Federal Tax Return Filing Requirements for State PACs

State RPAC committees must comply with the annual IRS information and tax return filing requirements.  Generally, a state PAC must file Federal Form 990 if it has gross receipts of $25,000 or more, or in some cases (that is, if it files reports with a state campaign finance agency that requires reporting certain information about PAC contributors and expenditures), if it has gross receipts of $100,000 or more.  If the PAC has taxable income of more than $100 it must also file Federal Form 1120-POL and pay any tax due. Taxable income for a PAC is income other than contributions made to the PAC, such as investment income.  Serious penalties for failing to file Form 990 may be imposed, including fines of up to $10,000 for each year the PAC fails to file Form 990 and 5% of any tax due for failure to file Form 1120-POL.  State PACs must also file with the IRS Federal Form 8871 when they are formed and may be required also to file periodic reports on Form 8872 unless they are exempted from that requirement, which most State PACs will be. State PACs should also check on and comply with any state tax filing requirements as well.

State PACs should consult with their tax advisers for more information. See also the links below from the IRS website addressing these federal tax-filing requirements for political organizations, including State PACs:

• http://www.irs.gov/Charities-&-Non-Profits/Political-Organizations/Political-Organizations-Annual-Income-Tax-Returns-(Form-1120-POL)
• http://www.irs.gov/Charities-&-Non-Profits/Political-Organizations/Annual-Information-Returns-Section-527-Political-Organizations
• http://www.irs.gov/Charities-&-Non-Profits/Political-Organizations/FAQs-about-the-Annual-Form-Filing-Requirements-for-Section-527-Organizations

For more information contact Ralph Holmen, RHolmen@realtors.org or 312 329 8375.

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