New IRS Form for PAC. There is a new IRS Form for a PAC, which stands for Political Action Committee. See IRS Code Section 501(c)(4).
The Legislation
Congress enacted legislation at the end of 2015. Congress added section 506 to the Internal Revenue Code. Section 506 requires an organization to notify the IRS of its intent to operate as a section 501(c)(4) organization.
501(c)(4) & 501(c)(3)
A 501(c)(4) organization may be known as a political action committee or a PAC. In Florida, they may be known as ECOs or electioneering communication organizations. Contributions to PACs are generally exempt from taxation to the PAC. However, many taxpayers believe that PACs and charitable organizations organized under section 501(c)(3) are exempt from tax. This is not the case because they may be subject to income tax on their earnings if they sell products, or the Net Investment Income tax if they have passive income from stocks, bonds or investments. Furthermore, charitable organizations may be subject to state sales taxes if they sell products.
FEC & Florida Elections Commission
The federal elections commission and the Florida elections commission are the entities that make rules regarding elections and campaigning in Florida and at the federal level. Depending on the campaign, a PAC or ECO could be subject to the rules of one or both. One notable rule is that a PAC cannot accept contributions from a non-US person.
IRS Form 8976.
The IRS has developed a brand new form – Form 8976 – that political organizations and political action committees should use to provide this notification. Form 8976 may only be submitted electronically. The Form 8976 – Electronic Registration System allows organizations to complete the notification process, keeps account information current and enables organizations to receive secure, digital communications from the IRS. A user fee of $50 must be submitted to Pay.gov to complete your organization’s notification.