We've had plenty of PTAs that have had this very situation and none of them have ever had to pay penalties to the IRS. They are usually very nice to us regarding this matter, probably because our boards are just volunteers and human too. It is distinctly possible that they didn't believe they had to file if you didn't make over 25000. But once a 990 is filed, you have to keep filing it and new people may not always get that information.
I do find it surprising that your state office did not help you though with giving you this information or putting you in touch with the state treasurer to assist you. It is also in your annual resources book that is distributed at the beginning of each year to all PTA units. A lot of times these type of things are due to a lack of training and if your previous boards didn't attend the trainings then that would explain a lot.
I have a unit that is attending our training for the first time this year, (we have tried to get them to come and tried to go to them but they've never accomodated)
They are a brand new board, as you are now, and coming to the training. I've also been on the phone with them several times in the last few weeks to help get them going.
Do you have a Council/County/Region Rep?
Things sure have changed! We finally have been given the old paperwork! We went to an accountant and hired her to help. She said sometimes the IRS is more forgiving when you prove that you have solved the problem for the future. We will have her included in our new budget. Thank you Mum24kids and debby for your advice!!
I feel your pain! I am the new treasuer of my PTA and we just finished cleaning up an IRS mess left over from previous years. If you can obtain the necessary information to complete the missing years, you should do it. As far as the penalties, you can appeal. I explained our situation and provided proof that we have "fixed" our problems by implementing new procedures for annual filings. The IRS reviewed our appeal and our penalties were taken away! We are now free and clear. It was a lot of work but we can breathe a sigh of relief.
First off, in dissolving your PTA, make sure you took the right steps in terms of notifying them and spending down your money or transferring it to the state PTA. You want to make very sure that you did not transfer funds inappropriately to the new group, or the new group could get dragged into this by the PTA. Your new PTO is starting out fresh and should have no liability from this situation. (And you did get a new tax id number for the PTO, right?)
But, in terms of doing the right thing--to the extent anyone from the previous PTA is around, it would be nice if they could try to work this out with the state PTA office by giving them any records that may help recreate the financials, because I suspect they are the ones who are going to get stuck dealing with it with the IRS. If you have any correspondence from the IRS, it should be forwarded to state with whatever other records you have to file with them. The local unit should have been filing annual financial reports with the state PTA, so someone at state should have the necessary records. I know you said state has been no help, but your local unit was basically a part of the state unit, so it is going to become their problem.
We are in the process of changing from a PTA to PTO for a few reasons. We found out that the PTA owes a large amount of money to the IRS for penalties because the taxes have not been filed for years. The previous Boards knew about them, but did not solve the problem. We don't feel comfortable with ignoring this. The accountant fees alone will be more than what we have in our account from last year. The State PTA, hasn't been any help. Can anyone give us some insight to this rotten situation we are in? We have started our new PTO and are not proceeding with any PTA activities. One more thing...we don't have the financial paperwork for the years that havn't been filed!!
