Eleanor Finch
Political campaign committees are subject to tax under IRC Section 527 and may have specific filing requirements with the IRS. These committees are considered political organizations and are generally required to file periodic reports on Form 8872, disclosing contributions and expenditures. They must also have an employer identification number (EIN) and may be required to file with the Federal Election Commission (FEC). Taxable income for political organizations includes certain types of income, such as contributions and proceeds from political fundraising events, while other income sources like investment income are subject to tax. The tax calculation for political organizations varies depending on their specific status and is outlined in the relevant sections of the tax code.
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What You'll Learn
- Campaign committees are political organisations subject to tax under IRC section 527
- They must file Form 8872, reporting contributions and expenditures
- Taxable income is calculated by multiplying taxable income by the highest rate of tax
- Tax-exempt political organisations must file Form 8871
- Non-electronic filings are available for periods before January 1, 2020
Campaign committees are political organisations subject to tax under IRC section 527
Campaign committees, as political organisations, are required to file periodic reports with the IRS, specifically Form 8872, which is the Political Organisation Report of Contributions and Expenditures. This form must be e-filed, and organisations will need the username and password provided by the IRS upon the initial electronic filing of Form 8871 (Political Organisation Notice of Section 527 Status).
It is important to note that there are specific requirements for exemption under IRC section 527, and organisations must notify the Secretary that they are section 527 organisations. Additionally, there are disclosure requirements for expenditures and contributions, with penalties for non-compliance.
Furthermore, section 527 organisations are generally required to have an employer identification number (EIN) and electronically file their periodic reports. The "Political Organisation Filing and Disclosure" website provides resources for electronic filing and searching for submitted forms, both paper and electronic.
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They must file Form 8872, reporting contributions and expenditures
Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all considered political organizations under IRC § 527. These organizations are generally subject to tax and may have specific filing requirements with the Internal Revenue Service (IRS).
One of the key requirements for these political organizations is to file Form 8872, also known as the "Political Organization Report of Contributions and Expenditures." This form must be filed periodically to disclose information about the organization's financial activities.
Form 8872 serves as a critical tool for maintaining transparency and accountability in the political landscape. By reporting contributions and expenditures, campaign committees provide insights into their funding sources and how they allocate their financial resources. This information is essential for regulatory bodies, the public, and other stakeholders to assess potential influences on political processes and ensure compliance with applicable laws and regulations.
The process of filing Form 8872 involves a few important steps. Firstly, organizations must gather relevant information about their contributions and expenditures before initiating the filing process. This includes details such as the amounts and sources of contributions, as well as the nature and purpose of expenditures. Secondly, Form 8872 can be filed electronically or on paper. For electronic filing, organizations need the username and password provided by the IRS after submitting their initial notice (Form 8871). Paper filings are also accepted and are available for reference, dating back to January 2012.
It is worth noting that there are specific guidelines for reporting contributions and expenditures. For example, when reporting contributions, organizations must disclose the names and addresses of contributors, the amounts contributed, and the dates of contributions. In the case of expenditures, organizations need to provide detailed information about the purpose and nature of the expenditure, the amount spent, and the recipient or vendor.
In summary, the requirement to file Form 8872 plays a crucial role in ensuring transparency and compliance within the political arena. By reporting contributions and expenditures, campaign committees and other political organizations provide valuable insights into their financial activities, enabling regulatory bodies and the public to hold them accountable and maintain the integrity of the political system.
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Taxable income is calculated by multiplying taxable income by the highest rate of tax
Political organizations, including campaign committees for candidates for federal, state, or local office, are subject to tax under IRC section 527. These organizations are required to file periodic reports with the IRS, specifically Form 8872, the Political Organization Report of Contributions and Expenditures.
Now, to address your question about taxable income:
Taxable income is the portion of an individual's or corporation's gross income that is used to calculate how much tax they owe for a given tax year. It is the amount of income subject to tax after allowable deductions and exemptions have been made. It is calculated by subtracting these deductions and exemptions from the total gross income, which includes income from wages, salaries, bonuses, tips, investments, and various types of unearned income.
