A little while back, someone posted a question here about registering with the IRS and they used the label, "509" rather than "501". At first, it looked like a typo, but then I saw "509" on some IRS paperwork I'm doing for our PTO. Maybe I"m the only one who noticed, but here's the difference for all you PTOers who want to be IRS-savvy.
501(c)(3) is the overall label given to groups who qualify for federal income tax exemption under section 501 (c)(3) of the Internal Revenue Code. As a 501(c)(3),you are either a public charity or a private foundation. The typical PTO is considered a public charity.
509 (a)(1), (2), and (3) are subsections under 501(c)(3), so you are both a 501(c)(3) AND one of the 3 types of 509. 509(a)(1) and (2) describe groups who get at least 1/3 of their $$ from the public. It's more subtle than that, but for this forum, that's enough said. 509(a)(3) is a "supporting organization" which means the group is basically controlled by another 501(c)(3). Even though you might think your principal runs your PTO, the typical PTO is not a supporting organization. Typically, a PTO is a 509(a)(1).
This distinction isn't crititcal to your day-to-day operation. But if you filed for 501c3 status a few years ago, the IRS will ask you to fill out Form 8734 in the near future. Form 8734 confirms that your PTO really should be a public charity based on where your $$ has come from for the past 5 years. You'll see the 509 language in the questions on that form.
