IRS Issues Proposed Ruling on
527 Political Organizations

WASHINGTON - The Internal Revenue Service announced Wednesday it is issuing and seeking comments on a proposed revenue ruling concerning the new reporting and disclosure requirements for 527 political organizations. The IRS recognizes that there are many issues for which 527 organizations need guidance. As a result, organizations may rely on this proposed revenue ruling until it is finalized. The IRS plans to issue a final revenue ruling soon after the close of the comment period.

“We encourage the public to submit comments on this proposed revenue ruling,” said Steven T. Miller, Director of Exempt Organizations. “It’s very important to us to provide organizations the guidance they need.”

The proposed revenue ruling, which provides questions and answers about the reporting and disclosure requirements, follows up on a new law approved by Congress and signed by President Clinton on July 1. The law created a new set of rules for political organizations described in section 527 of the Internal Revenue Code. Under the new law, most of these 527 groups will be required to publicly disclose information about their organization, contributors, expenditures and other information.

One of the issues addressed in the proposed revenue ruling is whether organizations with so-called “federal” and “non-federal” election accounts are subject to the notice and periodic reporting requirements of the new law. The proposed IRS ruling takes the position that while the federal account is excluded from the notice and periodic reporting requirements under the new law, the non-federal account is not. Following a thorough review, the IRS proposed ruling makes clear that non-federal accounts are political organizations that must file Form 8871 and Form 8872.

Announcement 2000-72, which contains the proposed ruling, is attached. It will be published in Internal Revenue Bulletin 2000-35, dated August 28, 2000 and will be posted to the internet ( http://ftp.fedworld.gov/pub/irs-drop/ ).

The IRS asks for comments not only on the questions and answers posed in the proposed revenue ruling, but also on other questions concerning the reporting requirements for 527 organizations.

Public comments should be submitted in writing on or before September 8, 2000.

Comments should be sent to:
Internal Revenue Service
1111 Constitution Ave, NW
Washington, DC 20224
Attn: Judith E. Kindell
T:EO:RA:T:P, Room 6033

Comments may also be sent electronically via the internet to *TE/GE-Exempt-1@irs.gov

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