A few years back, I was in your shoes. I was treasurer for one PTO that had a personal SS# on its bank account, and then a year later, for another PTO that used the school's EIN number. Yikes! I learned that in both cases, it was best for us to create "new" organizations by incorporating in our state (never had been done before) with their own EIN numbers. The IRS views incorporation as the begin date of the organization, so when we filled out the 501c3 application (Form 1023), we did so as though the group was brand new, even though we had a balance in our bank account (no problem with the IRS on that).

One really imporatant decision you need to make is whether your PTO is acutally an independent group from the school or a committee of the school. If you want to be independent, you need your own EIN, bylaws, bank account, annual IRS forms. But if you are a committee of the school, your banking will be done through the school's account, and so you dont' have your own EIN. In that case, your money is really owned by the school but they let you manage it as a courtesy.

Assuming your PTO wants to be an independent group, you should follow JHB's advice and start new, even if you don't incorporate (incorporation typically gives the officers protection from liability, but you can also buy insurance for that if you decide to skip incorporating for some reason). Don't worry about what's happened in the past. The IRS has better things to do than chase down delinquent parent groups (though of course it's within their right to do so....!). Now that you know, do the right thing for your group. Be sure to follow through, and---very important--document the ongoing responsibilities for the future treasurers (ex: annual IRS Form 990/EZ) so the next treasurer knows what to do. Once your PTO becomes a federally-registered 501c3, you need to continue to act like one forever.

Yes, I would recommend the start-up tool kit. It explains all this organizaitonal mumbo jumbo in plain language. Plus is takes you thru the 501c3 applicaiton item by item, step by step, in PTO language. Also, don't be afraid to call the IRS with your questions. The reps can be very helpful.

jhb, Creating a new organization sounds like it might be the "easiest" way to handle our situation. I will be discussing this with the other officers, principal and accountant. Not sure I'm quailified to deal with any of this, but guess I'm on my way to finding out. I just want everything to be done right. Want our little PTO to be like it should be.

Thank you.

Several of us that have been in your shoes opted to create a new organization. Frankly, it was primarily a bookkeeping and procedural matter. We didn't change the name or make a big deal about it.

So just draw your line in the sand and whatever happened before was the "old" PTO.

• Request a new EIN and open a bank account with the EIN
  • Free, simple one page form (SS4). Can be done by mail, online, or by phone.
• Incorporate as a non-profit within your state
  • This makes you an entity and reduces personal liability of officers/board members. You want to do this if you can. In most states, it's some boilerplate paperwork and a small fee ($25-$50). But there are a few where it's more complicated. If it's more trouble than it's worth, skip it.
• Create or adapt robust bylaws and adopt them.
• File for 501(c)(3) status (after incorporating) with the IRS
  • This is a status federal that defines you as a charible organization.
  • Benefits: provides credibility, allows contributions to you to be deductable, and exempts you from paying federal income tax on your fundraising income.
  • Process: fairly complex application, plus $750 fee
• Apply for state sales tax exemption
  • state often requires you to have your 501(c)(3) first

Simultaneously, you'll continue with the program side of your organization.

Good luck!

Thank you One and Only. Since you have been thru this, do you think you will have to pay back taxes for the previous years? Also, what info should I get from the previous Treasurer? Are bank statement copies and treasurer's reports sufficient?? O me, I didn't know I needed to be a CPA to be the treasurer of PTO. hahahahaha



Again, Thank you.

Call the IRS at 1-877-829-5500 to ask questions about obtaining your EIN. They can do it over the phone and then you can always request a packet of paperwork to file for 501C3.

Our school had the same thing happen last year. I tried to apply for the Lowe's grant and came to find out that we were not federally tax exempt; only state tax exempt. To boot, our EIN was deactivated due to not filing our federal 990 each year.
As president, I re-activiated our federal EIN so we were official once again, but since we never filed for federal tax exemption had to begin that process. Our PTO has been together since 1985 so, we too, were way behind in obtaining our status.
I obtained all the necessary paperwork and forms and began the process near the end of the school year. I filed last month and am waitig right now to hear back from them.
If you take it one step at a time, its not overwhelming. The benefits of becoming tax exempt are that you will be able to file on your own for grants and contests. Otherwise, you really are supposed to obtain the OK from whomever you fall under. In addition, think of the poor person who's social security number you are using. If they were ever audited, they would be hit with taxes on that interest! I strongly suggest you obtain your own EIN which can be done over the phone---but request a confirmation letter be sent to you!!! File that in your Treasurer's files and have the President and Principal also have copies as well.
If you have questions--the boards are always here and there's lots of support. I asked a few questions to help me with the paperwork. I did it myself since our cost for filing for 501c3 was $750. I didn't want to have a bill for an accountant on top of that.