Critter - Thanks for the reply. In doing more research, I found something on PTO Today that said how to search IRS files for the nonprofit status (something to do with Publication 78, I think). I was able to find our organization listed there. So the letter from the IRS will just be confirmation that we are a nonprofit.
In your reply to my 1st post, you said: "If you're not a 501c3, and you're not incorporated with the state, and you want to get set up legally as a non-profit organization. . ." I just wanted to check - does this mean that we have to be incorporated with the state to be legal? After reading so many tax documents & stuff, my brain is starting to get cluttered with all the legalese & it's hard to keep things straight! [img]smile.gif[/img]
Jenny - yes, you can be a federally-registered 501c3 and not be incorporated in your state. That's two different things. If you're not sure, if you can't find your PTO in the IRS's database (though that can be hard because of the variability in how an organization's name might have been registered), and you don't see any evidence of correspondance with the IRS in your treasurer's files, then it's highly likely that your PTO is not a 501c3. What tax id number was used to open your PTO's bank account? Go to the branch and ask the manager. Then call the IRS and ask them if it's registered to your PTO. They probably won't tell you who it is registered to if it's NOT you, but they can tell you that it's not yours. In our PTO, I found out we were using the school's own tax id number. Most people who haven't done any research just assume a PTO is tax exempt and non-profit by virtue of being. It takes more than just existing to be a legal entity unless you're really really small (less than $5k gross rev).
If you're not a 501c3, and you're not incorporated with the state, and you want to get set up legally as a non-profit organization, start by incorporating in Michigan (costs $20 and is a very simple form). Do this first. That establishes a brand new organization (even though you may have existed for years). That's good. Then when you are ready to file for the 501c3, complete the application as a brand new group. That actually simplifies the application a bit.
I am the new treasurer for a PTO in Michigan, and I have found reading these boards to be extremely helpful. In looking through the PTO Today archives, I found an article called "Law & Order--Are You Legal? How to Find Out". We have no documentation of anything legal, & I've been trying to find out what our status is. I also was told we are a nonprofit with tax-exempt status. I am waiting for a letter from the IRS confirming our status with them.
In the article I mentioned, it describes how to check online with your state's web site to see if you're incorporated. I did this, & did not find our PTO listed. My question is, is it legal to be registered with the IRS (as nonprofit & tax-exempt) but not registered with the state as incorporated? If we have never filed a tax return with the IRS (no gross receipts over $25,000), does that mean we don't have to file with the state?
I'm just trying to figure out where we stand. I'd appreciate any advice or help you can give. Thanks!
Jenny
I'm assuming the vendor you are dealing with is asking for a "tax exempt number" because some states, maybe even the state where the vendor is located, do indeed issue separate numbers. You can check with your state's commerce office for confirmation, but I wonder if you simply explain to the vendor that your state doesn't even have sales tax, then maybe your EIN will be enough for their needds. However, you mentioned earlier that you are working with a scrip company...it's been my experience that your PTO will have to be a federally-registered 501c3 for your group to participate with a scrip company. Being an exempt charity seems to be a basic requirement for scrip (probably has something to do with the scrip vendors then being able to claim their discount as a charitable contribution). Good luck
Wow! You guys are a mine field of information! I can't thank you enough for the help. I'm certainly going to have to talk to the IRS, I'm still confused. I know we are not a separate entitiy (legally) from the school. We do have an EIN though, and that's what they've been using all along. As we don't have state sales tax here, this issue obviously has not come up before. However, a company I'm dealing with wants our EIN plus our tax-exempt number, which is what got all this started in the first place, as I have one and not the other.
Our business manager isn't as smart as I thought since he doesn't think our public school is a charitable organization.
So, I'm off to call the government and see if they can't figure out the best course of action for us.
Thanks again for all the help!!!!!!
I'll add just a bit more info...the term "tax exempt number" is not the same as the number assigned by the IRS which is called a "tax id number" or "employer id number (EIN)". It's not uncommon for people to assume that if their organization has a tax id number, that it is automatically exempt from paying tax. However, getting a tax id number is only the FIRST STEP to registering as a federally-recognized non-profit which will thus be exempt from paying federal taxes (and maybe also exempt in your state from paying sales tax).
You can get a tax id number for your PTO by filling out IRS Form SS-4 and then calling the IRS - they will ask for the info you put on the form and assign you a number on the spot.
Your school district administrator probably doesn't want the PTO to use the school's id number because that blurs the lines of ownership of the PTO's money. If you fundraise under the school's number, the PTO is not independent of the school and your funds might be subject to the whims of the administration. By the way, a public school is automatically a charitable organization in the IRS's eyes.
The rules of sales tax exemption vary from state to state. For example, in Michigan, we aren't assigned a separate tax exemption number or certificate. The IRS's 501c3 determination letter serves as our state-level proof of sales tax exemption. In other states, your group may need to apply to your state after receiving the 501c3 from the IRS.
One final thought...incorporating in your state creates a new organization with no history in the eyes of the IRS. Plus, incorporation provides a level of protection for your officers' personal assets. If you want to incorporate, do it before applying for 501c3.
OK, one more final thought...call the IRS's non-profit help line - they are really helpful.
