That is how we started down the 501c3 path - the city Treasurer found too many non-city-related groups were using the city's tax number on their bank accounts. When we went to update the signature cards, the bank wouldn't let us until we got our own EIN.
There are some good recent threads on 501c3 under the Roberts Rules board.
I wouldn't consider it blindsiding the new board - blindsiding would be keeping the problem to yourself until it blows up in their face.
If your group is an independent organization with control of its own funds - it should have it's own tax ID # (called an EIN, one form, easy, no fee).
The way you are set up is very common, but, no, it's not correct. Some school's turn a blind eye to it. More and more are refusing to allow the parent group to use their ID due to legal and liability issues.
If you talk to the IRS, this is pretty much what they tell you...
Any group like a PTO that brings in more than $5000 (gross, not net) per year should be set up as a formal non-profit via the 501(c)(3) process. (Form 1023; $500; rather complicated, but you CAN do it.)
Otherwise, your group is considered a regular business and should be filing a business tax return and paying income tax like any other business.
Incorporating is also a good idea. But that's done at the state level, so you'll need to check the rules/fees in your state. Make sure if you decide to incorporate that you do that before filing the 501(c)(3) paperwork.
I am the new treasurer of our PTO. I found out at our 1st meeting that the PTO has been using the schools tax id#. Although they do have their own checking account and the funds are not accessible by the school.
From what I have been reading it looks like we need to incorporate in our state and file for our own tax id# and 501(c)3 status. Is this correct?
Does anyone know if the way this PTO is currently set up is even legal?
Any insight would be appreciated. I don't want to blindside the new board with an issue like this, but I was really concerned when I heard how the PTO has been operating up until now.
