On this forum, words like "IRS" and "fines" are likely to send a wave of panic.

I'm not an accountant, and taxman sounds like he's in the business, so I defer to his expertise. However, in Part IX. A. on Page 12 of the Form 1023 instruction packet (available for download at www.irs.gov), the IRS gives instructions on how to proceed with the application if your group has existed for more than 4 years. No where in paragraph does it mention fines.

It's been my understanding that the IRS would really love all qualified non-profits to register properly (that is, file the 1023). But it's not likely that they're out in the field hunting down non-registered PTOs. Now, once your PTO files for and is granted its 501c3 status, you are known to the IRS and your responsibilities increase. Specifically, you need to file the annual Form 990/990EZ every year. Failure to do so will definately expose your group to possible fines - I think it's $25/day for every day after the deadline. But we've heard on this forum of PTOs who've plead their case to the IRS and had some or all of their late filing fines waived. You certainly wouldn't want to purposefully ignore the 990 and hope you'll get the fines waived, but it's nice to know the IRS can be reasonable.

Each state has its own rules about non-profit organizations, so it's a good idea to do some research in your state. But the federal IRS stuff applies across the board.

[ 04-01-2006, 04:22 PM: Message edited by: Critter ]

Look at Form 1023 and related instructions. Ideally, an organization should complete this form within 27 months of formation in order to qualify under 501(c)(3). The IRS will impose small fines for failure to file a return, but saves the large fines for failure to apply for exemption. Act on this quickly.

Also, depending on your state, you may also have to apply for exemption with the state. One client of mine operated under a federal exemption, and then later found out that they had not also applied for exemption from the state. Also, check with your state's attorney general to see if he has a registry of charitable trusts (like in California). You may also have to file with the attorney general's office.

Good luck.

How do you become a 501c3 non profit organization? We classify our PTO as a non profit organization but we have never filled out forms.

Thanks for your info guys, I really appreciate it.

PTO mom

Just to clarify, you may need to file the Form 990EZ each year, but you don't acutally PAY any tax money. That's one of the key benefits of being a federally-registered 501c3 organization.

Here's a goodsite for nonprofit info Nonprofit Law