Purpose of Form 1120-POL
Form 1120-POL Filers
Form 1120-POL is filed by certain political organizations. Per IRS regulations, political organizations having taxable income after deducting the $100 specific deduction for the given taxable year need to complete and file Form 1120-POL.
Form 1120-POL Schedules and Attachments
- Deductions Statement
- Income Statement
- Exempt Function Expenses Statement
- Form 4562, Depreciation Report
- Form 4797, Net Gain/Loss Report
- Schedule D, Capital Gain/Net Income Report
Political Organizations and Taxable Income
Political organizations whose political organization taxable income exceeds $100 for the taxable year must file Form 1120-POL. For the IRS purposes, a political organization is a party, committe, association, fund, or other organization operating for the primary purpose of accepting contributions or making expenditures to influence the selection, nomination, election, or appointment of individuals to any public office. This means principal campaign committees, newsletter funds, separate segregated funds, and any other organizations that fall under the political organization category must file Form 1120-POL if their taxable income for the year exceeds $100.
Exempt Function and Exempt Function Income
A political organization's exempt function includes all of its activities that are related to and that support the process of influencing the nomination or election of any person to public office on the federal, state, or public levels. This also includes nomination or election to the officie of a political organization as well as Presidential or Vice Presidential elector positions. In that same vein, an organization's exempt function income is the total of all amounts received from the sources below that are used for the exempt function:
- Money and property contributions,
- Political party membership dues, fees, or assessments,
- Political fundraising or entertainment events proceeds, and
- Bingo game proceeds, as described in section 513(f)(2).
Nonpolitical Exempt Organizations
For exempt organizations that cannot be classified as political organizations, taxable income is considered to be the smaller of:
- The organization's net investment income for the tax year, or
- The amount the organization spent for an exempt function during the tax year through another organization, either directly or indirectly.
Other Forms You May Be Required to File
Organizations that are required to file Form 1120-POL may still be required to file additional reports and returns with the IRS. These additional forms include:
- Form 8871, Political Organization Notice of Section 527 Status, which must be filed within 24 hours of the date established as a tax-exempt political organization and within 30 days of any material changes to the organization.
- Form 8872, Political Organization Report of Contributions and Expenditures, which is filed by political organizations that file Form 8871 and accept a contribution or make an expenditure for an exempt function during the calendar year.
- Form 990 / 990-EZ, Return of Organization Exempt From Income Tax, which is filed by exempt political organizations with annual gross receipts of $25,000 or more.
Political Organization Accounting Period and Methods
Political organizations must figure taxable income using a regular accounting method. Generally, these methods include cash, accrual, or any other method authorized by the IRS. If the organization decides to change their typical accounting method, they must file Form 3115. Organizations must also set an accounting period, known as the tax year, for taxable income earned during that period. Organizations must adopt a tax year by the due date of their first income tax return.
Form 1120-POL Filing Deadline
The deadline for Form 1120-POL is determined by the organization's tax year end date. It's due on the 15th day of 4th month following the tax year end date. This means organizations that operate on a calendar tax year must file Form 1120-POL by March 15th each year.
Form 1120-POL Extension
If needed, you may file for an automatic 6-month extension to file Form 1120-POL using Form 7004. You must file Form 7004 before the original Form 1120-POL filing due date. Form 7004 only extends your deadline to file Form 1120-POL with the IRS; any taxes owed at the time of your due date will still need to be paid.
Form 1120-POL Late Filing Penalties
Organizations that fail to file Form 1120-POL before their deadline must pay an additional amount equal to 5% of the tax due for each month the return is late. The maximum penalty for late filing of Form 1120-POL is 25% of the tax due; the minimum penalty for a return more than 60 days late is the smaller of the tax due or $135.