Just a note about incorporating and filing for exemption. I've just heard back from the IRS about our paperwork (which was mailed in January). We now have to file an amendment to our articles of incorporation (another $50 for Ohio) and include the following in the purpose section of our form:
No part of the net earnings of the organization shall inure to the benefit of, or be distributed to, its members, trustees, officers or other private persons, except that the organization shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the proposes set forth in the purpose clause hereof. No substantial part of the activities of the organization shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the organization shall not participate in, or intervene in (including the publishing or distribution of statments) any political campaign on behalf of any candidate for public office. Notwithstanding any other provision of this document, the organization shall not carry on any other activities not permitted to be carried on 1. By an organization exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or 2. By an organization, contributions to which are deductible under section 170(c)(2) of the Internal Revenue Code, or corresponding section of any future federal tax code.
Upon the dissolution of the organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.
This was all already included in our bylaws but the IRS wanted it restated in our ARticles. I guess our state's short little form needed an attachment :0). Also the IRS felt we needed to check box i rather than h to explain how we received our funds (I forget what page that was on). I'm not sure how the NPN guide told us to check it but that's how the IRS thinks we should check it.
Also, the IRS agent I spoke with admitted the process was a little complicated...DUH...........!
I have the "Charter" form that our State requires for nonprofit's for incorporation. I also plan to call the State Dept. of Treasury and make sure what I need for the incorporation. I've read the instructions for filing but as usual they crosstalk themselves. I honestly would like the President to draw up a constitution and to beef up our bylaws as right now there's not much to go by. I'm thinking more of having things set for the future of this PTO not for just right now and I think having a constitution and more in depth bylaws would be beneficial. There's also the fact that I'm just the secretary and would like to see someone else put some thought into this organization's future than just me. Thank you all for you help. I'll keep you up on what's happening. Tomorrow's board meeting begins the discussion and hopefully the start of getting it finished! yeah!
PTO Slave - obviously, do whatever you think best for your group. However, you might want to think some more about how you plan to craft the Constitution/Bylaws. The boiler plate version of the Articles of Incorporation is a very basic one page form with name, address, dissolution clause, initial agent, etc.
A constitution usually has a lot more "meat" - your purpose, info on meetings, elections, what the offices and responsibilities are, etc. You can craft the constitution, make sure it also contains the pieces needed by the State and file it as your AOI. But then, if you make any changes to the wording in the future (maybe you change what constitutes a quorum or remove a standing committee) then you've just changed your AOI and need to refile it and pay a fee. (I think only $20 in your state.)
As I said, we stopped short of finishing the process. But that's why we were leaning towards just writing the minimum the state required as an AOI and putting everything else in the bylaws.
Note - I'd love to hear from an expert (lawyer?) - can an organization have an Articles of Incorporation AND a constitution? (Regardless, they'll still have bylaws.) If anyone knows - share with us.
I have successfully completed the 501(c)(3) application for one PTO before I knew about incorporation. We had to draft a formal Constitution that is very redundant to our robust Bylaws, but the IRS looks at the Constitution for some of the stuff that we put in our Bylaws, and we wanted to pass without trouble. I am now completing the process for another PTO and the first thing we did was download the incorporation application from our state's website. It is WAY EASIER to complete our state's Articles of Incorporation form (Michigan) than to draft and get approved a whole Constitution. In fact, it took about 3 Y/N questions, $20, and 24 hours of turnaround time to get our PTO incorporated. The IRS accepts the AOI in place of a Constitution. If your bylaws need updating, do it, but I wouldn't recommend writing a separate constitution unless you absolutely have to. Take a look at your state's application before you make any final decisions. You might be plesently surprised.
Maybe it wouldn't seem like such a hassle to write both a constitution and Bylaws if you were starting a PTO for the first time and you kept consitution issues and bylaws issues separate, but who wants to manage two governing documents if you don't have to? And can anyone give a really good definition of the difference between the two documents anyway???
Also, according to two separate IRS reps I've spoken to, our PTO is considered a brand new organization as of our incorporation date as far as the IRS is concerned. So, instead of having to dig through 3 past years of financial info and make sure all the numbers balance, I can treat the PTO as though it just started. That means the financial info is based on two years of future projections (much easier to do in my opinion).
And I agree with Tim - the application process took coffee maybe, but no tylenol. Good Luck!!!
I still plan to have the PTO President draw up the constitution or whatever he chooses to call it (I called it the Articles of Organization but he may not) and beef up our bylaws as they are on the scant side now. The meeting is next week and I plan to present the need for Incorporation and then for the 501 (c) (3) filing after the incorporation is done. The accountant spoke to the VP who doesn't want to go through all this and I always have to either talk to the person myself or research it myself (originally from Missouri - the Show Me State - hehe) and I still feel that the incorporation and then the 501 (c) (3) is the way to go so hopefully what I learn and have learned on this forum and from reading the paperwork for filing I'll be able to sway the board to see it my way. And you're right it does not have to be a headache. The only headache I've really gotten from it is from a few of the member's I've tried to explain the reason for it to....
