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)].
Income received from political activities isn’t taxable. 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.
- Money from the sale of political campaign materials.
However, these receipts must be separated for use only in the organization’s exempt functions.
Income that isn’t from an IRC §527(c)(3) exempt function is taxable. Examples include:
- Interest earned on deposits.
- Dividends from contributed stock.
- Rents or royalties.
- Gains from the sale of contributed property.
Exempt-function income that’s taxable for federal purposes under IRC §527(i)(4) is also taxable by Oregon. Expenses accrued while earning this income are deductible. Some political organizations may operate as a dual-purpose organizations or have dealings using “segregated funds” or “newsletter funds.” We follow the federal Treasury Regulation relating to IRC §527 in determining the tax status of these organizations and funds.
Exempt functions are 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.
An unincorporated political organization with taxable income should file a personal income tax return under ORS Chapter 316, unless the 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 must file an Oregon Corporation Excise Tax Return
, Form OR-20
A minimum tax is required, even if the corporation has no taxable income. Only non-exempt income is included in Oregon sales when determining the minimum tax. Political organizations that are incorporated or that elect to be taxed as a corporation must file a Form OR-20-INC
corporate income tax return if they have Oregon-source taxable income.
An Oregon tax return must be filed within one month of the federal due date. However, we accept federal filing extensions. Include a copy of the federal extension with your Oregon return.