Simone Lawson
Political campaigns in the US are subject to tax requirements under Internal Revenue Code Section 527. This legislation requires tax-exempt political organizations to obtain an Employer Identification Number (EIN), even if they have no employees. An EIN is necessary for opening a bank account and filing tax forms. To obtain an EIN, a political organization must complete Form SS-4, available online or by contacting the IRS directly. This nine-digit number is essential for tax compliance and financial management during political campaigns.
| Characteristics | Values |
|---|---|
| Do political campaigns need an EIN number? | Yes, political campaigns need an EIN (Employer Identification Number) even if they don't have employees. |
| Who assigns the EIN? | The EIN is assigned by the IRS (Internal Revenue Service). |
| How to apply for an EIN? | To apply for an EIN, political organizations must complete and submit an online Form SS-4, Application for Employer Identification Number. Alternatively, they can call the toll-free Business & Specialty Tax Line (800-829-4933) or submit a paper Form SS-4 via fax or mail. |
| What is an EIN used for? | The EIN is used to identify taxpayers and is required to open a bank account. |
| What are the reporting requirements for political organizations? | Political organizations are subject to tax under IRC Section 527 and may have filing requirements. They are generally required to file Form 8872, "Political Organization Report of Contributions & Expenditures," and may also need to file periodic reports electronically. |
| Are there any exemptions from taxation for political organizations? | Yes, certain organizations may be tax-exempt, but they still need to obtain an EIN and file Form 8871 within 24 hours of their creation to maintain tax-exempt status. |
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What You'll Learn
Political organisations and tax exemption
Political organisations are subject to tax under IRC section 527 and may have filing requirements with the Internal Revenue Service (IRS). This includes political parties, campaign committees for candidates for federal, state, or local office, and political action committees. Most tax-exempt political organisations are 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 not engage in "political campaign activity". This restriction applies to all candidates for federal, state, and local elections. For example, if a candidate for public office wants to speak at a charitable nonprofit event, the nonprofit should only agree if the candidate does not plan to discuss their campaign. Instead, the candidate may only talk about topics related to the nonprofit's mission, and other candidates must also be invited.
Organisations with substantial political or lobbying objectives may be recognised as tax-exempt under Code Section 501(c)(4). Unlike 501(c)(3) organisations, 501(c)(4) organisations are permitted to engage in substantial lobbying as long as it is "germane" to the organisation's program and meets other limitations. Donations to 501(c)(4) organisations are not tax-deductible. It is important to note that lobbying and legislative activities are treated separately from political campaign activity under the law.
A tax-exempt political organisation may be required to obtain an Employer Identification Number (EIN), even if it does not have employees. The EIN, also known as a Federal Tax Identification Number, is a nine-digit number used by the IRS to identify taxpayers required to file various tax forms. To obtain an EIN, an organisation can complete an online Form SS-4, Application for Employer Identification Number, or call the IRS's toll-free Business & Specialty Tax Line. Alternatively, a paper Form SS-4 can be submitted via fax or mail.
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How to obtain an EIN
Obtaining an EIN, or Employer Identification Number, is a straightforward process. This unique, nine-digit number is used by the IRS to identify taxpayers and is required for all businesses, organisations, and some trusts to manage their taxes.
Firstly, ensure that you meet the requirements to obtain an EIN. You must be the responsible party in control of the entity or its authorised representative, and you must have the responsible party's Social Security Number or individual taxpayer ID number (ITIN).
Secondly, decide on your method of application. You can apply for an EIN online, by phone, fax, or mail. Online applications are free and will result in an immediate issuance of an EIN. However, please note that you cannot save your application, and it will expire after 15 minutes of inactivity. If you are unable to complete the application in one session, you can choose to apply by phone, fax, or mail. The processing time for applications received by mail is four weeks.
Thirdly, complete your application. You will need to answer questions and submit the application. If applying online, you will need to complete this in one session. If applying by mail or fax, you will need to complete Form SS-4, which can be found on the IRS website. Ensure that your form contains all the required information. If you are an international applicant, you will need to call a non-toll-free number to obtain your EIN.
Finally, if your application is approved, you will receive your EIN. If you applied online, your EIN will be issued immediately. If you applied by mail, your EIN will be mailed to you. Remember to print your EIN confirmation letter for your records.
