If you’re setting up or managing a federal or state political action committee (PAC) or other political organization, there are certain steps you must take to make sure it is properly structured and registered with the IRS, and that you are filing the correct forms at the right time.

This requires thoughtful planning and consideration, and may be best suited to a certified public accountant (CPA) who has experience handling these kinds of unique tax and reporting requirements.

Want to avoid the headaches? Here are a few steps to consider. Get in touch with us when you’re ready to get started.

1. Get a taxpayer ID number (IRS Form SS-4).
2. Notify the IRS of your political organization’s formation. Most organizations will file Form 8871 under Section 527, a notification that allows the PAC to be tax exempt. Form 8871 may need to be refiled if there are any significant changes to the information that was originally reported upon the PAC’s formation. This tax exempt status covers certain activities; every PAC manager must understand the boundaries of these requirements to maintain tax exempt status.
3. Some political organizations do not have to file Form 8871. These include organizations that are required to report to the FEC, to committees of state or local political candidates, or to political parties; and any organization that expects $25,000 or less in annual gross revenue on a regular basis.
4. Certain political organizations are also required to periodically file Form 8872 to report federal contributions and expenditures.
5. A federal PAC is required to file its own Form 990 or 990-EZ if it typically maintains gross annual revenue of $25,000 or more. Part 1-A of Schedule C will also need to be submitted. If the PAC is a qualified state or local political organization (QSLPO), it must only file Form 990 if gross annual revenues are $100,000 or greater.
6. Even with tax exempt status, the PAC may still be subject to tax (e.g., on investment income OR non-exempt net income greater than $100). In this case, Form 1120-POL must be filed annually.

At Barsz Gowie Amon & Fultz, we have experts on staff who have deep knowledge and real-world experience helping PACs and other political organizations navigate the necessary federal and state filing requirements and tax considerations. Contact us to find out how we can help you.