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Whether an accounting firm which provides services to a lobbying entity or on behalf of a lobbying effort must register and report as a lobbyist?
Indiana Lobby Registration Commission
(Vote to ratify FAO taken at public meeting of May 22, 2001)
Vote to Ratify FAO:
Chairman Krahulik - yes
Commissioner Abbs - yes
Commissioner Bepko - yes
Commissioner Heeke -yes
Questions and written comments may be directed to Indiana Lobby Registration Commission, 10 W Market St, Ste 1760, Indianapolis, IN 46204 (317) 232-9860
Summary of Decision:
An accounting firm which provides services to a lobbying entity or on behalf of a lobbying effort is not required to register and report as a lobbyist, unless the accounting firm has the intention of influencing legislative action or unless the accounting firm communicates directly with member(s) of the General Assembly or testifies in front all or part the General Assembly on behalf of the lobbying effort when that accounting firm has not been invited to testify by a member of the General Assembly.
The facts which brought rise to this advisory opinion are that Crowe Chizek, a certified public accounting firm and consulting firm headquartered in Indiana is not currently registered as a lobbyist under IC 2-7-1 et seq. Crowe Chizek has described the functions it performs for various lobbying entities in its formal request for advisory opinion, which is attached and incorporated by reference into this advisory opinion.
A "lobbyist means any person who (1) engages in lobbying; and (2) in any registration year, receives or expends an aggregate of five hundred dollars ($500) in compensation or expenditures reportable under this article for lobbying, whether the compensation or expenditures is solely for lobbying or the lobbying is incidental to the individual's regular employment." IC 2-7-1-10.
A threshold issue is whether the agreement between Crowe Chizek and its lobbying entity clients triggers a registration duty on behalf of Crowe Chizek. If the agreement specifies that Crowe Chizek is to perform lobbying services on behalf of its client, then Crowe Chizek must register and report as a lobbyist. The Commission has determined that a contract to lobby is sufficient to trigger a duty to register. FAO 97-03. However, the "compensation" paid on the contract is not reportable on a lobbyist's activity report until actually made. FAO 97-03. Hence, the duty to register as a lobbyist may sometimes be different than a duty to report actual expenditures / compensation. 1999 Commentary of the Lobby Law, p. 7
The next question is whether Crowe Chizek has a duty to register and report as a lobbyist when the agreement with its client is either silent as to whether Crowe Chizek will perform lobbying duties, or when Crowe Chizek performs the duties it has enumerated in its formal request for advisory opinion.
The fact that a client of Crowe Chizek is a registered lobbyist does not mean that efforts made by Crowe Chizek on behalf of the lobbying efforts of its client causes Crowe Chizek to have a duty of registration and reporting under the lobby law. In general, persons who work at influencing legislative action on behalf of the corporation are lobbyists, but the corporation's other employees who do not engage in lobbying are not lobbyists. (Informal Commission Decision: November, 1996);Comment 55, 1999 Commentary of the Lobby Law.
By way of analogy, it has been determined that an employee who lobbies on behalf of an employer is a lobbyist, to the extent the employee receives greater than $500 in compensation. FAO 98-02. It has also been previously determined by the Commission that when an officer of a company hosts a meeting with legislators to discuss and explain the complex issues in a bill and to answer questions, that officer is engaged in lobbying, and the company and the officer must register if the $500 threshold is met. (Staff decision: September 1995; FAO 98-02). Similarly, a chairman/president of an organization, who writes letters or calls legislators to support or protest legislation which affects that organization, is lobbying and must register if the $500 threshold is met. The $500 includes the prorated amount of any regular salary s/he receives during the time spent writing or calling. (Staff decision: December 1995); Comment 60, 1999 Commentary of the Lobby Law.
Presumably, the client of Crowe Chizek which is the lobbying entity (or should be registered as a lobbying entity), is reporting all expenditures it makes on behalf of its lobbying efforts. The client's duty of reporting would include the duty to report payments made to Crowe Chizek for the services Crowe Chizek has described that it performs for its lobbyist clients. To the extent that those expenditures are reported in the public record, there is no value in having Crowe Chizek file as a compensated lobbyist with regard to those expenditures. Indeed, to require Crowe Chizek to register and report as a lobbyist would impose an undue and unreasonable burden upon it, because Crowe Chizek is not always aware of why its services are being requested, or whether the product of its services will ultimately be used for some lobbying purpose.
To the extent that Crowe Chizek demonstrates an intention to influence legislative action, which intention can be derived from its conduct or disclosures, then Crowe Chizek would have a duty to register and report as a lobbyist, regardless of the nature of the original agreement with its client. One factor which can be used to determine the intention of Crowe Chizek is whether it testifies before all or part of the General Assembly on behalf of its lobbyist client when it has not been invited to do so by a member of the General Assembly1.