Couple of things Lundy,
First, the IRS non-profit designation and your state's tax exemption are two different animals. Some states require a group to go thru the IRS first for it's determination then to the state for the exemption. (CT is that way). I HIGHLY recommend taking the time and filing for IRS determination. I personally know of an organization that has been in existance (off and on) since 1935 but just offically filed organizing documents last spring. On recieving their non-profit determination from the IRS, they became accountable from the date they became official. The past was waived via a different chapter of the Internal Revenue Code.
Second, as Critter put it, saving money isn't a bad thing for a non-profit. The organization must show what the money is going to be used for, ie., major playground equipment.....
We have only been under the school districts EIN number since mid Aug 2003. Before that I wasn't involved with the paret's group much. I went to a couple of meetings last year but had nothing to do with money or board issues. Would I be held resonsiable for issues I know nothing about? I wasn't even living in this town when they raised the $70,000.00 for the playground and it was in a diffrent account that has since been closed out after the playground was put in.
My 2 cents: If your money has been raised under the district's tax number, then the district has been very generous letting you, volunteer parents, decide how to spend the district's money that you have raise on the district's behalf. And I suppose that some day, they could chose to take back control over their money.
What you describe is not the most common definition of "PTO", but since there's no official rules of how PTO's can operate, yours is just a unique situation, not necessarily bad. However, if your parents would like more control over the way they contribute to the school, how the money they raise is spent, and what fundraisers and projects they embark on, then it might be time to investigate the most common form of PTO - the independent parent group. The independent parent group will apply for its own EIN (call the IRS and have a new number over the phone), write its own Articles of Incorporation and Bylaws, establish its own budget at the approval of its members, and maybe even incorporate in their state and apply for federal 501(c)(3) charity designation. If you believe your group had its own EIN at one time, then you might have once operated as an independent parent group.
Regarding your question about how much you put in your checking account...put in as much as you want. There's a common misconception that "non-profit" means you can't make a profit or save money. Not true. Many (virtually all??) PTO's keep money in their accounts from year to year to fund long term projects, or have operating funds at the start of the school year. That's good business practice, not illegal.
I would concur with dragonlady here. You need the advise of a CPA or a tax lawyer to handle all the various issues raised here.
I think though that we need to clearify some things, you may not be in any trouble, I see nothing in your posts yet to lead me to think you are. You have been operating under the district 501(c)(3) for some time. If anyone has a problem it will be the district. One potential problem is that $70,000 you raised. Was it reported on the districts 990's? I would bet it wasn't. Again another growing problem I am seeing and I hope school districts fix before some hot shot at the IRS figures this one out. Again, this is something a CPA or tax attorney can answer for you.
Of greater concern will be your state laws. There are generalities between states but specifics can get rather confussing. Like Ohio has a sales tax rule that in my mind is totally nuts, but what I think wont change law [img]smile.gif[/img]
What I would do at this point is seek the advice as above, even if I had to pay for it, try your legal aid also for pro bono advice. Once I knew the law I would then talk to who ever is in charge of all this at the district level, but feel it out first they may bulk at the idea of having to find out from all those PTOs how much money they took in under their name. You could be opening a hot political issue. In my case I know several of our school board members on a personal level and I can discuss things like this with them without opening the can, if you have such a relationship use it, if not try to develop it.
I would try to find a CPA parent in your school or see if you can find one to donate their time. We are at the tail end of a similar situation. When we took over this summer we found out no state forms or taxes had EVER been filed. Also our Tax Exempt Certificate had expired 5 years ago. First we counted the Dept. of Revenue (we are in MA) and immediately applied for a renewal of our Tax Exempt Number. There wasn't any fee involved and it took about 3 months to get it back. But we no longer have to use the schools. We also found out that since no forms were filled out we needed to go back 4 years and fill out taxes and Form PC (that might be unique to MA) for each year. That is why we got an accountant involved, the form PC is 13 pages long!! We have to send all that info. along with our original Articles of Organization and our bylaws to the Attorney Generals Office and $35 fee for each year. We are hoping they do not charge us any penalty fees for continuing to operate as a Non-Profit group when the state had deactivated us.
Good Luck and try to get professional help. The accountant we found donated her time for getting us back us to par. Going forward though she will charge us $200/year.
Dave,
Thanks for the help ... your more help then I would ever get from anyone at the school. I ask questions and they say "I don't know, but when you find out let us all know". We are a VERY small group, 425 kids, and a parents group of 6 on a good night. We have our board members (4 of us) and a couple of people here and there. If I want to know something I have to do the tracking of the information myself.
It is the EIN # that we share with the school district, not just our grade school the whole district. We have a checking account, savings and a CD all under this #. From what I can see the parents group has not filled any tax type papers in 6 or more years. They raised over $70,000.00 for a playground and didn't do anything about taxes or filling. I don't want to be the one held responiable for everything but if I don't do it things don't get done. I'm going into my second year being invoved but my first year as president. I was not voted in I was handed it because noone wanted it and if I didn't take it our group would be gone! Not sure what direction to go in first.
