Taxation of Trade Associations, Labor Unions, and Other Exempt Organizations that Conduct Political Activities


A tax-exempt organization that conducts exempt function activities is subject to tax on amounts it expends for such activities. The tax is imposed at the highest corporate rate, on the lesser of the organization's net investment income or the amount of exempt function expenditures.

If the exempt organization sets up a separate segregated fund, however, that fund will be treated as a separate political organization and taxed under section 527.

Additional information