Critter's right about not being required to set up as 501(c)(3) if the dollar amount is too small. And the IRS uses $5000 as the rule of thumb. But nor is it required you're already at a certain level if you want to proceed.
When we did this with our elementary school PTO, we started a new organization to separate it from the old one which had few processes, no bylaws, and little in the way of financial reports. (We didn't want to be responsible for someone else's history of following/not following the rules.)
The point is, as a new organation (at least on paper), we had zero fundraising history and no problem gaining the 501(c)(3).
Donations to the PTO definitely won't be tax deductible unless they get set up as 501(c)(3). That's one of the key advantages to gaining that status.
Maybe the tax man was referring to the IRS's minimum threshhold for filing for 501c3. If your group's annual gross receipts is less than $5,000, the IRS does not require the 1023 application. I'm not an IRS rep, but I take that to mean that the IRS sorta assumes you're too small to track. Does that mean donations to your group are tax deductible?? Don't know but a call to the IRS should answer that.
Anyway, it's probably a moot point since you intend to raise loads of money, way above the min threshhold. You can, and probably should seriously consider, filing the 1023 for your group if you intend to be independent of the school. JHB makes some great points, too, about staying a function of the school.
If you accept donations to the school for the playground fund, you can't refer to your group as independent of the school. That might not really matter for the near term. And since you've already set up a bank account with the school's EIN, you've in effect set up your committee as an arm of the school by default. A school is automatically considered a 501c3, so your donors are donating to a tax-exempt charity when they write a check to the school.
If you have a good relationship with your school administrators and want to serve as a volunteer arm of that organization, you can possibly continue under their umbrella. But they then they own/control the funds. You are basically providing volunteers.
That's not a bad model if all the pieces work. However most PTOs, although closely tied to the schools, want to be independent entities - and control the funds they raise.
So if you want to be an independent entity - you need your own EIN. (Quick, easy, one IRS form, no charge.)
As for 501(c)(3) - that's supposed to be based on your purpose. I wouldn't think your income would be a factor - especially if you are trying to position yourself to qualify for MORE income in the way of grants.
Our PTO had been functioning with only a secretary and a treasurer for several years. In January, a group of interested parents joined so that we were able to fill the positions of president, vice president, and parliamentarian. We have written and adopted bylaws and we are following Robert's Rules of Order during our meetings. I am the treasurer, so I have been struggling to complete Form 1023 (Application for Recognition of Exemption under 501(c)(3)of the IRS). Our annual PTO budget is less than $2,000, but we are in the process of trying to acquire grants for as much as $30,000 so that we can provide the funding for a new elementary playground. I am wondering whether our group can even apply for 501(c)(3) status. We are constantly being reminded by potential donors that we will not receive any large donations until we are exempt. However, I was told by my tax preparer that our organization did not even qualify to send in the application. (I am hoping that he is wrong!) I used our school's EIN to open a new bank account that will be used only for the playground fund. Since we are such a small organization, is there any way that we could use the school's 501(c)(3) status instead of getting our own? Perhaps the school could receieve the donations and then pass them on to us? (Would that be "laundering?") I would be most appreciative of any help that you can offer to our organization. Thanks!
