10 years ago, when our group was started, they went to all the work to be set up right but their records are nowhere to be found. About 5-6 years ago, the principal told the group they didn't have to do anything anymore because they fell under the school/district's umbrella and they all just went along with it. So they quite doing anything. There are not even any receipts for this time until last school year. The district sent out notices in the fall for all parent groups to call said number and get their own tax exempt number because of stricter (new) laws in our state. So I did this. Now what???? For those that have done the research, just a simple outline and in what order do I need to do things. (We clearly bring in over $25,000/year.) Thanks in advance for all the help. I just want to do things right and not have to back track. I also have no idea about our checking account but we have to change it at the end of this school year anyway because of another issue.

I, too, have heard the argument from a lawyer specializing in non-profits that it's not necessary to file. The attorney had a well-rehersed argument that basically said if you operate as a non-profit, you ARE a non-profit.

Unfortunately, the IRS doesn't seem to agree with that view. At least not the reps I've consulted, and I've spoken to several. And other lawyers/accountants have told me it is necessary to file. (I was doing some pretty extensive research in this a few years back.)

My ultimate gut feeling was that if you had a good non-profit attorney on retainer who could spout that defense should you ever end up in legal trouble - perhaps there is a loophole they could find.

However, since most of us don't have that kind of support, and since the IRS very clearly says "apply if you meet the $5000 rule of thumb", my advice would be to apply for 501(c)(3) status.

I would certainly try a different tax accountant - someone who specializes in small tax exempts. Our community has several CPA's who do a lot of business with PTO's, the local recreation association, the friends of the library, etc. Guidestar ( www.guidestar.org ) is an organization that has info on all tax exempts. You can see if your PTO is listed, and do a search by town name or ZIP code to find all the tax exempts in your area. (Register as a donor.) This might give you some ideas about who to call to get a referal to a CPA who knows what he/she is talking about.

The PTO's in my district have all gone the route of incorporating and then filing as a new organization. I vote with JHB that this is the way to go. You don't mention if you are incorporated, but the liability protection would be really beneficial for a big group like yours.

A note on the $25,000 threshold for filing 990 tax returns. This is not an absolute. According to the "gross receipts test" in the 990 instructions the threshold is:
- up to one year old - $37,000
- 1 to 3 years old - average $30,000 or less
- 3 years old or more - AVERAGE $25,000 or less for the preceding three years

Once again, Thank You for your responces. I decided to call a tax accountant but was very uncomfortable with her response. She said I should just act like we have always been tax exempt and until I hear from the IRS, don't do anything :eek: :eek:

I had also called H&R Block and was told someone would call me back, when they did and I stated I needed someone familiar with tax-exempt, they gave me a different number to call. I will call it tomorrow...I was in the middle of getting the family fed and had about 20 minutes before my son's baseball practice.
Have a great night and again, Thank You.

My own thought is that you'd want to be consistent. If your organization is "born" on XYZ date, it needs to start anew completely.

So that would be part of the decision process. What would it take to bring this organization "up to code"? What's already done that would save time not doing over? What obstacles are there.

Versus, what are the steps and effort required to start from scratch as a brand new organization.

Weigh the alternatives and choose a path.

Thanks JHB. I sort of thought would it be easier to start new.

Does anyone know if this would affect what we are currently filing with our state? Our state already recognizes us as a tax-exempt organization and the past treasurers kept this up. The Treasurer before me thought that was all we needed to do..she knew nothing of having to do something with the IRS. I have also thought about calling H&R Block or someone similar to see if I couldn't get some "free" advise on what to do.