All of the info posted here has helped as I begin to separate our PTO from under the Diocesan umbrella. I am rewriting our contitution into bylaws and I will hopefully convince our group to 501(3c). Please e-mail me with your current bylaws, if this is handy, as I try to teach myself and thus write appropriate ones for us. Thanks This email address is being protected from spambots. You need JavaScript enabled to view it.
Jay...thanks for the input. As per usual, IRS directions and forms aren't very well explained. Our PTO didn't want to do the 501c3 because at the time we weren't making over $5k/year. Now we are and suddenly it's my responsibility to get it done. I'm still trying to figure out which schedule to file with the 1023???? This is the same PTO that two years ago had the checking account under the Treasurers SSN. I got that changed quickly and got us a EIN and also rewrote the by-laws to limit the number of loopholes. At one point our bylaws covered a page and a half. They're now about 6 pages long and address pretty much any situation that arises. Will keep working on the 1023 and then I need to look into some things like insurance. Most of our meetings are held at the school and I've been told by the Principal that as long as we have authorized use of the facility from the district, then we're covered under their insurance. Not sure about that but will get to that later. Thanks again Jay.
Jeff This email address is being protected from spambots. You need JavaScript enabled to view it.
As I understand it, organizations with gross receipts less than $5,000 can function as 501(c)3 tax exempts without having to officially apply for tax exempt status (which is done with form 1023). Organizations with gross receipts between $5,000 and $25,000 have to submit the 1023 and become officially recgnized as tax exempt, but do not have to file an annual informational tax return (990 or 990ez). If gross receipts are between $25,000 and $100,000 the 990ez can be used for the annual return. Above $100,000 and the longer 990 is required.
An organization recognized as tax exempt by the IRS does not have to pay income taxes, and donations to the organization are tax deductble for the donor.
I'm curious about the gross receipt numbers that people are listing for becoming a 501c3 tax exempt organization. I'm currently working on our Form 1023 to become 501c3 and it states some specific groups that aren't required to file for exemption but the dollar amount listed is $5000. Under the taxes part, you can file a 990-EZ if you had gross receipts under $100k and total assets under $250k. From what I'm reading, any group looking for exemption under 501c3 that grosses over $5k/year must file the 1023. Reading further, unless an organization is 501c3, those making contributions aren't allowed to write that off on their taxes. Am I misreading this?? This sure is confusing.
Critter - while I often do get my IRS #'s mixed up, I did mean a 1099. A 1099 is required if the PTO has paid $600 to a person during a calendar year (for example a speaker or artist-in-residence). The IRS copies must also be accompanied by a 1096. I have filed half a dozen 1099's - not a huge deal, but one example of how things get complicated.
I second your opinion that the biggest issue is whether future PTO officers will have the commitment to keep up with the 501(C)3 requirements. While the 990 tax return is "informational" the penalty for filing late, or failing to file is $20 per day. That adds up to real money!
We went 501(c)3 just a couple of years ago after I discovered we had been operating under the school's umbrella and the new school district business manager said that was a big no-no. The initial paperwork and writing a constitution and by-laws(which I also discovered did not exist) was a bit daunting, but now that it's over we really don't have too many issues. When we recently made some by-law changes we made sure to send a copy of them to our IRS representative because we operate under an advance ruling(kind of like being on probation for a few years to prove you can follow the policies-otherwise I think you have to wait awhile to really become official). We pay an accountant to do our taxes so we know it's done right.
For us it came down to looking at how much money we take in and how many donations we receive and realizing that those donors can't take a deduction if we're not 501c3. We also needed that constitution and by-laws so we operate in a consistent manner and not at the whim of whoever is in charge.
