According to the IRS, as a rule of thumb, if an organization has more than $5000 income per year they should follow the steps to be set up as an authorized non-profit entity. (Usually a 501c3 for us.) Note the $5000 is everything coming in to your account, not your "profit".
Once you are set up as a 501(c)(3), then you are required to file a 990/990EZ informational return each year if you make over $25,000. You can voluntarily file every year, and many do choose to do that.
So the $25,000 number only kicks in as a factor AFTER you are a 501(c)(3). A PTO is a type of business. According to the IRS, if you aren't set up as a non-profit and you have income, then you should be filing a business return.
We all know there are thousands of organizations out there that don't do this - I'm just repeating what I've been told by multiple IRS reps over the last few years.
raesmom, we found out we were using the bank's tax id number. So I called the IRS and applied for a new tax id number. It took about 10 minutes on the phone, then we received a confirmation letter from the irs that states the if we would like to apply to receive a ruling or a determination letter recognizing our ptc as tax exempt, we needed to file form 1023/1024(application for recognition of exemption) check into publication 557 regarding tax exempt status. Call the irs at 1-877-829-5500 for general information or 1-866-816-2065 for tax id information. Their website is www.irs.gov. Also to dragonlady according to the irs if you have no activity on for your originazation withing seven years your tax id number becomes inactive. You might want to check into who told you that the number always stays active. And yes you don't have to file federal taxes with the irs unless your organization makes over 25,000 annually. Check with your secretary of state for your states requirements also. Start with the irs first they are very helpful. Ha irs and helpful in the same sentence. that's funny. Hopefully this has helped.
Here in MA we just found out that although you only have to file with the IRS if you make over 25K you still need to file a blank 990EZ form with the state. We were deactivated by the state for not filling out a blank form 990EZ. According to the state we need to fill out a Form PC and a blank 990EZ form to be recognized by the State every year. We have two ID#'s, one with the IRS(doesn't expire) and one with the state for Tax Exemption Status (this expires every five years). I would check with your Attorney Generals Office to find out the requirements for your state. Thats what we did and found out we were not a recognized Public Charity any longer and also that our Tax Exempt Certificate expired 5 years ago. Now we have to go back 3 years and file everything to become active again.
Tax exempt organizations do not need to file a tax return with the IRS if their revenue is less than $25,000/year. (Some states may have different revenue levels.) Technically, you need to file for tax exemption from the IRS to be declared tax exempt; tax-exempt status is not automatic for PTOs (or any other organization).
If you can find it, go back to the original document that you filed with the IRS to get the tax ID number, and see how it was filled out. If you can't find it, then I would call the IRS and ask them to get you a copy or see what they have on file for you. You may not even be using the correct ID number; there's another active post going on now about someone who found out they were using their bank's tax ID number!
We were told in our PTA training that you didn't have to file unless you made 25,000 or more in a year, but I'm no accountant and maybe it's different if you aren't PTA for some reason. There are a lot of people here more experienced than I that can probably better answer you. Good luck!
