Malcolm Rivera
Political organizations are non-profit groups that support an individual candidate running for federal, state, or local office. These organizations are required to file with the IRS and obtain a tax ID, also known as an Employer Identification Number (EIN). While political organizations may be exempt from federal taxes, they are still subject to payroll taxes and must file periodic reports with the IRS. To maintain their tax-exempt status, these organizations must refrain from directly or indirectly participating in any political campaign or intervening on behalf of or in opposition to any candidate for elective public office. This includes contributions to political campaign funds or public statements of position made by the organization.
Characteristics and Values of EIN Organizations for Local Political Issue Campaigns
| Characteristics | Values |
|---|---|
| Type of Organization | Political organization supporting an individual candidate running for local office |
| Tax Status | Tax-exempt but subject to IRC Section 527; required to file Form 8872 and periodic reports |
| Employer Identification Number (EIN) | Required, even if the organization has no employees; obtained by filing Form SS-4 or online |
| Bank Account Requirements | EIN is needed to open a bank account |
| Permits and Licenses | EIN may be required for obtaining permits and licenses for events |
| Political Campaign Intervention | Prohibited from directly or indirectly participating in any political campaign for/against a candidate; violation may result in denial/revocation of tax-exempt status |
| Voter Education Activities | Allowed to conduct non-partisan voter education and registration activities |
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What You'll Learn
- Political organizations are non-profit groups that support a candidate running for office
- These organizations are subject to tax under IRC Section 527 and must file Form 8872
- To obtain tax exemption, Form 8871 must be filed within 24 hours of the organization's creation
- To open bank accounts and lines of credit, a political organization will need an EIN
- Section 501(c)(3) organizations are prohibited from participating in political campaigns for elective public office
Political organizations are non-profit groups that support a candidate running for office
While these organizations are non-profit, they are not tax-exempt. They are required to obtain an Employer Identification Number (EIN), even if they do not have employees. This nine-digit number is used by the IRS to identify taxpayers and is necessary for filing various tax forms. To obtain an EIN, an organization must complete Form SS-4, either online or through other methods such as calling a toll-free number or submitting a paper form.
It is important to note that there are restrictions on how political organizations can operate. For instance, 501(c)(3) organizations are prohibited from directly or indirectly participating in any political campaign or intervening on behalf of or in opposition to any candidate for elective public office. This includes making contributions to political campaign funds or making public statements of position in support of or against a candidate. Violating these restrictions may result in the loss of tax-exempt status and the imposition of excise taxes.
However, 501(c)(3) nonprofits are allowed to engage in lobbying or influencing legislation at the federal, state, or local level, as long as it is within certain limits. They can also take positions on legislative issues, such as ballot measures, and encourage voters to support or oppose them. Additionally, individuals associated with a 501(c)(3) organization, such as staff, board members, and volunteers, can personally endorse candidates, make campaign contributions, and run for office, as long as they do not imply that their political positions are made on behalf of their organization.
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These organizations are subject to tax under IRC Section 527 and must file Form 8872
Political organizations are complex entities with specific requirements for tax filings and disclosures. In the context of a local political issue campaign, it is important to understand the tax obligations under IRC Section 527.
IRC Section 527 encompasses political parties, campaign committees for candidates for federal, state, or local office, and political action committees (PACs). These organizations are considered political in nature and are subject to specific tax provisions. They are generally required to obtain an Employer Identification Number (EIN), also known as a Federal Tax Identification Number, even if they do not have employees. This nine-digit number is used by the IRS to identify taxpayers and facilitate the filing of various tax forms. To obtain an EIN, an organization must complete Form SS-4, which can be submitted online, by phone, or through a paper form sent via fax or mail.
Now, specifically referring to the tax obligations under IRC Section 527, these organizations are indeed subject to taxation. They are required to file periodic reports on Form 8872, known as the "Political Organization Report of Contributions and Expenditures." This form must be filed electronically, and it details the contributions received and expenditures made by the political organization. The periodic reporting on Form 8872 ensures transparency and compliance with tax regulations.
It is worth noting that there have been amendments to the reporting requirements over time. For instance, in 2002, President Bush signed Public Law No. 107-276, which reduced the reporting obligations of many political organizations. This law exempted qualified state and local political organizations from periodically reporting contributions and expenditures on Form 8872. Additionally, federal and small-state PACs were no longer required to file Form 990, which was previously mandated.
While the specifics of tax filings can be intricate, it is crucial for organizations involved in local political issue campaigns to understand their obligations under IRC Section 527. By complying with the tax requirements and utilizing resources such as the "Political Organization Filing and Disclosure" guidelines provided by the IRS, these organizations can ensure they remain in good standing with the law.
