Hey
Thanks for the info on 1023 - your answers were exactly what I was expecting - I will go ahead and file the info for 1023!

OK. I'm not as well versed on this as maybe I should be, and I cannot wax poetic (lol) about the subject at all. I am not a lawyer. I will tell you this from experience: If you use the school numbers, that money ultimately belongs to, you guessed it, the school. If your principal or even the district folk decide to, they could, let me repeat, COULD step in and take the money to use for whatever it is they want or need. And, I might add, they would be able to because the bottom line comes down to: their numbers, their money. File the necessary paperwork and avoid the headaches later. You'll be thankful in the long run. $150-$500 may seem like a lot now, but just imagine the school deciding it needs your just-had-a-fundraiser-and-there-is-$20K-in-the-account! :eek: :eek:
It could happen. It has happened. Don't let it happen to you.

[ 05-14-2002: Message edited by: TheMetzyMom ]</p>

My understanding is that once an organization (e.g., PTO or other club) begins to conduct business, and especially financial activities, it becomes an entity with potential legal and tax obligations at both the state and federal level.

As a separate entity, it needs its own tax ID number, called an EIN. That's one step. Regardless of what else you do, your PTO really needs an Employer Identification Number (EIN). This is the business equivalent of a social security number and is not difficult to obtain. You simply a complete a one-page IRS form called an SS-4. There is no fee, there&#8217;s nothing terribly complicated about it.

Becoming a 501(c)(3) is a separate issue. A 501(c)(3) is a particular kind of non-profit that has been set up with the IRS to have special status. To get this, you complete IRS Form 1023, pay a $150 or $500 fee (depending on gross proceeds), provide the associated documentation, and agree to certain rules of behavior, like limitations on political activity. Once gaining this status, the PTO is exempt from most federal corporate income tax, has more credibility as a non-profit, and is eligible for certain benefits like non-profit postal rates. One of the most important benefits to many PTOs is that donations to the PTO are tax deductible as a charitable contribution (for the giver). Additionally, this status may make it much easier (or even be required) for receiving grants. At least some states require an organization to have its 501(c)(3) status before they will give it a tax exemption at the state level.

A 501(c)(3) with more than $25,000 gross proceeds files an informational tax return each year &#8211; either the 990 or 990EZ.

Note, according to the IRS, if you are an independent entity and not formally listed as a non-profit (501c3 or other 501 category) and you have gross proceeds of $5000 or more each year, you are a BUSINESS as far as they are concerned and should be filing an annual corporate tax return.

So basically, getting your EIN is a piece of cake. But the next decision is:

1) Do nothing, file nothing with the IRS. Technically, you aren't operating legally (according to the IRS), but many entities do this and just assume/hope nothing happens.

2) File an annual return as a business

3) File for 501(c)(3) and proceed as a recognized non profit.

Just for the record, I'm not an attorney or accountant. These are just the details as they've been explained to me by multiple sources over the last couple years.

Good luck!

We were using our schoold tax id # and the district has put a stop to it. They say that PTO is a seperate entity of the school. Which is true. We have had to file for our tax id# plus
501 c 3. The PTO is following thru on doing this due to the tax issues. To cover ourselves in the long run. So, Yes it's worth it.

I have never been in the Tresurer position so not sure if correct but I would think if you are using the school's ID number and putting the money that you raised in an activity account, the use of that money could co-mingle with the school funds and if you have any problems, those funds COULD be misspent. I would open my own account. Hopefully this sheds light and one of the PROS at this issues can give you more info.

I'll start with a quicky -- as a 501(c)(3), contributions by individuals to your group are tax deductible. That's only true, I believe, if you have the official designation.

Tim