I have a semi-related question. I am in the process of pursuing some donations for a school raffle and our secretary provided me with the schools's tax ID number (G ##-#######). I tried to submit a few online donations request forms (two for some state athletic teams) but got this error:
"The Tax ID that you entered was not found in the IRS database. We cannot accept applications from organizations whose tax information is not on file."
Is the school's Tax ID/EIN Number not acceptable in terms of proving charitable status? The FAQs say these teams WILL make donations to schools. I am using the school's name on all requests, with the approval of the district.
Grant - you made me curious so I went to the IRS website for more information about Section 527 organizations. Here's a quote from a couple of publications on www.irs.gov: "The purpose of section 527 groups is to engage in political activities...A political organization subject to 527 is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. The exempt function of a political organization is influencing or attempting to influence the selection, nomination, election or appointment of an individual to a federal, state, or local public office or office in a political organization."
That might be what your group does, but it doesn't sound like the typical PTO to me.
There is another status your group can obtain. That is a 527 non-profit corporation. this allows you to obtain and use less than 25K/year and have non-profit status as well as cut down on the paperwork required for a 501c3.
A 527 corporations intended status can be used for engaging in public advocacy to promote the education and protection of children.
It is what our education advocacy organization is set up as.
First of all, the tax id number is the only number the federal govt (IRS) will issue. Getting one doesn't really mean anything about the non-profit or tax-exempt status of your group -- just that you exist.
You really bring up two different points: the difference between non-profit and tax-exempt. (I am not an attorney, nor an IRS rep so take this with a grain of salt). The first step to formlizing a PTO is to get the tax id number (also called the Employer id number or EIN). Then, typically, the gruop will incorporate in its own state as a NON-PROFIT organization. That MIGHT give your group some special privileges in your state, but the laws vary from state to state. The next step is to file for the official federal EXEMPTION FROM FEDERAL INCOME TAX under section 501c3 of the tax code. In other words, to file for your 501c3. This status allows your group to avoid paying federal income tax on (some/all) of your income. In our state, 501c3 status also exempts our group from paying state sales tax on (most) purchases. In our state, there is no other identification number than the federal tax id number. We don't get a "non-profit" number or an "exemption number".
When you say your group is non-profit, do you mean in spirit or in actual legal status in your state? I think most typical PTOs operate like non-profit organizations, but many many haven't filed with their state or feds.
Yes, you're right about the restriction on donations from outside sources. In order for them to claim their donation to you as tax-deductible, you must be a federally-registered 501c3. Having a tax id number doesn't prove you're 501c3. Some vendors might look the other way and make a donation anyway, but unless you are 501c3, you can't claim to your potential donors that their donations might be tax-deductible. This can be very important if your PTO is planning a big auction or doing a walk-a-thon where you really rely on donations.
Hope this helps. Please come back with more questions, but you might want to order a copy of the PTO Today Start Up guide (from this site) which covers all this stuff in one big binder - written in a way we all can understand, promise.
