Malcolm Rivera
If you're planning to run for office, it's important to understand the financial requirements of your campaign. In the US, political organizations such as political parties, campaign committees, and political action committees are considered tax-exempt organizations under IRC Section 527. However, they are still required to obtain an Employer Identification Number (EIN), also known as a Federal Tax Identification Number. This nine-digit number is used by the IRS to identify taxpayers and is necessary for various tax filings and other important functions, such as opening a bank account. So, if you're planning to run for office, make sure your campaign committee has obtained an EIN to stay compliant with tax laws and to facilitate the financial aspects of your campaign.
Do I need an EIN for my political campaign?
| Characteristics | Values |
|---|---|
| Who needs an EIN? | Political parties, campaign committees for candidates for federal, state, or local office, and political action committees. |
| What is an EIN? | An Employer Identification Number, also known as a Federal Tax Identification Number. |
| When do I need an EIN? | As soon as your political organization is formed. |
| Where do I get an EIN? | Online via the IRS website, by calling the IRS, or by submitting a paper Form SS-4 via fax or mail. |
| Why do I need an EIN? | To open bank accounts and lines of credit, file taxes, and claim tax exemptions. |
| Additional requirements | To file Form 8871 within 24 hours of the organization's creation and to electronically file periodic reports. |
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What You'll Learn
Political organisations and tax exemption
Political organisations are subject to tax under IRC section 527. This includes political parties, campaign committees for candidates for federal, state, or local office, and political action committees. These organisations are generally required to file periodic reports on Form 8872 with the IRS.
To maintain their tax-exempt status, charitable nonprofits, foundations, or religious organisations under Section 501(c)(3) must refrain from engaging in "political campaign activity". This restriction applies to all candidates for federal, state, and local elections. However, nonprofits are encouraged to engage in advocacy, and lobbying and legislative activities, which are treated separately under the law. Organisations with substantial political or lobbying objectives may be recognised as tax-exempt under Code Section 501(c)(4), which permits them to engage in substantial lobbying as long as it is "germane" to the organisation's program.
Even if a political organisation does not have any employees, it is still required to obtain an Employer Identification Number (EIN), also known as a Federal Tax Identification Number or Tax ID. The IRS uses this nine-digit number to identify taxpayers that are required to file various tax forms. An EIN is necessary for opening bank accounts and lines of credit, filing taxes, and claiming tax exemptions. Additionally, an EIN may be required for obtaining licenses and permits for events. To obtain an EIN, an organisation must complete and submit Form SS-4, Application for Employer Identification Number, either online or through mail.
It is important to note that the rules and requirements for tax exemption and EIN acquisition may vary depending on the specific circumstances and location of the political organisation. Therefore, it is always advisable to consult with a tax professional or refer to the IRS website for the most accurate and up-to-date information.
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How to obtain an EIN
Tax-exempt political organizations are required to obtain an Employer Identification Number (EIN) or Federal Tax Identification Number. The IRS uses this nine-digit number to identify taxpayers that are required to file various tax forms.
To obtain an EIN, you can use the IRS's free online tool, which is available Monday to Friday, 7 am to 10 pm Eastern Time. You will need to answer questions and submit an application, and if approved, your EIN will be issued immediately.
Alternatively, you can apply by phone by calling the Business & Specialty Tax Line at 800-829-4933 (toll-free) or 267-941-1099 (not toll-free). International applicants must call to obtain their EIN. The person making the call must be authorized to receive the EIN and answer questions concerning the Form SS-4, Application for Employer Identification Number.
You can also submit a paper Form SS-4 by fax or mail. This form must be mailed or faxed to the appropriate service center. The processing time for an EIN application received by mail is four weeks.
Please note that you can only apply for one EIN per responsible party per day. If you are forming a legal entity (LLC, partnership, corporation, or tax-exempt organization), you must form your entity through your state before applying for an EIN to avoid delays. Additionally, if your business is located in a state that taxes income, you will need to obtain a state tax ID as well.
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When an EIN is required
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a nine-digit number used by the IRS to identify taxpayers that are required to file various tax forms.
Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all political organizations subject to tax under IRC section 527. These organizations are generally required to obtain an EIN, even if they do not have any employees. This includes tax-exempt political organizations, which must still file periodic reports.
To obtain an EIN, an organization must complete IRS Form SS-4, Application for Employer Identification Number. This can be done online, by phone, or by submitting a paper form via fax or mail. The organization will need its EIN to open bank accounts and lines of credit, to file taxes, and to claim tax exemptions.
In addition to obtaining an EIN, political organizations must also electronically file periodic reports with the IRS. To do this, the organization must have the username and password issued by the IRS after filing its initial notice (Form 8871).
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Filing requirements for political organisations
Political organisations are subject to tax under IRC section 527 and are considered tax-exempt entities. As such, they are required to obtain an Employer Identification Number (EIN), even if they have no employees. An EIN is a unique, nine-digit number that the IRS uses to identify taxpayers that are required to file various tax forms.
To obtain an EIN, an organisation must file Form SS-4, Application for Employer Identification Number, either online, by mail, or by calling the Business & Specialty Tax Line. An EIN is necessary for a political organisation to open bank accounts and lines of credit and to file taxes at the end of the year, including claiming their tax exemption.
Political organisations must also file Form 8871 within 24 hours of their creation and are not considered tax-exempt until they do so. Additionally, they must file Form 8872, the Political Organisation Report of Contributions and Expenditures, and Form 8871 with the IRS, as required under IRC Section 527.
Many political organisations are also required to electronically file periodic reports with the Federal Election Commission (FEC). To do so, they will need the username and password issued to them after filing their initial notice.
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Using an EIN to open a bank account
A political organization, such as a campaign committee for a candidate running for federal, state, or local office, is generally required to obtain an Employer Identification Number (EIN), even if it does not have any employees. An EIN is also known as a Federal Tax Identification Number.
An EIN is not always required to open a business bank account, but it is highly recommended. It is possible for some entrepreneurs, especially sole proprietors, to open a business bank account without an EIN. However, even if your business structure doesn't require an EIN to open a bank account, there are several benefits to getting one:
- It helps separate your personal and business finances, which is important for record-keeping, tax time, and maintaining liability protection.
- It can help protect your personal assets if your business runs into legal trouble.
- It makes your business appear more professional to potential clients or investors.
- It gives you access to a wider selection of accounts.
To open a business bank account, banks will require certain documents to verify your identity and the nature of your business to help prevent fraud and money laundering. Even with an EIN, you will need to provide some personal information and additional documentation, such as your Social Security Number or Individual Taxpayer Identification Number (ITIN).
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Frequently asked questions
Yes, political organizations are required to have an Employer Identification Number (EIN), even if they do not have any employees.
An EIN, or Employer Identification Number, is a nine-digit number used by the IRS to identify taxpayers that are required to file various tax forms.
You can apply for an EIN by completing and submitting an online Form SS-4, Application for Employer Identification Number, or by calling the toll-free Business & Specialty Tax Line (800-829-4933). You can also submit a paper Form SS-4 via fax or mail.
