax deductible as an ordinary and necessary business expense. NCHBA affiliate member dues are $5.00 so the amount not deductible is $2.35 and $2.65 may be deductible.
The National Association of Home Builders has made a similar calculation with respect to their portion of builder and associate 2015 dues. For 2015, NAHB has determined that 11% of their regular annual dues of $182.00 is non-deductible. Thus for the NAHB portion of dues $20.02 is not deductible and $161.98 may be deductible.