Every business—large and small—knows the value of maintaining good relations with the members of Congress who represent its state and legislative district and those who serve on committees with jurisdiction over its industry. Similarly, businesses seek to maintain cordial relations with those in the executive branch of the federal government charged with regulating their industries. How better to enhance these relationships than with tickets to the big game or a sold-out concert?

Those contemplating extending such invitations, however, need to beware of gift rules and restrictions applicable to members of Congress or to their staffers, and similar rules that govern the offering, giving, or acceptance of gifts by federal officials and employees of the executive branch. The rules are particularly restrictive for registered lobbyists, lobbying firms and for companies that employ them. Legislation enacted in 2007 makes the violation of such rules by lobbyists and those employing them a crime punishable by substantial fines and even prison time.  

The basic rule on gifts to federal government officials, legislators and their staff members is straightforward: no gifts may be offered, given or accepted unless expressly allowed by rule or regulation. The word “gift” is defined broadly, and includes anything of monetary value, including meals, travel, lodging, event tickets, discounts or in-kind benefits.

The basic prohibition on gifts is subject to various express exceptions that are spelled out in the applicable rules and regulations. The most-used exceptions include those for food and refreshments of nominal value served other than as part of a meal (the so-called “toothpick” rule); attendance at widely attended events relating to official duties; attendance at charity events; and commemorative items of little intrinsic value. Another exception exists for gifts given or received based on personal friendship, but those seeking to invoke this exception must be able to demonstrate a long-term relationship with the recipient, reciprocal exchanges of gifts of roughly equal value and that the gift was not given solely due to the legislative or executive branch employee’s official position. For those seeking to use this exception, the donor cannot request or obtain reimbursement by an employer.

The legislative branch gift rules permit the giving or acceptance of gifts from one source of less than $50 on one occasion and less than $100 from one source on multiple occasions in a calendar year, although registered lobbyists, lobbying firms and entities employing lobbyists may not take advantage of this exception.

Similarly, the executive branch gift rules permit gifts from one source not exceeding $20 on one occasion and not exceeding $50 in a calendar year. The rules, however, prohibit applying a “credit” in the amount applicable to that particular branch of government—of $49.99 for the legislative branch or $20 for the executive branch—and allowing the recipient to reimburse the donor for the remainder.

An important exception to the general prohibition on gifts applies when the recipient pays market value for the item. The term “market value” means the retail cost the recipient would pay to purchase the gift. For event tickets, the market value is determined by the face value of the ticket. But for tickets that do not have a face value printed on them, such as tickets to suites and sky boxes, the market value of the ticket is deemed equal to the highest-priced ticket in the stadium or arena. In venues hosting major professional sports, where front-row tickets can cost $1,000 or more per seat, the cost of the highest-priced ticket can be substantial. The fair value of any parking, food or drinks that would be provided in the suite or box also must be included in the calculation of the market value of the gift.

So what about those tickets to the big game or sold-out concert that you want to offer your senator, congressman or favorite federal regulator? If you are a registered lobbyist, lobbying firm or entity that employs lobbyists, forget it unless the recipient is willing to pay full market value. And even for those not subject to the lobbyist prohibitions, the cost of a ticket to any professional or major college sporting event is likely to far exceed the one-time thresholds contained in the rules and regulations.

For those considering giving a ticket not bearing a face value, don’t do it until you do the math and the recipient is willing to pay, in advance, the equivalent of the highest-price ticket in the arena, plus the fair value of any food and beverages that will be served! Lobbyists, lobbying firms and entities employing lobbyists are required to report twice yearly on political contributions, certify that the person or firm has read and is familiar with Congressional gift and travel rules and has not knowingly violated those rules. Prior to the enactment of the Honest Leadership and Open Government Act (HLOGA) in 2007, the federal Lobbying Disclosure Act provided for a civil penalty of up to $50,000 for a knowing failure to comply with provisions of the law. See 2 U.S.C. § 1606.

HLOGA has increased the maximum civil penalty for knowing failure to comply with the act’s provisions to $200,000, and imposes criminal penalties of up to five years imprisonment, fines under Title 18 or both. See 2 U.S.C. § 1606, as amended by the HLOGA, Pub. L. No. 110-81, § 211(a),121 Stat. 749 (2007).

There remain many ways to legally and ethically enhance a business’ relationship with key members of Congress or with federal officials. But unless the recipient is a true personal friend or is willing to pay market value, tickets to sporting events, concerts or other performances is generally not a viable option.