We give teachers up to $35 toward the purchase of classroom supplies. We have been asking for receipts for all money that is disbursed. This is painful but it has been done this way since before I was the steward of this account.

I was told to collect receipts for everything!

There was a suggestion that we just give the teachers a check, cash, or gift cards. This would complete the transaction quickly and easily.

My head says that we cannot loosen this receipt restriction and that it was done the more difficult way because it is the fiscally correct way.

Can anyone tell me if it is OK to give the money without getting receipts?
Are there tax implication for the Teachers or the PTO (we are now filing for the 501c3 status)?
Would we have to declare this money to the IRS in some special way?
Am I being to cautious?
Pete.