What Should Political Organizations Know About Form
- Updated August 14, 2023 - 2.00 PM - Admin, Tax990
The IRS considers any organizations that operate towards any exempt purposes as nonprofit and provides them the option to apply for federal tax exemption.
This article discusses how Political Organizations can obtain federal tax exemption under section 527 and their tax filing requirements.
Table of Contents
How Does the IRS Define Political Organizations?
The IRC section 527 defines a political organization as a party, committee, association, or organization that takes part in various political activities to accomplish goals that benefit the organization members.
These organizations are operated and organized specifically for collecting contributions for or making expenses for an exempt function.
The Exempt function involves influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization and the election of Presidential or Vice-Presidential electors.
Any activities carried out by the political organizations directly or indirectly in relation to or support an exempt function are exempt function activities.
How can Political Organizations Obtain Tax-Exempt Status?
Political Organizations that need an exemption from paying federal taxes should file Form 8871, Political Organization Notice of Section 527 Status.
Form 8871 must be filed electronically within 24 hours from the time when the Political Organization was established in order to obtain tax exemption under section 527.
If this 24-hour time frame falls on a , weekend or any Federal holiday, political organizations can file Form 8871 on the next business day.
Until a political organization files Form 8871, it will be subjected to federal income taxes, which they must report on Form 1120-POL.
There are some political organizations that are not required to file Form 8871, including
- Organizations whose annual gross receipts are expected to always be less than $25,000
- Political committees required to report under the Federal Election Campaign Act of 1971 (2 U.S.C. 431 et seq.)
- Political committees of a state or local candidate
- State or local committees of a political party
- Tax-exempt organizations described in section 501(c) and treated as having political organization taxable income under section 527(f)(1)
What are the 990 Filing Requirements for 527 Political Organizations?
Which 990 Form Should Political Organizations file?
If the a political organization’s gross receipts are less than $100,000 and assets less than $250,000 at the end of the year, it must file Form 990-EZ.
All other tax-exempt organizations should file Form 990.
Reporting Additional Information
527 Political Organizations that file 990 forms may also need to include Schedules for reporting additional information regarding their activities, contributions received, etc.
When is the Deadline for 527 Political Organizations to File Form 990?
Generally, for Political Organizations that have obtained tax-exempt status under section 527, the deadline for Form 990 is due by the 15th day of the 5th month after their accounting period ends, i.e., May 15th for organizations following a calendar tax year.
Operating on a fiscal year?
Use our due date calculator to find your due date.
Penalties may be imposed by the IRS on 527 Political Organizations that fail to file 990 forms on or before the deadline.Learn More.
Political Organizations that need more time to prepare their 990 returns can file Form 8868 and request up to 6 months extension with a reasonable cause.
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