We recently did the same thing as JHB, although with maybe not as much work. I pulled out the ones from 10 years ago and pretty much rewrote them to how we were actually running the PTO. I used samples from the web, and I made sure they were consistent with the §501(c)(3) rules (ie basically I made sure they did not mention any type of political or legislative type activities). I presented them to the rest of the board who made some minor changes and then we adopted them. Our by-laws only allow the Board members and the principal to vote, so that makes it administratively very easy.

I struggle a bit with the school district not being more proactive on this issue. The PTO's in our district provide a significant amount of support to the schools, both in time and money. If the PTO's are ever sued, the school district will suffer a lot of negative P.R. because the general public does not recognize that they are not legally part of the school. Also, our state is considering including the PTO's as part of the school district's annual audit. This could really increase the fee the school district pays to its outside auditors when they have to go out and audit every PTO. Perhaps some assistance and support up front in helping the PTO's to achieve tax exempt status would help in convincing the state not to include PTO's in the annual audit.

I had to tell the administration office that I would have to resign as PTO treasurer if I did not get the support from them and the principal to go through this process. I am a CPA (although I specialize in international tax, so I really did not know much about this process) and I work everyday with the IRS, so I really would've had to resign. This seemed to make people appreciate how important this was to get it right!

We ran into a problem a couple years ago, dusted off the old bylaws (that no one had looked at in years) and found them to be woefully inadequate. We found it much more efficient to adopt NEW bylaws, replacing the old ones completely. We formed a committee to look for samples, spent a great deal of time customizing them, created a chart of some of the key differences, such as organizational structure. So we did really look at what we were doing. Once we felt we had a good solution, we called a special general meeting and voted them in.

The slight problem we have now is that we actually have by-laws and we have to figure out how to go from the old by-laws to the new constitution and by-laws by adapting some of the examples suggested by JHB - and still follow up to that point in time what is written in the old by-laws - because it would be a major re-write, and can not be considered as mere revisions. There are many points we need to adjust to IRS compliance.

I would like to know if there is anyone that has gone through this? Or would the best thing to disband and regroup with brand new Articles of Association/Constitution and By-laws written from scratch?

I agree with BPS's comments, although I have to admit we haven't pursued incorporation yet. However, it is on my list of objectives for this year.

The primary reason to incorporate as a non-profit is that it turns your PTO into a legal entity as opposed to a collection of private indiviuals. This lessens the potential liability, especially among the Board members should something go wrong and the PTO gets sued.

As far as the 501(c)(3) process, it's really not that bad. Yes, it's a lot of paperwork and intimidating when you first start. However, that particular branch of the IRS is so helpful it's just unbelievable. Plus, with the Forum as a resource, there are plenty of us who have already done it who will answer questions and share information.

As far as constitutions/bylaws, many are listed on the PTO/PTA websites, and there a lot of those listed under the PTO Management Forum message called "List Your School Website". You are wise to look at what others are using, pick one and customize it. That's much easier that starting with a blank page. Here are some other websites that may help you. Good luck!

Tax Information for Non-Profits www.mapnp.org/library/tax/np_tax.htm

Frequently Asked Questions on Tax Exempt Status members.aol.com/irsform1023/misc/faq.html

IRS Forms & Publications www.irs.ustreas.gov/forms_pubs/fillin.html

Publication 557: Tax-Exempt Status for Your Organization www.irs.ustreas.gov/forms_pubs/pubs/p557toc.htm

Form 1023 Help
A free website designed to help non-profits with Form 1023 www.form1023help.com/

Application for Recognition of Exemption – 501(c)(3) ftp.fedworld.gov/pub/irs-pdf/k1023.pdf

Gaming Publication for the Tax Exempt Organization
(Read this if you are 501(c)(3) and plan Bingo as a fundraiser) ftp.fedworld.gov/pub/irs-pdf/p3079.pdf

Quality 990
(Purpose: to improve the quality of IRS Form 990 reporting by nonprofit organizations) www.qual990.org/index.html

501(C)(3)
Contributions www.irs.ustreas.gov/prod/bus_info/eo/contrib.html

Publication 526 - Charitable Contributions www.irs.ustreas.gov/prod/forms_pubs/pubs/p526toc.htm

after looking through tons of information and with the help of another frequent poster here, JHB, I think we are well on our way. We found out we don't have to incorporate, we can do it with a constitution or articles of association.

I also found an absolutely great web-site, very clear, detailed and well done: members.aol.com/irsform1023/

And I absolutely agree with you. The more I read into this topic and al the ramifications when not 501(c)(3), I feel less comfortable participating in anything as a volunteer or fundraiser for our school because of all the liability issues. I don't think it is the duty of the school to tell their parents organisations that they are not covered or under the umbrella of the school, but it sure would be nice if they would do it.

You are correct that it can be a confusing process. I am in the process of filing for ours right now. I discovered last Spring that our PTO, as well as all PTO's in the district, had never applied for tax exempt status. Most of the research I did was on the Internet. I could not find any examples of Articles of Association, so I decided to incorporate. I purchased a book about nonprofits in my state that was very helpful.
I also consulted with a firm in Seattle who has a link posted on this site.
My personal opinion is that all PTO's with annual gross receipts over $5,000 should apply for tax exempt status. That is the correct legal and ethical answer. It is not fair to ask volunteers to support the PTO and be on the Board without telling them of the potential liability they have for taxes and lawsuits. Most people don't even think to ask - they assume they are covered by the school.
Also, before you use your old employer ID number, you should contact that IRS to see if it is still valid. If you never used it, it could be assigned to someone else now.