Mr. PAULS. No; we could not. Mr. GARRY BROWN. In analyzing the questionnaire, can we separate out then the nondeductible activities if it doesn't distinguish between these two groups of activities? Mr. PAULS. We tried to be very careful about that. Mr. GARRY BROWN. Well, you can't then can you, because you didn't know whether those things were included or not. Mr. PAULS. The responses provided by the replying companies would not enable us to do that. Mr. GARRY BROWN. I am just saying that you could not do it because the questionnaire did not make the distinction between deductible and and nondeductible activities. Mr. PAULS. That is correct. Mr. GARRY BROWN. The answers of two corporations indicate that the recipients treated the term "representational activities" as erroneously defined. Air Products & Chemicals Corp. stated: "We cannot provide you with an accurate figure for expense of meetings with Government officials-regulatory agencies, executive departments, and so forth.” That is item 3 on page 71. Gulf Oil said that: Moreover, it-the company cannot answer the question about representational activities in the form asked by the letter because it does not segregate expenditures in a manner to fit the definition provided by the subcommittee. In short, this line of questioning was only to establish, I think, that you might want to look again at the last paragraph of your conclusion. You say, "Companies may have experienced difficulty in complying with IRS rules and regulations pertaining to expenditures for representational activities and trade association dues because of their recordkeeping practices. They are confused about the types of representational activities considered to be grassroots lobbying; and/or the company's lack of awareness regarding the activities of the trade associations." Rather, I would suggest that it was difficult for them to respond to the questionnaire because the questionnaire didn't attempt to make a distinction between direct lobbying of Congress and direct lobbying of administrative agencies, public policy statements unrelated to a political issue, and grassroots lobbying. Because the questionnaire merely said that all your representational activities and that includes a whole spectrum of things that have totally different tax consequences I would suggest that instead of saying the companies didn't understand the IRS rules, that it may very well be that the companies didn't understand the questionnaire. Mr. PAULS. This is conceivably true. Our finding was based on information supplied by the responding companies. It seemed a reasonable conclusion to draw. What we have attempted to do here, Mr. Brown, to quote Senator Ervin, is to draw a picture of a horse. Others can conclude what that represents. We tried to avoid that, except where we felt with some confidence that we could make a finding. We only have two, which we presented to this subcommittee. Mr. GARRY BROWN. I think that your conclusions probably would have been correct if you had just said that companies may have experienced difficulty in complying with IRS rules and regulations and in applying such rules and regulations to the question the way it was phrased in the questionnaire. Then I think your conclusion is correct. I think as it stands that it is only giving half of the horse. I have no further questions, Mr. Chairman. Mr. ROSENTHAL. Thank you all very, very much. [The letter from the Director of the Library of Congress and the Library of Congress report follows:] In authorizing the appearance of the Congressional Research Service analysts who assisted the Subcommittee in analyzing responses from corporations to letters of inquiry about their representational activities, I thought it would be appropriate to submit this letter for the hearing record. In It was the judgment of the Service that the request for assistance from the Subcommittee conformed with our statutory mandate to assist committees of the Congress in their legislative duties. rendering this assistance, the Service exercises the utmost care to ensure that our products comply with long-established guidelines requiring objectivity, non-advocacy, balance, and non-partisanship. These principles were adhered to in preparing the analysis that you requested. The Service of course played no role in determining the companies to which the letters of inquiry were addressed; neither did the Service develop the definition of the term "representational activities", nor frame the questions for which the Subcommittee sought responses. In summary, this analysis was developed pursuant to assumptions made by the Subcommittee; the role of CRS was only to assist in analyzing the responses. We organized and analyzed the responses in conformance with sound research principles; in our considered opinion, the report forwarded to the Subcommittee by CRS represents an entirely appropriate response to the Subcommittee's request. We very much appreciate this opportunity to be of assistance and hope that our analysis, as well as the testimony of our staff, will prove useful to the Subcommittee in its important work. Sincerel Gilbert Gude SUBJECT: Analysis of the Subcommittee's August 22, 1977, Attached is the report analyzing the response to the Subcommittee's August 22, 1977, questionnaire regarding the representational activities of large American corporations and companies, as you requested. Should you have any questions about the report or need further assistance in this or any other matter, please do not hesitate to contact us. RG/SL:mb Y The Library of Congress Congressional Research Service Washington, D.C. 20540 AN ANALYSIS OF RESPONSES TO A QUESTIONNAIRE BY THE COMMERCE, CONSUMER AND MONETARY AFFAIRS SUBCOMMITTEE OF THE HOUSE GOVERNMENT OPERATIONS COMMITTEE CONCERNING REPRESENTATIONAL ACTIVITIES OF LARGE AMERICAN CORPORATIONS AND COMPANIES Rogelio Garcia and Suzanne Laurencell May 25, 1978 |