I am having trouble convincing our members we should get 501c3 and Incorporation. The problem is, no one wants to read the info I passed out and they do not understand what I'm trying to get them to vote on. They say NO based on the fact that it costs money and they think we should not spend. HELP!! I have answered questions to the best of my ability. I am now in the process of making a PowerPoint Presentation in hopes I can get my point across better at next meeting April 14th. Can anyone give me advise on how to deal with members who refuse to educate themselves and vote based on spending money? Our executive board all agrees we should do this. Those who vote against it are not reading any info I gave and don't listen to me when I speak. We grossed over $8,000 so far this year. We are small but my goal all year has been to make the needed changes so we can grow to make big money like many other PTO's have. I have worked so very hard to improve our by-laws and research 501 to know everything possible that I feel upset no one takes the time to learn the facts before voting! We are rehashing this for a final official vote soon. Advise?!
Andi - I called the IRS to double check and the $5000 rule of thumb isn't going to change. You don't need to file the 1023 application if following all the rules for a 501(c)(3) but with that low of gross receipts. But the organization does need to file the new 990N postcard filing.
One note - the $5000 "gross receipts" test is a little more complicated. I was just giving an abbreviated answer when I posted that. You can find the whole thing in IRS publication 557. I'll edit my answer above to include that so there's no confusion.
I'm not sure your correct on that point. My understanding of the new tax law that will apply for this tax year is that there will no longer be such a thing as "informal" status. You will either be taxable or tax exempt. Starting next year everyone will have to file a 990 no mater ho much money you bring in and also my understanding is that if any anytime your balance exceeds $5000.00 not an average. I could be mistaken but I have a friend who works for the IRS and one of our school board members works in the attorney general's office and they both said the same thing. Better safe than sorry.
You need a tax ID number (EIN) for the bank account in the name of the PTO - if it's an independent entity. Don't use someone's social security number. See above (#1). Very easy. You don't have to be a 501(c)(3). Note - if the PTO is part of the school, more like a specialized committee, then the school might manage the funds rather than having a separate bank account.
Then you still do #2 (bylaws/set up your organization), maybe even check on #3 (incorporation).
From that point it depends on your size ($$). Generally, if you bring in more than $5000 per year, the IRS expects you to formalize and apply for 501(c)(3) status by filing the 1023 application form. The $5000 is everything coming into your accounts - not what's left over. If your gross receipts are less than than $5000 and you are following all the rules of a 501(c)(3) type organization you can exist by default as a tax-exempt entity in the eyes of the IRS.
Note - $5000 gross receipts test is actually a bit more complicated. See publication 557.
You should still have strong bylaws, good cash handling rules, fair voting - all those type things.
What happens if you have not 501C3 status and you want to start a PTO? How do you get a bank account? Under who's name? Do you have to get a dba?
Help! This is a brand new group for a brand new charter school who is not allowed to have a bank account of its own. The school has to deposit funds into the school district's account.
