Section 527 Political Organizations

A political organization subject to IRC 527 is a party, committee, association, fund (including a separate segregated fund described in IRC 527(f)(3)) or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures (or both) for an exempt function.

The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to any public office or office in a political organization, or the election of the Presidential or Vice Presidential electors.

A political organization must be organized for the primary purpose of carrying on exempt function activities. A political organization does not need to be formally chartered or established as a corporation, trust, or association. A separate bank account in which political campaign funds are deposited and disbursed only for political campaign expenses can qualify as a political organization. When there are no formal organizational documents, consideration is given to statements of the members of the organization at the time of its formation that they intend to operate the organization primarily to carry on exempt function activities. A political organization may engage in activities that are not exempt function activities, but these may not be its primary activities.

Political organizations include principal campaign committees, newsletter funds, and certain separate segregated funds maintained by tax-exempt organizations.

A principal campaign committee is the political committee designated by a candidate for U.S. Congress as his or her principal campaign committee for purposes of IRC 302(e) of the Federal Election Campaign Act of 1971 and IRC 527(h).

Political organizations that have tax-exempt status under IRC 527 of the Internal Revenue Code (unless exempted from filing) must file some or all of the forms listed as a condition of tax-exempt status:

Form 8871, Political Organization Notice of Section 527 Status,

Form 8872, Political Organization Report of Contributions and Expenditures,

Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status,

Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations,

Form 990, Return of Organization Exempt From Income Tax

Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

A state or local organization may be considered a Qualified State or Local Political Organization (QSLPO), if it meets the following criteria:

All of its political activities relate solely to state or local public office (or office in a state or local political organization);

It is subject to state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS;

The state agency and the organization make the reports publicly available;

No federal candidate or office holder controls it or materially participates in its direction, solicits contributions for it, or directs any of its disbursements.

For additional information, refer to IRC 527(e)(5) and Rev. Rul. 2003-49, 2003-20 I.R.B. 903.

Federal tax law divides political organizations into several different categories, and provides different filing requirements for each category as shown in the table below:

Filing Categories

Category

Organization Type

Federal Organizations

FEC political committee - A political organization (including federal candidate committees, political party committees and PACs) required to report as a political committee under the Federal Election Campaign Act.

Other federal political organizations - A political organization that attempts to influence federal elections and isn't required to report as a political committee under the Federal Election Campaign Act.

State and Local Organizations

Candidate Committee - A campaign committee of a state or local candidate.

Party Committee - A state or local committee of a political party.

Qualified State or Local Political Organization (QSLPO) – (See list of criteria above).

A political organization must have its own employer identification number (EIN), even if it does not have any employees. To get an EIN, an organization must file Form SS-4, Application for Employer Identification Number. See Form SS-4 instructions for more information.

Additionally, many political organizations must electronically file their periodic reports. In order to electronically file these reports, an organization needs the user name and password issued to it after filing its initial notice. If the user name and password are forgotten or misplaced, the political organization can fax or send a letter requesting a new user name and password to:

Internal Revenue Service Attn: Request for 8872 Password M/S: 6273 Ogden, UT 84201 EEFax 855-214-7520

The filing requirements in the table below apply to those political organizations that wish to be a tax-exempt political organization and that receive or expect to receive $25,000 or more in gross receipts in any taxable year.

If the Organization is a

It May Be Required to File

FEC political committee, State or local candidate committee or State or local committee of a political party,

Form 1120-POL

Qualified state or local political organization (QSLPO)*,

Form 8871; Form 1120-POL; and Form 990

Caucus or association of state or local officials*,

Form 8871; Form 8872; and Form 1120-POL

Any other political organization, including other state or local political organizations,

Form 8871; Form 8872; Form 1120-POL; Form 990 or Form 990-EZ

If the organization is:

A political organization that isn't tax-exempt, or

A tax-exempt political organization that does not have gross receipts of at least $25,000,

Form 1120-POL must be filed if there is taxable income (after taking the $100 specific deduction) for any taxable year.

