Form 8872: Who Must File and What to Report
Understand the financial disclosure and reporting obligations for Section 527 political organizations to ensure IRS compliance and public transparency.
Form 8872, the Political Organization Report of Contributions and Expenditures, is a document filed with the Internal Revenue Service (IRS). Its function is to create public transparency by disclosing the sources of money an organization receives and detailing how that money is spent. This reporting mechanism allows the public to see the flow of funds through groups that seek to influence elections or political appointments, ensuring a degree of accountability.
Who Must File Form 8872
The primary entities required to file Form 8872 are political organizations operating under Section 527 of the Internal Revenue Code. A Section 527 organization is a group created to accept contributions or make expenditures for influencing the selection, nomination, election, or appointment of individuals to public office. These organizations are tax-exempt, and the filing requirement is triggered once the organization has, or expects to have, annual gross receipts of $25,000 or more.
Before filing Form 8872, a new organization must notify the IRS of its existence by electronically filing Form 8871, Political Organization Notice of Section 527 Status, within 24 hours of its formation. Following this, the ongoing requirement to file Form 8872 provides periodic updates on the group’s financial activities.
Certain organizations are exempt from the Form 8872 filing requirement, including political committees that file similar financial reports with the Federal Election Commission (FEC). Another exemption applies to qualified state or local political organizations (QSLPOs). A QSLPO is a political organization that limits its activity to influencing state or local elections and is required to report similar information to a state agency, which then makes those reports public.
Required Information for Form 8872
Completing Form 8872 requires gathering specific details about the organization’s financial transactions. The main part of the form requires basic identifying information, such as the organization’s name, address, Employer Identification Number (EIN), and the date it was formed.
The financial data is reported on two separate schedules. Schedule A, Itemized Contributions, is used to report detailed information for each contributor who gave an aggregate of $200 or more during the calendar year. For each of these contributions, you must report the contributor’s full name, mailing address, employer, and occupation, along with the date and amount of the contribution.
Schedule B, Itemized Expenditures, requires similar detail for each payment made by the organization that aggregates to $500 or more to a single payee during the calendar year. For each reportable expenditure, the organization must provide the recipient’s name and address. A description of the purpose of the expenditure, such as “media buy,” and the date and amount must also be documented.
After completing Schedules A and B, the total amounts are transferred to the summary section on the first page of Form 8872. An authorized official of the organization must sign the completed form, affirming that the information provided is true, correct, and complete.
Filing Deadlines and Procedures
The frequency and due dates for filing Form 8872 depend on whether it is an election year. Organizations can choose to file on a monthly or quarterly basis during an election year. Monthly reports are due by the 20th day of the following month. Quarterly reports are due by the 15th day of the month following the end of the quarter, except for the third quarter report, which is due October 15th.
In addition to periodic reports, special reports are required around election times. A pre-election report must be filed 12 days before a general election if the organization made contributions or expenditures in connection with it. A post-general election report is due 30 days after the general election. In a non-election year, an organization can file semi-annually, with reports due by July 31 and January 31 of the following year.
As mandated by the Taxpayer First Act, all Form 8872 reports must be filed electronically. Organizations must use the IRS e-file system, accessible through the IRS website. To file, the organization needs a username and password, which are provided by the IRS after the initial electronic filing of Form 8871.
Public Disclosure and Penalties
The IRS is required by law to make these forms, including the detailed schedules of contributors and expenditures, available for public inspection. This information is posted on the IRS website, allowing anyone to search for and view the financial activities of Section 527 organizations. This public disclosure is the central purpose of the filing requirement.
Failure to file Form 8872 on time or filing an incomplete or inaccurate report carries penalties. The penalty is calculated as a percentage of the total amount of contributions and expenditures that were not properly disclosed. The penalty rate is 21% of the unreported amounts.
This penalty is imposed directly on the organization. Given that the penalty is based on the volume of financial activity, it can become substantial, particularly for organizations with large budgets. The IRS enforces these penalties to ensure compliance.