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Political organizations
Political organizations (campaign committees, political parties) normally do not pay income taxes to state or federal governments. However, this may change if the political organization engages in activities that constitute non-exempt functions per Internal Revenue Code (IRC) §527(e)(2).
 

What is a political organization?
We follow 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.”
IRC §527(e)
 
What income is not taxable?  
Income received from political activities is not taxable. Also, expenses associated with the performance of exempt functions 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 that is not IRC §527(c)(3) exempt function income 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 §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.” We follow the federal Treasury Regulation relating to IRC §527 in deciding the tax status of these organizations and funds.

 

Filing tax returns
An unincorporated political organization with taxable income should file a personal income tax return under ORS Chapter 316 unless the unincorporated political organization has elected to be taxed as a corporation.

Political organizations that are incorporated or have elected to be taxed as a corporation and are “doing business” within Oregon as defined by ORS 317.010(4) must file an Oregon Corporation Excise Tax Return, Form 20. A minimum tax is required, even if the corporation has no taxable income. For purposes of determining minimum tax, only non-exempt income is included in Oregon sales. Those political organizations that are incorporated or elected to be taxed as a corporation must file a Form 20I corporate income tax return if the political organization has Oregon source 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, we will accept it. Attach a copy of the federal extension to your Oregon return.

 

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.

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