Question: Fuindraiser Funds Paid to School went to PTO account

How serious is it that our fundraiser has been using the school's tax exempt status for our fundraiser, so there hasn't been taxes taken out of our profits?. We gross about 25 to 30 thousand a year. The Fundraiser organization has been making the checks out to the school, but the checks issued have been deposited into the PTO's non exempt bank account for at least the past 4 years. Can this be resolved without paying back taxes? The school is not after the money. This was just caught because I used to be a bank auditor and am now the PTO treasurer and was doing an internal audit of our books.

Asked by Anonymous

Answers:

Advice from PTO Today

Craig writes:
There are lots of PTOs in the same situation. The IRS has told us in the past that they are much more interested in getting PTOs to file for tax-exempt status than to penalize them for past actions. As long as you initiate the process of obtaining tax-exempt status before being contacted by the IRS to do so, you are likely OK. Read the article 501c3 for PTOs for information on the process, and I would strongly recommend our PTO Startup Toolkit. It walks you through the application (IRS form 1023) question by questions.