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To obtain tax exemption, Form 8871 must be filed within 24 hours of the organization's creation
Political organizations are subject to tax under IRC section 527 and must adhere to specific filing requirements. These include political parties, campaign committees for candidates for federal, state, or local office, and political action committees. To obtain tax exemption, Form 8871, also known as the "initial notice," must be filed within 24 hours of the organization's creation. This form serves as the initial step in the process of attaining tax-exempt status, and organizations must have an Employer Identification Number (EIN) to file it. The EIN, a nine-digit number, is used by the IRS to identify taxpayers who are mandated to submit various tax forms.
An organization can apply for an EIN by completing and submitting Form SS-4, the "Application for Employer Identification Number." This can be done online, or by calling the Business & Specialty Tax Line. Additionally, Form SS-4 can be sent via fax or mail. It is important to note that even if a political organization does not have any employees, it is still required to obtain an EIN.
Once an organization has successfully filed Form 8871 and obtained an EIN, it can then proceed to electronically file its periodic reports. To do so, the organization will need the username and password issued by the IRS after the initial filing of Form 8871. These periodic reports are crucial for maintaining tax-exempt status and ensuring compliance with IRS regulations.
It is worth mentioning that there are exceptions to the requirement of filing Form 8871. An organization is exempt from filing this form if it reasonably anticipates having less than $25,000 in gross receipts for any taxable year. This exception provides flexibility for smaller organizations with limited financial resources.
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To open bank accounts and lines of credit, a political organization will need an EIN
Political organizations are subject to tax under IRC Section 527 and are required to file periodic reports. These include political parties, campaign committees for candidates for federal, state, or local office, and political action committees. These organizations are required to maintain separate bank accounts and are expected to keep their funds separate from personal funds.
To open these bank accounts, a political organization will need an Employer Identification Number (EIN), also known as a Federal Tax Identification Number or a Tax ID. This is a unique, nine-digit number that is used by the IRS to identify taxpayers and is required for filing various tax forms. An EIN is necessary even if the organization does not have any employees.
To obtain an EIN, a political organization must complete and submit Form SS-4, Application for Employer Identification Number. This can be done online, by mail, or by calling the IRS directly. The organization will also need to file Form 8871 within 24 hours of its creation to be considered tax-exempt.
Having an EIN is crucial for a political organization's financial operations, as it enables them to open bank accounts, establish lines of credit, and file taxes at the end of the year. It also helps maintain transparency and separate entity status for the organization's funds. Additionally, an EIN may be required for other purposes, such as obtaining licenses and permits for events.
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Section 501(c)(3) organizations are prohibited from participating in political campaigns for elective public office
Under the Internal Revenue Code, Section 501(c)(3) organizations are prohibited from directly or indirectly participating in, or intervening in, any political campaign for elective public office. This includes activities such as contributing to political campaign funds or making public statements of position (verbal or written) in favour of or against any candidate. Violating this prohibition may result in the denial or revocation of tax-exempt status and the imposition of excise taxes.
However, certain activities are permitted if conducted in a non-partisan manner. For example, 501(c)(3) organizations can engage in voter education activities, such as presenting public forums and publishing voter education guides, without violating the prohibition. Similarly, activities intended to encourage people to participate in the electoral process, such as voter registration and get-out-the-vote drives, are not prohibited if conducted without bias towards any particular candidate or political party.
It is important to note that political organizations, including political parties, campaign committees for candidates for federal, state, or local office, and political action committees (PACs), are subject to tax under IRC Section 527. These organizations are required to obtain an Employer Identification Number (EIN), even if they do not have employees, and must file periodic reports with the IRS.
While the First Amendment protects an individual's right to express their political beliefs, 501(c)(3) organizations must be cautious in how they engage with political candidates and campaigns to avoid jeopardizing their tax-exempt status. This includes considerations such as inviting political candidates to speak at events or stating positions on public policy issues.
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Frequently asked questions
EIN stands for Employer Identification Number, also known as a Federal Tax Identification Number. It is a nine-digit number used by the IRS to identify taxpayers that are required to file various tax forms.
Yes, a local political issue campaign is a type of political organization and, as such, will need its own EIN. This is the case even if the organization does not have any employees.
You can apply for an EIN online via the IRS website, 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.
You will need an EIN to open a bank account and to file your taxes at the end of the year, including claiming your exemption. You will also need it for other financial activities, such as opening lines of credit, and for getting licenses and permits for events.
