Even if it wasn't an IRS requirement, I highly recommend establishing your group as a 501c3 non-profit. This status has made a HUGE difference when soliciting donations for various fundraising events. Also, many grantmakers do not give money to schools but will give $ to organizations that support schools or provide services to families and children.
The others are correct, if you are bringing in over $5000 per year gross, the IRS expects you to formalize by applying for 501(c)(3) status. The PTA is one particular organization that has filed for that status. There are hundreds/thousands. The only difference in PTA vs PTO (regarding this) is that with a PTA, it may have been handled at the state level for the 501(c)(3) designation and the local chapter was tied into that. Since your PTO is an independent entity with no such structure, YOU have to apply for yourself.
SS-4 first for the EIN. (Well, first, decide on your official name -- we're variously known as "X PTO" or "X School PTO" or "X Elementary PTO" etc.) Then look into incorporation requirements for your state as well as Form 1023 and make sure your articles and by-laws say what the governments need them to.
We are in a similar situation. We have not filed for 501c3 status and have been using the school's EIN. Our school auditors for years have told the school that we should have our own EIN. Can anyone give me advice on the process I need to go through? From what I can find, I need to fill out IRS Form 1023 Application for Recognition of Exemption and then an SS-4 for the EIN. To do these things, I assume we need by-laws in place - which we don't have. Any advice for putting these together also? Thanks.
Short answer: you do need to apply for 501c3. PTO/PTA doesn't make a difference (if you were a PTC, a committee completely run by the school, that's different.)
Note that it's gross revenue, not profits, that the IRS cares about.
Interesting that you got something from the IRS; usually, they wait for you to contact them. Note that you have to be a 501c3 to file 990ez, otherwise you'd be considered a small business and need to (fill out whatever form and) pay taxes.
You might want to call the IRS with your EIN (tax id number) in hand and see what they have on file for you; the fact that they think you should file 990ez indicates maybe some part of 501c3 has already been done ...
i talked to our principal about 501c3 and tax exemption. he thought we should apply for tax exemption but he talked to someone on the school board who said we didn't need to do the 501c3 because we're not a pta. is that true? our pto was converted from a pta four or five years ago and they never used to raise more than $5000/year. now that some of us new parents have become involved and have gotten a new school our profits are $10,000 or so.
our treasurer also received something from the irs about filing a 990ez this year. i told her that it was something that we needed to do and it shouldn't be too involved. she doesn't believe me and thinks that we don't need to do it. i just don't want to be one of those pto's that's operating under the radar. we finally got pto insurance this year because of me and as president next year i would like to make sure everything is legitimate. by the way, i'm secretary right now.
