Patty,
I don'y know about NY, but for the IRS, if you don't have a valid EIN, you aren't recognized as a non-profit. An EIN can be applied for, over the phone, if you aren't sure if your organization has one. When you apply for an EIN, the important thing to know is the OFFICIAL name of your group. This is going to be the same name you need to use for incorporation as well as for the form 1023 for the IRS (if you plan to file).
The EIN (Employer Identification Number) is an identification number and is used by an organization in much the same way we as individuals use our Social Security Numbers. An organization needs to apply to the IRS for (and be granted) exemption from federal income tax liability under Section 501 of the tax code in order to be considered tax-exempt. And, an organization can be tax-exempt and not be a "charitable" organization where donations to the organization can be tax deductible to the donor. Only an organization granted exemption under Section 501(c)3 is charitable.
There are several discussion threads throughout this forum that have addressed this subject. I've found them very helpful. Also, the PTO Today magazine recently had an article written by a PTO treasurer who went through the application process. In addition, the IRS web-site has the application form along with instructions.
My group just received a notice from our bank that we do not have a valid EIN # for the IRS. Do we have tax exempt status? Our PTO has been in place for the 7 years I have been at this school. Not sure what to do?
I believe last year was the first time but I'm not completely sure of the history. I just looked at a copy of last year's letter and although it does not say anything about tax deductibility, it does use the words "donation", "gift", "funds", etc.
I am going to propose that this be framed as a membership drive rather than a year-end contribution. This group has never incorporated and has a fund balance greater than $10,000 which has been carried forward for several years. I want to spend down the fund balance and incorporate before filing for the (c)3. I also need to educate this group on the significance of all of this.
Regarding the Finance Committee, the Constitution (which needs serious revision) only states, "The Finance Committee is responsible for the review and approval of expenditures up to $250." My vision is to have a working committee that can provide a training ground for the next treasurer, takes an oversight and advisory role on financial and/or legal issues/reporting, will review all requests for unbudgeted funds prior to being proposed to the full membership, and conduct quarterly and year-end reviews of the books. We are fortunate that our parent population contains a wide base of professionals who don't necessarily want to be fully involved in the PTO but want to help, so I do believe this is possible. If you have any other thoughts on the role of a Finance Committee I welcome them.
It's still possible to get your 501(c)(3) before the letter goes out... [img]smile.gif[/img]
Can you come up with words other than "donation" or "contribution" to decribe the plea? Like you, I would be very uncomfortable with a direct donation request before the group has its non-profit status, especially since you, as an officer, know the implications.
Is this year-end appeal an annual tradition or a new idea? Maybe the letter could ask for donations to be made directly to the school (a 501c3) rather to the PTO. In that case, the donations are tax-deductible.
By the way, what do you envision to be the mission of your Finance Committee?
I just assumed the role of PTO treasurer this year. I can find no evidence that the organization has ever filed for 501(c)3 status. I have just heard that a member is in the process of writing a year-end letter asking parents to make a financial contribution to the PTO. I do intend to contact this member to assure that the wording of the letter does not suggest contributions will be tax deductible. However, I actually think it should contain precise wording to that effect.
The previous treasurer (a CPA) was somehow able to reconcile the fact that this organization is asking for "donations" without a tax-exempt status but I cannot. I expect that before the year is out I will take this matter up with the other officers but right now my energy is directed towards developing a Finance Committee. In the meantime, does anyone have suggestions for this letter?
