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Political organizations (campaign committees, political parties) normally do not pay income taxes to state or federal governments. However, this changes if financial activities go beyond normal political operations.
What is a political organization?
The Oregon Department of Revenue follows the federal definition of a political organization:
“ . . . a party, committee, association, fund or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.” (Internal Revenue Code, Section 527(e).)
What is an ‘exempt function?’
It is the political function of influencing or trying to influence the selection, nomination, election or appointment of a person to federal, state or local public office (or to an office in a political organization). This includes the selection of presidential or vice-presidential electors.
What income is not taxable?
Income received from political activities is not taxable. Also, political activity expenses are not deductible. Examples of nontaxable income include contributions of money or other property, dues or fees from members of a political organization, money from political fund raising or entertainment, or money from the sale of political campaign materials. However, these receipts must be separated for use only in the organization’s exempt function.
What income is taxable?
Income earned by investments is taxable. Examples include interest earned on deposits, dividends from contributed stock, rents or royalties, or gains from the sale of contributed property. Exempt-function income that is taxable for federal purposes under IRC section 527(i)(4) for failure to timely file Form 8871 is also taxable by Oregon. Expenses in earning this income are deductible. Some political organizations may operate as a dual-purpose organization or have dealings using “segregated funds” or “newsletter funds.” The Oregon Department of Revenue follows the federal Treasury Regulation relating to IRC Sec. 527 in deciding the tax status of these organizations and funds.
Filing tax returns
An unincorporated political organization is treated as a corporation under both federal law and Oregon law [ORS 316.277(1)]. If your organization is unincorporated, you are not required to file an Oregon tax return unless your organization has taxable income. If it has taxable income, file Form 20-I, the Oregon Corporation Income Tax Return.
Organizations that are incorporated must file an Oregon Corporation Excise Tax Return, Form 20, if they:
- Have investment activity; or
- Have exempt-function income that is taxable under IRC section 527(i)(4) for failure to timely file Form 8871.
A minimum tax is required, even if the corporation has no taxable income.
An Oregon tax return must be filed within one month of the federal due date. However, if you get a federal filing extension, Oregon will accept it. Attach a copy of the federal extension to your Oregon return.
Taxpayer assistance
General tax information
Salem: 503-378-4988
Toll-free from an Oregon prefix: 1-800-356-4222
Asistencia en español
Salem: 503-378-4988
Gratis de prefijo de Oregon: 1-800-356-4222
TTY (hearing or speech impaired; machine only):
Salem: 503-945-8617
Toll-free from an Oregon prefix: 1-800-886-7204
Americans with Disabilities Act (ADA): Call one of the help numbers for information in alternative formats.
E-mail: corp.help.dor@state.or.us
Updated October 2007
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