The Internal Revenue Service has requested our assistance in making political organizations aware that the Internal Revenue Code, under certain circumstances, requires political organizations to file income tax returns. Therefore, the following general information is set out below relating to your potential filing requirements.

"Section 527 of the Internal Revenue Code of 1954 provides that political organizations are exempt organizations for Federal income tax purposes. However, any amounts received in the ordinary course of trade or business or any investment income received by a political organization, such as interest, dividends, rents and royalties, plus the excess (if any) or gains from the sale or exchange of assets over the losses from the sale or exchange of assets, are includable in income for Federal income tax purposes."

"Taxable income of a political organization is the excess (if any) of the political organization's gross income for the taxable year (not including such exempt items as contributions, membership dues or proceeds from certain fundraising events) over the direct expended incurred in earning that income. A specific deduction of $100 is allowed against taxable income."

"Thus a political organization is subject to Federal income tax, and is required to file a return, if its taxable income exceeds $100."

"Political organizations that are subject to Federal income tax under section 527 of the Code are required to file a Form 1120-POL on or before the 15th day of March following the close of the calendar year; returns made on the basis of a fiscal year must be filed on or before the 15th day of the third month following the close of the fiscal year."

"Form 1120-POL, as well as assistance in completing the form is available at local offices of the Internal Revenue Service."

For further information concerning the Code, you should consult the Internal Revenue Service, Department of the Treasury, PO Box 20541, Greensboro, NC 27420.