proud mom of 3;126952 wrote: ... I do know that fellow officers have been using a tax I.D. number when purchasing items for the PTO and the number must not be ours or has expired. Either way, it is illegal, I am sure. ...
The tax ID is probably that of the school's, which is a very common, but also typically an illegal, use of the ID. Unless the PTO is a part of the school and the people using the ID are authorized purchasers for the school, one entity can't use another's tax ID number.
oh boy!! I found out through many phone calls to diffrent agencies that we are not in the system federal or state, as tax exempt, whether it has expired because of paperwork not being completed or submitted, I am not sure. I do know that fellow officers have been using a tax I.D. number when purchasing items for the PTO and the number must not be ours or has expired. Either way, it is illegal, I am sure. I truly appreciate all your insight!! The President and VP are the only officers that were on the board when this mess took place(25,000+ was stolen by the former treasurer) should they be asked to step down? what are your opinions?
Sales tax exemption is authorized by the state. I couldn't easily see from Ohio's website what agency to call, but here's a general help number: 866-644-6468. You'll want to ask what it takes to be set up as a tax-exempt non profit in your state and how to see if your group is already set up. (And this may require first that you be at 501(c)(3) - see below.) Being sales tax exempt will probably save you from paying sales tax on many purchases and collecting/remitting sales tax on some or all of your activities where you are the seller (t-shirts, food, events, school supplies). What exactly this means is set by state law so varies from state to state.
At the federal level, the IRS controls issues surrounding income tax. A group that makes $5000 or more (net) in a year should be formally set up as a 501(c)(3) charitable organization or it should be filing a business return. (Note - there are other versions of 501's, but PTO's almost always fall under this one.)
To accomplish this, you need to structure your organization properly, including robust bylaws acceptable to the IRS, fill out a doable-but-not-trivial application form, and pay a $750 fee. Once set up, depending on your income, you'll file an informational return with the IRS each year, but you typically won't pay any taxes. You can contact the IRS to see if this piece has already been done.
Let us know where you stand and what questions you have. There are lots of people here who can help.
We have found the IRS to actually be very helpful. For years our books were being done incorrectly and almost everything had been filed wrong. Our new treasurer really wanted to clean it all up since her name was now going to be on everything. Not knowing where to begin she called the IRS and they walked her through everything and helped her get everything in order AND NO THEY NEVER CAME AFTER US FOR ALL THE YEARS IT WAS DONE WRONG.
The old prez and treasurer did not want her to call them out of fear that it would come back to bite them in the you know what. but, it was all fine.
So you should start by calling them. They can give you your numbers and let you know exactly what they have for your group.
