JV - you meant Form 990, didnt' you, not 1099? A minor point, but important if Need To Know goes to the IRS website to look at the forms.

Like JV, I've been treasurer for both formal and informal PTOs. The hardest part of being a 501c3 is completing the initial application process (form 1023). After that, the annual return (Form 990EZ or 990) is all the IRS requires. It's an IRS form, to be sure, but once it's done one year, it doesn't change much year to year. If your records are in good shape, it's something a volunteer can do without too much trouble. Day to day operations really aren't affected by 501c3. There are some key advantages, though of being 501c3 such as donations to your PTO are tax-deductible to your donor. And just to clarify, the form you file each year is information only, the IRS does not collect taxe$ from 501c3s.

The bigger issue, that JV alluded to, is whether your PTO will stay formalized into the future. Is there a culture at your school that seems to support a formal, independent PTO? Does your school staff and parent community want the PTO to stand on its own? Does your PTO operate independently (financially, decision-making) now?

It's not worth the trouble or expense of applying for 501c3 if in the near future, the organization (members) won't keep up with the reporting requirements. Many (most?) elementary school PTOs are formalized enough to handle the responsibilities of 501c3, but I've heard many middle school PTOs are better run as a committee of the school. Parent involvement at the middle school isn't as high, and the organization isn't as active, so 501c3 doesn't make sense.

[ 01-25-2005, 10:43 AM: Message edited by: Critter ]

I have been treasurer for both a 501(C)3 PTO and an "informal" PTO. The day to day operation was essentially the same. In either case it is important to keep accurate detailed records, and to be able to compile summary data. On the other hand, I found the tax return and everything that went with being an official tax exempt (state forms, 1099's) to be a real undertaking. I did not like being responsible for interpreting the rules and making sure everything was done correctly. I recommend that if an annual return is going to be necessary (gross receipts over $25,000) that the PTO agree in advance that a paid or volunteer accountant prepare the return and any other filings.

I would like for our group to become 501(c)(3). I have researched this site and have printed off the required forms. I am willing to fill out the paperwork myself and send it in, but there are people on our board who are nervous about the changes this could bring. I know it would mean we would have to file taxes each year, but will it also make our day-to-day operations more difficult? I can see that there are a lot of benefits to making our tax exempt status official, but I don't want to make things so hard that no one will ever want to be treasurer again. I guess I'm looking for reassurance that future treasurers will not constantly be on the phone with the IRS or reading through confusing IRS instruction booklets.