Jennifer, be sure you know WHICH tax exemption you are talking about.
"Tax-Exempt" is often is a STATE term. Generally a qualified organization files an application with the state to become tax-exempt. Typically, this means that you are exempt from some or all sales tax. (Might also apply to other state taxes like income tax or real estate taxes.) Specifically, when you buyitems for qualified purposes as the PTO, you don’t PAY sales on the purchase. It also means that you may not need to collect/remit sales taxes on thing the PTO sells sell. You need to check your state laws – it may not be all or nothing. Example, in Texas, we can have 2 days (i.e., fundraisers) per year that are tax-free. On other fundraisers, we remit sales tax to the state comptroller annually.
Most of the advice given so far deals with the federal level of gaining Non-Profit Status from the IRM (and basically being exempt from federal income tax).
They are both important, but two different processes. (Note, some states won't give you tax exempt status unless you already have your 501c3).
Thanks CVMom- I will put your advice to good use. Hopefully I can convince my members that we need to start this process now. Their hesitation will be the $500 filing fee. We just spent $15,000 on a playground. Our community is growing by leaps and bounds and this is the 3rd new elementary school built in the past 6 years. Parents are tired of starting all over again and the PTO constantly asking for more money. Family Movie Night has been wonderful for us...no $ comitment. Just some time to spend together as a family.
Well our situation is a bit confusing right now. Our parent group went from a PTA to a PTO 10+ years ago but apparently never filled out proper forms and was never granted non profit statis. So we are taking the steps right now to fix this. What we are filling out now is a 1023 form (BOOK!) and will submit a $500 user fee when we send it off. I would strongly suggest if you want to do things correctly to do this in the beginning. Things will be much easier on those that follow you--a bit of a headache for you right now though. Our problem is for "years" everyone thought we were a recognized 501c3--when if fact we were not but had begun to file nonn profit tax returns 990EZ. We begin filling those returns b/c it was the "right thing to do" not knowing this would come back to haunt us. So we are now begging the IRS for mercy and pleading ignorance since officers change from year to year and often times there is confusion on what has been done/what has been talked about being done.
Also somewhere on this board I found the ptolaw.com and in that there was a workbook to aide in filling out the 1023 form (and also incorporating). This has been helpful in answering some of the questions I was not sure on.
Tim- thanks for the advice. I read over some material from PTO today archives and forwarded them onto my Principal. Any chance you would like to speak with him with your Point of View? CVMom- Which Form did you fill out then to become tax exempt? How much did it cost?
I want to add that we just debated the incorporating issue and came to the decision that we would not incorporate. In our state (Arkansas) volunteers have immunity except of couse of contractual or negligant acts they personally committ to. It was going to be basically "double" coverage as far as liability goes in our state.
Quick plug here for the National PTO Network. While the NPN is great for all groups, it's often especially valuable for new groups.
The first "Expert guide" you'll receive as an NPN school is called PTO Start-Up and it includes step-by-steps on filing for nonprofit status and writing bylaws and even incorporating. It will mek your life a lot easier.
Not to mention all the other great services and benefits.
