Unless excepted, political organizations described in section 527 of the Internal Revenue Code are required to file some or all of four forms:
An initial notice of status on Form 8871, Political Organization Notice of Section 527 Status;
Periodic reports of contributions and expenditures on Form 8872 , Report of Contributions and Expenditures;
Annual income tax returns on Form 1120-POL , U.S. Income Tax Return for Certain Political Organizations; and
Annual information returns on Form 990 , Return of Organization Exempt from Income Tax, or Form 990-EZ , Short Form Return of Organization Exempt from Income Tax.
The purpose of this page is to set forth (in question and answer format) issues arising from the filing of the annual returns by political organizations. The following questions do not address the filing of these returns by other exempt organizations.
Questions about Form 1120-POL
What is Form 1120-POL?
Form 1120-POL is the annual income tax return for political organizations.
Who has to file Form 1120-POL?
A political organization with taxable income after taking the $100 specific deduction for the taxable year must file Form 1120-POL.
When is Form 1120-POL due?
Form 1120-POL is due on the 15th day of the 3rd month following the end of the political organization’s taxable year. For organizations on a calendar year, Form 1120-POL is due on March 15th of the following year.
See: Return Due Dates for Miscellaneous Returns and Reports Filed by Exempt Organizations
May a political organization request an extension of time for filing Form 1120-POL?
Yes, the organization may request an automatic six-month extension by filing Form 7004 , Application for Automatic Extension of Time to File Corporate Income Tax Return, by the due date of Form 1120-POL.
Does a political organization report the contributions it receives on Form 1120-POL?
A tax-exempt political organization does not report its contributions or any other exempt function income on Form 1120-POL. Only taxable income (generally the investment income of the political organization) is reported on the Form 1120-POL (see Q&A #7 for what non-exempt political organizations report on Form 1120-POL).
May a political organization deduct the salaries, rents and other expenses it incurs for its political campaign activity on Form 1120-POL?
No, the political organization may only deduct those expenses that are directly related to earning taxable income. For example, the organization may not deduct the salary of its campaign director. However, if the political organization hires a broker to manage its stock portfolio, it can deduct that expense from the taxable dividend and capital gain income derived.
What does a political organization that is not exempt because it did not file Form 8871 report on Form 1120-POL?
In addition to reporting its investment income as discussed in Q&A #5, the political organization reports its exempt function income (contributions, etc.) as other income (line 7 on the 2005 form). It may deduct the expenses directly related to earning that income (such as fundraising expenses), but may not deduct its political campaign expenses.
What if the political organization fails to file Form 1120-POL?
A political organization that fails to file a required Form 1120-POL timely must pay an additional amount equal to 5 percent of the tax due for each month (or partial month) the return is late up to a maximum of 25 percent of the tax due, unless the organization shows that the failure was due to reasonable cause.
What if a political organization fails to pay the tax shown on Form 1120-POL?
A political organization that fails to timely pay the tax shown or required to be shown on Form 1120-POL, must pay an additional amount equal to 0.5 percent of the unpaid tax for each month (or partial month) the tax is not paid up to a maximum of 25 percent of the unpaid tax, unless the organization shows that the failure was due to reasonable cause.
Are Forms 1120-POL filed by political organizations publicly available?
No, Forms 1120-POL filed by political organizations are not required to be made available for public inspection by either the Service or the organization.
DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.
