My former PTO found itself in your situation - an EIN issued so long ago that the IRS had no record of it. The board decided to incorporate and essentially form a new organization, then apply to become a tax exempt organization (501(C)3). Whether or not you incorporate, I recomend going the "new" organization route since it eliminates having to deal with the whole history of being non-compilant. Your Application for Recognition of Tax Exempt status (Form 1023) is not due until 27 months after you were legally formed.
Only official tax exempt organiztions file the 990 and since you are not official you would only create questions and problems by filing. According to the IRS rules, organizations with gross receipts over $5,000 need file the 1023 and get approval to operate as a tax exempt (non profit) organization. Then if your gross receipts go above $25,000 you would need to file the annual 990 tax return. (The $25,000 is not an absolute - the 990 instructions explain the actual "gross receipts test".) If you are not an approved tax exempt you are technically a for profit organization and should be paying income tax.
The IRS web site (www.irs.gov
) has all the forms and publications on line. I would start with #557 - Tax exempt Status for your organization. You can also look at the 1023 Application, 990 & instructions, etc. Call 1-800-TAX-FORMS to have the IRS send hard copies. This site (ptotoday) also has lots of helpful articles and links. Once again - have fun!
Here is a quick update - from what we can tell, it is possible that we received the EIN number a long time ago (we were established in 1958!) and because noone ever filed a 990, we were deleted from the IRS. We are doing a little digging to see if we can reinstate our original number or if it is best to get a new one.
Now, my next question... do we file a 990 regardless of if we are 501(c)3 or not? We have never grossed over $25,000 but we will be very close this year and probably over next year. I would like to become 501(c)3 but I don't know if the board, principal & members will go for it - I'll have to see if I can convince them once we get this mess straightened out.
You are correct concerning the filing of the 990. Only orgs that have a gross income of 25K or more are required to file. If you have stepped over that 25K limit once, you must continue to remit a 990 every year. If you don't make 25K, there is a place on the form to say "didn't make 25K" and that's the extent of the filing for that year.
You need to file the 990/990EZ if your GROSS receipts are over $25k per year. That means if your fundraiser takes in $26000, you must file even though you only keep 50%. Even if your 501c3 PTO is below the threshhold, the IRS suggests you file a "0" return so you have them on file and have established a routine of filing. Sooner or later, your group may exceed the threshhold.
I don't know about Indiana's state tax #. In Mi, we aren't assigned a state-level number to show tax exempt status. The IRS's tax id number (aka Employer Id #, EIN, and erroneously: tax exempt number) is nothing more than an identification number. Getting an EIN is the first step to filing for 501c3, but it doesn't prove anything about an organization's tax exempt status. It's analogous to a social security # for an individual. Maybe your state also assigns identification numbers, regardless of 501c3 status. It should be easy to contact someone at the state level to find out the meaning of the state #. If you can't find any documentation in the files and nothing turns up in your research with the IRS, it may be safe to assume your group never applied for 501c3. Alot of groups are under the mistaken impression that if they have an EIN, they are tax exempt (that is, non-profit). Not necessarily - that's just step #1.
Another quick question: is your PTO incorporated in your state? Before you file for 501c3 with the feds, you should evaluate if incorporation is right for your group. Inc gives your officers some protection from liability, and must be done before you file for 501c3. Also, if you incoporate, the IRS views you as a brand new organization as of your incorporation date.
Thanks JayVee and Critter - I am following your advice to see what we can find out. I thought that only 501(c)3s that have an income over $25,000 need to file a 990? Please let me know if this is incorrect information. Also, can we have a State Tax ID number and a Federal Tax ID number (I believe this is what you are calling the EIN, right?) without being non-profit or is it all done at the same time? Also, we have looked through past treasurer's records and have not found any documentation from the IRS or the State of Indiana that gives us any number or determination.
I'm not in Indiana, but the id number on your bank statement should be an EIN, not your state's id number. The IRS will tell you whether or not that EIN is registered to your PTO. That's exactly how we found out that our PTO was using the school's own EIN for their bank account a few years back.
I found it a little tricky to look up to see if our PTO was a 501c3 already. Maybe the IRS has improved its search capabilities, but when I looked, you had to have an exact match on the PTO's name. If the PTO was registered as Acme School Parent Club and you now call it Acme PTO, you won't get a hit. Like I said, maybe it's a better system now, but don't assume your PTO is not a 501c3 simply because you don't get a hit on the online search.
Get your treasurer to dig through the files. If your group really is a 501c3, there should be a letter from the IRS, plus annual Form 990 packets which should have been sent to the PTO.
In reality, it may be better if your PTO is NOT a 501c3 yet. If you are, and you haven't been filing your annual 990's, you may have a far more complex problem with the IRS. I would do some diligent research, then start fresh if you don't get conclusive info that your PTO is 501c3. Sounds like <nonmember> had a bad experience with the IRS, but I have found them to be very helpful. My impression has always been that the IRS would rather help a PTO get set up properly, than worry about chasing "illegal" PTOs. I wouldn't panic.