To calculate taxable income, individuals must first determine their filing status (single, married, or head of household). This status will impact the deductions and exemptions that can be claimed. For example, married couples filing jointly can combine their deductions, while those filing separately must divide them. Once all income sources have been identified and any applicable deductions and exemptions have been made, the resulting amount is the taxable income.
It is important to note that taxable income is generally less than adjusted gross income (AGI) due to these deductions and exemptions. Additionally, certain types of income, such as employer-sponsored health insurance, are excluded from the tax base entirely. On the other hand, unearned income such as canceled debts, government benefits, and lottery payments is considered taxable.
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Tax-exempt political organisations must file Form 8871
Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all considered political organizations under IRC § 527. These organizations are typically subject to tax requirements under this section and may need to file periodic reports with the Internal Revenue Service (IRS).
Most tax-exempt political organizations are mandated to file periodic reports on Form 8872 with the IRS. To file electronically, the organization must have the username and password provided by the IRS after electronically submitting its initial notice (Form 8871). Form 8871 is the Political Organization Notice of Section 527 Status, and it is electronically filed by political organizations to notify the IRS that they are to be treated as a Section 527 organization. This form also serves to inform the IRS of any material changes to the information reported on a previously filed form.
The Political Organization Filing and Disclosure website provides a comprehensive platform for political organizations to electronically file, search for, and view submitted forms, including both paper and electronic filings of Form 8871 and Form 8872. The website offers updated XML schemas for uploading electronic filings of these forms, with clear instructions to exclude Social Security numbers or other unnecessary personal information.
It is important to note that Form 8872, Political Organization Report of Contributions and Expenditures, must be filed electronically for periods beginning on or after January 1, 2020, as per the amendment to IRC Section 527(j). Additionally, Revenue Procedure 2007-27 provides a safe harbor for certain tax-exempt political organizations, allowing them to establish that the failure to file Form 8872 was due to reasonable cause and not willful neglect, thereby becoming eligible for relief from penalties.
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Non-electronic filings are available for periods before January 1, 2020
Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all considered political organizations under IRC § 527. These organizations are generally required to file periodic reports on Form 8872 with the IRS.
The Taxpayer First Act mandates that tax-exempt political organizations must electronically file Form 8872, Political Organization Report of Contributions and Expenditures, for periods beginning on or after January 1, 2020. However, non-electronic filings are available for periods before this date.
Prior to the implementation of the Taxpayer First Act, political organizations had the option to submit paper filings. These paper filings are still available for reference and can be accessed through the Political Organization Filing and Disclosure website. This website allows users to search for and view submitted forms, both paper and electronic filings, including Form 8871, Political Organization Notice of Section 527 Status, and Form 8872. The website also provides information on the requirements for exemption under IRC Section 527 and the taxation of political organizations.
It is important to note that even before the mandate for electronic filings, the FEC encouraged committees to file electronically whenever possible. This was facilitated by the availability of electronic filing software, such as FECFile, and webforms for specific forms like Form 5 and Form 9. Additionally, many California cities and counties have campaign filing requirements that allow for online filing systems and public websites for viewing reports. However, for committees that had not yet transitioned to electronic filing, non-electronic options were still available.
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Frequently asked questions
Political campaign committees are organizations that support candidates for federal, state, or local office. They are subject to tax under IRC Section 527 and may have specific filing requirements.
Political campaign committees are taxed on their taxable income, which is calculated by multiplying the organization's gross income (excluding exempt function income) by the highest rate specified in Section 11(b) of the tax code. Exempt function income includes contributions, membership dues, and proceeds from political fundraising events.
Political campaign committees are required to file periodic reports, such as Form 8871 and Form 8872, with the IRS. They must also have their own Employer Identification Number (EIN) and may need to file additional forms depending on their activities and state-specific requirements.
Organizations that are required to report to the Federal Election Commission (FEC) as political committees are not mandated to file notices and reports with the IRS to maintain their tax-exempt status under IRC Section 527. However, they must still comply with other tax requirements applicable to political organizations.
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