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Filing requirements for political organisations
Political organisations are subject to tax under IRC Section 527 and have specific filing requirements. These include political parties, campaign committees for candidates for federal, state, or local office, and political action committees.
To be tax-exempt, a political organisation must file Form 8871 within 24 hours of its creation. This form must be filed with an Employer Identification Number (EIN), also known as a Federal Tax Identification Number. An EIN is a nine-digit number used by the IRS to identify taxpayers that are required to file various tax forms. An organisation can apply for an EIN by completing an online Form SS-4, Application for Employer Identification Number, or by calling the IRS's toll-free Business & Specialty Tax Line.
Additionally, political organisations must file Form 8872, the Political Organisation Report of Contributions and Expenditures, for periods beginning on or after January 1, 2020. This form must be filed electronically and can be uploaded as an XML file. To file electronically, the organisation must have the username and password it received from the IRS after filing its initial notice (Form 8871).
Many political organisations must also electronically file periodic reports with the IRS. These reports are required for most tax-exempt political organisations and must be filed on Form 8872. To file these reports electronically, the organisation needs the username and password issued by the IRS after filing its initial notice. If the username or password is forgotten, the organisation can contact TE/GE Customer Account Services to request a replacement.
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FEC requirements
Political organizations are subject to specific tax requirements under Internal Revenue Code (IRC) Section 527. This includes political parties, campaign committees for candidates for federal, state, or local office, and political action committees.
Most tax-exempt political organizations are required to file periodic reports on Form 8872 with the IRS. To file electronically, the organization must have the username and password received from the IRS after filing its initial notice (Form 8871). Form 8871 must be filed within 24 hours of the organization's creation, and an Employer Identification Number (EIN) is required to file this form.
An EIN, also known as a Federal Tax Identification Number, is a nine-digit number used by the IRS to identify taxpayers required to file various tax forms. All political organizations, even those without employees, must have their own EIN. To obtain an EIN, an organization must complete and submit 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.
It is important to note that the FEC does not issue EINs, and FEC staff cannot answer questions about tax law requirements. For information about IRS requirements for political organizations, the IRS website should be consulted. Additionally, the Federal Election Campaign Act of 1971, as amended, should be referenced for further guidance.
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Bank accounts for political committees
A political campaign can be expensive, and fundraising and managing expenses are important parts of the election process. Political committees must establish a bank account to keep committee funds separate from personal funds. This account is used to deposit receipts and make disbursements.
Before opening a campaign bank account, you may need to establish a political campaign committee with your local county Board of Elections. The name of the campaign committee is the name that will be used to open the bank account. The bank will require committee paperwork along with personal identification. It is recommended to open an interest-free checking account rather than an interest-bearing savings account. This is because any interest earned on a campaign bank account must be reported in finance reports, and the small amount of money gained is not worth the additional effort required by the committee treasurer to report.
A candidate's personal funds can be used for campaign purchases before a campaign bank account is established. These purchases are generally treated as in-kind donations or personal loans. The account must be maintained at a national bank, state bank, or other FDIC-insured institution.
If you are starting a political action committee (PAC) and opening a checking account, the PAC must first be approved by the Federal Election Commission (FEC). Under these requirements, you will need an address for the PAC and a designated treasurer to handle the funds. There are additional compliance guidelines for any fund transfers that you make.
A political organization must have its own Employer Identification Number (EIN), even if it does not have any employees. This is a nine-digit number used by the IRS to identify taxpayers that are required to file various tax forms. The committee's EIN must be used to open the bank account. This number is not the same as the FEC committee ID number.
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Frequently asked questions
Yes, political campaigns are considered political organizations and are subject to tax under IRC section 527. As such, they 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.
A political campaign can obtain an EIN by completing and submitting IRS Form SS-4, Application for Employer Identification Number. This can be done online via the IRS website, or by submitting a paper form via fax or mail.
While both are identification numbers, they serve different purposes. An FEC committee ID number is not the same as an EIN, and the FEC does not issue EINs or provide related tax law advice.
Yes, in addition to obtaining an EIN, political campaigns must also file periodic reports electronically with the IRS. To do so, they will need the username and password issued by the IRS after filing their initial notice (Form 8871).