To be tax-exempt, certain political organizations must file Form 8871 within 24 hours of establishment and within 30 days of any material change. Both Form 8871 and Form 8872 must be filed electronically.

Political parties, campaign committees for candidates for federal, state or local office, and political action committees (PACs) are all political organizations subject to tax under IRC 527. IRC 527 organizations, unless excepted, are generally required to file one or more of the following:

An Initial Notice

Periodic reports on contributions and expenditures

Annual income tax returns

Annual information returns

To be tax-exempt, a political organization is required to notify the IRS electronically that the organization is to be treated as a IRC 527 organization. It must also notify the IRS within 30 days of any material change, including termination, to maintain its tax-exempt status.

To notify the IRS, the organization must file Form 8871. To complete the electronic filing, the political organization must print the electronically submitted Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status, sign it, and mail the "Declaration of Electronic Filing" to:

Department of the Treasury Internal Revenue Service Ogden, UT 84201

The following political organizations are not required to report Form 8871:

Any person required to report to the FEC;

Any political committees of a state or local candidate;

Any state or local committee of a political party;

Any organization reasonably anticipating that its gross receipts will always be less than $25,000 for any taxable year; and

Any organization described in IRC 501(c) that is subject to IRC 527(f)(1) because it has made an "exempt function" expenditure.

Unless excepted, tax-exempt political organizations are required to file periodic reports with the IRS. Political organizations are excepted from filing these periodic reports (Form 8872) if they are not required to file Form 8871 (including organizations required to report as political committees with the FEC) or are qualified state and local political organizations.

All other political organizations are required to file Form 8872 to report the names, addresses, and (if an individual) the occupation and employer of any person to whom expenditures are made that aggregate $500 or more in a calendar year and the amount, date and purpose of each expenditure. The report must also include the name, address, and (if an individual) the occupation and employer of any person who contributes a total of $200 or more in a calendar year, and the amount and date of each contribution. Expenditures made or contributions received after July 1, 2000, must be reported, except for those made or received pursuant to binding contracts entered into before July 2, 2000.

Form 8872, must be filed electronically for periods after 2019. Prior to this, an organization was required to file Form 8872 electronically if it had, or expected to have, contributions or expenditures of more than $50,000 during the calendar year.

Political organizations with taxable income, after taking the $100 specific deduction, must file Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.

Tax-exempt political organizations with gross receipts of $25,000 or more, are required to file Form 990. Certain small political organizations may file Form 990-EZ instead. Political organizations that receive contributions of $5,000 or more from any one contributor will be required to include Form 990, Schedule B with their return.

Qualified state and local political organizations are only required to file Form 990 if they have gross receipts of $100,000.

A tax-exempt political organization isn't required to file Form 990 if it is:

Not required to file Form 8871 (including an organization required to file as a political committee with the FEC) or

A caucus or association of state or local officials.

All of these notices, reports, and returns (except for Form 1120-POL) are to be made publicly available by the IRS and by the organization. Penalties are provided for failure to comply with these requirements.

The filing requirements in the table below apply to those political organizations that:

Wish to be exempt from federal income tax provisions, and

Receive or expect to receive $25,000 or more in gross receipts in any taxable year.

Form

When Filed

Exceptions to Filing Requirement

Form 8871

Within 24 hours of establishment or within 30 days of any material change, including termination

Organization that does not seek tax-exempt status;

IRC 527 Political committee required to report to the FEC;

Campaign committee of state and local candidates;

State or local committee of political parties; and

Organization that reasonably expects annual gross receipts to always be less than $25,000.

Form 8872

At organization's option, quarterly/semiannually or monthly, on same basis for entire calendar year (see form instructions for detailed information)

Any organization excepted from Form 8871 filing requirement (see above); and

Qualified state or local political organization (QSLPO).

Form 1120-POL

Due the 15th day of the 3rd month after the close of the taxable year

Organization with no political organization taxable income after taking the $100 specific deduction.

Form 990 or Form 990-EZ

Due the 15th day of the 5th month after the close of the taxable year

Any organization excepted from Form 8871 (see above); and

Caucus or association of state or local officials