Reporting Requirements for a Political Organization

Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. The organization is also required to periodically report certain contributions accepted and expenditures made by the organization. To notify the IRS of section 527 treatment, an organization must file Form 8871. To report contributions and expenditures, certain notifying organizations must file Form 8872.

Form 8871. A political organization must file Form 8871 to notify the IRS both electronically and in writing that it is to be treated as a section 527 organization. However, an organization is not required to file Form 8871 if:

• It reasonably expects its gross receipts to always be less than $25,000,
• It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA)(2 U.S.C. 431(4), or
• It is a section 501(c) organization that is treated as having political organization taxable income under section 527(f)(1) of the Code.

All other political organizations, including state and local candidate committees, are required to file Form 8871.

An organization must provide on Form 8871:

1. Its name and address (including any business address, if different) and its electronic mailing address,
2. Its purpose,
3. The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its Board of Directors, and
4. The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4) of the Code).

Before filing Form 8871, the political organization must have its own EIN even if it has no employees. To get an EIN, file Form SS-4 with the IRS. Form SS-4 can be obtained by downloading it from the IRS Internet web site at www.irs.gov or by calling 1-800-TAX-FORM.

Due dates. Form 8871 must be filed within 24 hours of the date on which the organization was established for an organization formed after June 30, 2000. Form 8871 must have been filed by July 31, 2000, for an organization already in existence on June 30, 2000.

If the due date falls on a Saturday, Sunday, or legal holiday, the organization may file on the next business day.

How to file. An organization must file Form 8871 electronically and in writing as follows:

• Electronically via the IRS Internet web site at www.irs.gov/polorgs, and
• On paper by sending a signed copy of the form to the Internal Revenue Service, Ogden UT 84201. An organization can fill in and print out Form 8871 from the IRS Internet web site.

Failure to file. An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a section 527 organization for any period before the date Form 8871 is filed. Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income.

The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate.

For more information on Form 8871, see the form and its instructions. For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms, later.

Form 8872. Every section 527 political organization that accepts a contribution or makes an expenditure after July 1, 2000, for an exempt function during the calendar year, must file Form 8872 except:

• A political organization that is not required to file Form 8871 (discussed earlier),
• A state or local committee of a political party, or
• A political committee of a state or local candidate.

All other section 527 organizations, including other state and local political action committees, are required to file Form 8872 even if they file reports with state or local election agencies.

The Form 8872 reports must include the name, address, and (if an individual) the occupation and employer of any person to whom expenditures are made that aggregate $500 or more in a calendar year and the amount of such expenditures. The reports must also include the name, address, and (if an individual) the occupation and employer of any person that contributes in the aggregate $200 or more in a calendar year and the amount of that contribution.

An organization is not required to report contributions accepted or expenditures made after July 1, 2000, if they were received or made under a contract entered into before July 2, 2000.

Due dates. The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held or any other calendar year ( a non-election year). In election years, the forms must be filed on a quarterly or monthly basis and in connection to election dates. In non-election years, the forms must be filed on a semiannual or monthly basis. A complete listing of these filing periods can be found in the Form 8872 instructions.

How to file. Complete and file Form 8872 in one of two ways:

1. Electronically via the IRS Internet web site at www.irs.gov/polorgs, or
2. By sending a signed copy of the form to the Internal Revenue Service, Ogden, UT 84201.

The form must be signed by an official authorized by the organization to sign Form 8872.

An organization that filed Form 8871 both electronically and in writing will receive a letter from IRS with the user ID and password needed to file Form 8872 electronically. If an organization does not receive its user ID and password, it may request one by writing to the following address:
Internal Revenue Service
Room 4010
P.O. Box 2508
Cincinnati, OH 45201

Penalty for failure to file. A penalty will be imposed if the organization is required to file Form 8872 and it:

• Fails to file the form by the due date, or
• Files the form but fails to report all of the information required or reports incorrect information.

The penalty is 35% of the total amount of contributions and expenditures to which a failure relates.

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