In Texas, you file for state sales tax exemption with the Office of the Comptroller of Public Accounts. You would have to check with them on what the eligibility rules are.
Exemption FAQ
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I'll copy in some information below that should help you understand. This from a similar post I answered awhile back. Post again if you have more questions.
There are helpful guides and tools for purchase via PTO Today. However there's also a lot of free help on these message boards. I know it will seem overwhelming at first, but what I'll list below is the "condensed" explanation of the different pieces. Start getting familiar with the terms and general concepts. Then come back to us with specific questions.
While known for activities like supporting programs and volunteer recruitment, a PTO is a non-profit business. To run a PTO properly (legally) here are the steps:
IRS Income Rule of Thumb If the PTO grosses more than $5,000 per year, it is supposed to formalize by applying for 501(3)(status).
Example: PTO fundraisers bring in $8,000 with $3,500 expenses, leaving $4,500 for programs. The gross income amount is $8,000. They should file for 501(c)(3).
Steps in Creating PTO (Filings, 501(c)(3), Exemptions)
1.
Obtain EIN from IRS
.This Employer Identification Number (EIN) is your PTO’s 9-digit taxpayer identification number, similar to a person having a social security number (SSN). By itself, this has nothing to do with being tax exempt or non-profit. Nor do you necessarily have employees.
Process: Simple IRS application completed as an easy interview-style online form, over the phone, or mailed as a 1 page SS4 form. Very simple. No cost. Note - even if form asks for SSNs of leaders, you do not need to furnish those.
2. Develop bylaws for your organization. These are the rules by which the organization operates, and you want to create these with an eye towards meeting IRS requirements and state incorporation benefits.
Process: Gather sample bylaws from organizations similar to yours that have good internal processes and already have 501(c)(3) status. Customize to meet your organization’s needs.
3. Explore Incorporating as a Non-Profit in your state.In most states incorporating as a non-profit involves creating a simple Articles of Incorporation (AOI) for which they often have a short one-page template, filling out some minor paperwork, and paying a small fee (maybe $25-$50). In some states it may be more expensive/complicated and you need to weigh the value.
Primary benefit is that it turns your organization into a single legal entity rather than collection of individuals - which reduces personal liability for the officers.
Process: Find your state agency that governs this, review rules, submit paperwork and fee.
4)Apply to become a qualified 501(c)(3) organization with the IRS by filing form 1023. Benefits include: § Increased credibility § Donations to your organization are tax deductible § Exempts your fundraising revenues from federal income tax § May be required for grant applications § Probably required for sales tax exemption
Process: Fill out application form 1023 and include $750 fee. This is a pretty intense form, but many of us have successfully filed it.
5. Apply for sales tax exemption in your state. § Exempts you from paying sales tax on qualified purchases for the PTO § Exempts you from having to collect and remit sales tax on taxable items the PTO sells (t-shirts, fundraisers, concession stand, etc.). § Note – this may not exempt your from everything. Rules vary by state.
Process: Find your state agency that governs this, review rules, submit paperwork. Usually very simple and requires no fee. But you may have to be a 501(c)(3) first.
:confused: We are a medium size school and only do 2 big fundraisers a year along with a fall festival and spring dance. My question is do we need a 501 c 3 we do bring in less then than $5000 per year, and how do you file for a tax expemtion we are in Texas. So are PTO's non profit and if so how do we file that also. I know thats is a lot of question but we what to do everything right and need alot of help and we are getting about 50 thousand different stories on what we are supposed to be doing.
