ptolisa - sounds like your group has made a conscious decision to operate under the district's control, but your posting has a few misstatements. I had to go look this stuff up myself; it gets very confusing, but there's lots of people who look here for advice so it should be as accurate as possible.

The fee to become a federally-registered tax-exempt entity is a ONE TIME fee, not an annual fee. It is $300 if your group's gross proceeds are less than $10,000, and $750 is you're over $10,000. Notice that's GROSS proceeds, not net. So if your PTO holds a fundraiser that takes in $13,000, you're over the $10,000 mark even though you only get to keep 50%.

The threshhold for whether or not you should even consider applying for 501c3 is $5,000, not $25,000 as you suggest. The IRS would like any group that normally takes in over $5,000 annually in GROSS receipts (again, we're not looking at net profit, but rather total money in) to register for 501c3.

An example. For the past few years, ABC PTO has taken in gross about $7,000 from various fundraisers, yearbook sales, and dues, even though they profit only about $4,000 each year. It's time to formalize as a 501c3. They will owe a one-time application fee of $300 to the IRS.

This overly simplistic approach ignores filing for state incorporation, but those fees are typically less than $100 per year.

A wise man told me that whoever owns the tax id number under which money is kept in a bank owns the money, regardless of how things are perceived. That would suggest the city or district actually has claim to the money kept in PTO accounts opened with their tax id number. Since all the other PTOs in town do the same thing, it's probably been done this way for a reason. Presumeably, the dsitrict or city is taking care of your tax reporting, for example. However, sometimes PTOs are under the impression that they can use the school district's tax id number with no risk or obligation. In our PTO's case, the original bank account was set up using the school's tax id number simply because the treasurer didn't know any different. Thankfully, it's become a lot easier to get info about this stuff (thanks, Tim!).

Even if it's not necessary for your PTO to formalize as a 501c3, you might want to consider getting your own tax id number. There's virtually no obligation but it gives your group legal ownership to your bank account. It's free, it's easy (go to Form SS-4 from www.irs.gov).

It's actually a moot point--we were informed by the district recently that we can no longer use their EIN. We got ours online in 5 minutes.

Lisa, what is the annual fee for? The EIN was free...

Just did the same thing. Changed banks and I panicked.
Anyway, I found out we can use the districts number. I called Sec. of State and fed IRS and attempted to become "legal". Well, for what we bring in for donations and fundraisers, it was not worth it for us. The IRS has an annual fee of 350.00 and it was not worth for us. I checked with local schools and PTO's and they all use the cities number for tax exempt status.
We formed local meetings with other PTO presidents in our area and found we are all doing the same thing. We informed our members we don't have to do any filing because we fall under the 25k profit margin.
Sticking to that! Good luck.

Our PTO is on the verge of changing banks because of some problems with customer service. We are currently using the district's EIN number. Would it be a good idea for us to get our own EIN number before opening our account at a new bank? And if so, does that mean we have to apply for non profit status within a certain time frame? We are currently writing bylaws and preparing to eventually apply for non profit status but are not quite ready for that yet.
TIA!