Section 527 — Internal Revenue Manual Part 3. Submission

Definition of Political Organizations: Political organizations are organized and operated primarily to, directly or indirectly, accept contributions and/or make expenditures for the purpose of influencing, or attempting to influence, the selection, nomination, election, or appointment of any individual to Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors. Political organizations include political parties, committees, associations, Federal, State and local candidate committees and other political organizations such as political action committees (PACs).

Disclosure Requirements: Tax exempt IRC 527 organizations must make their forms (other than Form 1120-POL ) publicly available for inspection and copying at their principal place of business. The IRS also posts Form 8871 and Form 8872 on its website.

Tax-Exempt or Non Tax-Exempt: 527 political organizations may be either tax-exempt or non tax-exempt.

Type

Description

Tax-Exempt Political Organizations

A political organization is tax-exempt if it gives electronic notice under IRC 527(i) (filing Form 8870) or isn't required to give notice because it meets one of the exceptions under 527(i)(5) and (6). Political organizations that are not required to give notice under IRC 527(i)(5) and (6) to be tax-exempt are the following:

Any person required to report under the Federal Election Campaign Act of 1971 as a political committee.

Any political committee of a state or local candidate;

Any state or local committee of a political party;

Any organization that reasonably anticipates its annual gross receipts will always be less than $25,000.

A tax-exempt organization described in section 501(c) that is treated as having political organization taxable income under section 527(f)(1).

Non Tax-Exempt Political Organization

A non tax-exempt political organization is a political organization that has not given timely notice under 527(i) (if it doesn't meet one of the exceptions in 527(i)(5) or 527(i)(6)). Without timely notice the political organization is taxable for any period beginning with the establishment of the organization and ending on notice of the establishment of the organization. Without timely notice under 527(i) of a material change, the political organization is also taxable for the period beginning on the date on which the material change occurs and ending on the date on which notice is given.

Taxable Income: The taxable income of a tax-exempt political organization and a non tax-exempt political organization are different.

Type

Description

Taxable Income of a Tax-Exempt Political Organization

A tax-exempt political organization isn't taxed on its exempt function income. It is, however, subject to tax on other types of income. Taxable income includes:

Gross income (excluding exempt function income)

Minus deductions allowed that are directly connected to the production of the gross income (excluding exempt function income)

Modifications: specific deduction of $100, no net operating loss, or no deduction of the special deduction for corporations

Filing Categories: Federal tax law divides tax-exempt political organizations into several different categories, and provides different filing requirements for each category.