It sounds to me like we are talking about two different tax ID's. The school in question seems to be using their District's federal tax ID (EIN) on their checking account, which makes them part of an income tax exempt organization. The sales tax exemption number is completely separate and is issued by the state, exempting the holder from paying sales tax.
The PTO can apply for its own EIN (see IRS form SS-4 - they will even issue the EIN over the phone) and use this to open new bank accounts. Then there are the decisions about incorporating/applying for tax exempt status (501(C)(3))/ applying for a sales tax exemption, etc
This of course does not solve the criminal proceedings problem - I agree with a previous poster - Good Luck.
You should check the laws in your state on sales tax exemption and what's required.
But basically any organization that gets exempt from sales tax has met whatever the qualifications the state requires and agrees to follow the rules of use of such an exemption.
Those misusing an exemption (at least in our state) are subject to criminal charges ranging from misdemeanors to felonies, depending on the amount involved.
Like lots of other PTO's it was very common in our district for organizations to use the school's ID. Ususally the principal knew - even provided the info. But it was never authorized by school district, and the district is really cracking down on offenders this year in our area.
For us to use our school's ID, we need to give THEM the funds and one of the school staff authorized to make such a purchase would have to handle it.
I belong to two PTO's. Both are separate organizations and have their own bank accounts. One is very formally set up. We have our 501(c)(3) and state tax exemption. The other one has very little revenue and operates more informally and is not tax exempt. When we buy something, we pay tax on it. If it were something big for the school, we'd consider granting them the funds and letting them buy it if the 8+% tax would make a difference.
The school is the one that gaves the PTO their Tax ID number to use, and gives us new letters everytime the school renews their tax ID number. As far as the criminal case goes the school board was notified immediately after we first discovered the possibility of theft. The administration was the ones that actually confirmed much of the information that was handed over to the authorities. The school board has already said they thought it would be best for the PTO to handle the situation with the authorities, on our own.
Now I'm really confused if using the schools tax ID number is not legal then it would make sense that we need to get our own tax ID number, but what are the chances of that happening while a criminal proceedings of theft is going on? Also what do we do in the mean time, do we change all of our accounts to a non tax exempt status? Are we now in legal hot water for using the schools tax ID #?
One issue that isn't clear is if the School Board KNOWS that the PTO is using the school's tax ID number.
What I've seen most often is that both tax officials and the school district administration will usually state that school organizations are NOT allowed to use the school ID number.
A lot of organizations still do, and often the principal goes along with it. But the fact is that it's an unauthorized use.
Unfortuneately for your Board they really do not understand. As you are under their FEIN#,you are a part of them and your must consolidate your numbers with theirs. In addition, you are subject to oversight by the Board and the Board needs to be actively involved especially if their are criminal proceedings. If they were involved actively or by mere negligence from lack of oversight the Board members can be held responsible and liable. Your Board needs to wake up or be replaced.
In my experience, most Boards do not want to appear that they wish to control support associations such as yours. However they do want to be involved and informed as to your actions so that it does not interfere with the organization as a whole. For instance,they do not want the support organization approaching donors, which may lead to the illusion that the organization is unorganized.
Last of all, I was involved in an organization actually chose not to be affliated with the organization they supported and organized separately. They felt it gave them more freedom to do as they wished. However, they could not select a name that would affiliate them with the organization they supported, even though they publicly stated so.
I would take your concerns to the Board. It is their responsiblity to address this.
I have to agree with critter, using the schools number really does tie you in to your school. we had this the first four months we were started. I would be afraid that the school in tight times might want that money, i know when i took over our group as the first leader, the principal had me get our own number and open our own account asap. we had some money that was in a "school" account that she was afraid the district would take even though it was earmarked for us...be careful....
"When you stop learning you stop growing."
