Thank you all of your in put. It does seem I need to do some research on our state laws.
To PresidentJim and CrewChief, Our board in new this year and have had alot happen in such a short amount of time. We are finding alot of mistakes from alot of different angels and feel the past board members did not take their jobs seriuosly. Money raised for this PTO is handled in such a mild manor it frightens all of us, especially our Treasurer. She is the one responsible while she is in office. We want to make sure things are done correctly.We are finding that things have been handled inappropriately. This one Mom I was talking about,she is in charge of the advertising that goes in our school directory we publish every year. We just received the money that was collected from last years advertising (one year later). Over $100.00 cash was in an envelope and we had over 25 checks that were a year old. We had to contact each business and explain our situation. We took a loss on one business who since went out of business.
There is a Buy one Get one book fair we do at the end of the year to encourage reading for the summer. The same Mom is in charge. When we took over the PTO in July the new treasurer was told that there were two check outstanding. The treasurer went to the Mom and told her she needed the checks asap. One check she had right away, it was one of our teachers and the other check happened to be her own. So we had to haunt her for a few weeks,we did finally receive it. Then we had one of our biggest fundraisers and she ordered a rather large amount of product, her check bounced, again after some pressure we received the check. We still have an issue pending with her, we are missing one check for this years advertising that was done in our directory.(again)I actually spoke to her back in October, she stated she forgot and will get it to us. We still haven't received it. It just so happens it is her sister's business. We contacted the business and spoke to her sister and she will only pay through her. So we are left with no check.
So, yes maybe I am a little upset that things have started in such away for the new board. I don't like being put in this position. Two of us on the Board know this Mom outside of school. We have over looked everything but when it came to the Tax exempt issue we felt it was to much. We are requesting a meeting with this Mom and explaining the situation and letting her know that we do not want her incharge of any more fundraisers. I know that seems harsh, but we feel in just the short amount of time we have come across to many problems with her at the head of them all!
I'll second JHB and PTOTres. There's a big difference between whether your PTO needs to PAY state sales tax on the things you buy for your PTO and whether you need to COLLECT sales tax from your customers, including book fair customers. And of course, if the state's rules say you must collect sales tax from the parents, you must also send it along to the state.
No, you can't just assume you're exempt from all form of taxes because you have your 501c3. Sales tax is a state issue. The tax exemption granted by your 501c3 is exemption from paying federal income tax.
Your Book Fair mom might be only 1/2 wrong. You probably are supposed to collect sales tax (we always do), but if your PTO hasn't been remitting the $ to the state, then there's an important breakdown in the process.
A few years back I tried to clarify our tax situtation with our fundraising company rep. She was very knowledgable of her product, but really didnt' know about tax laws in our state. She was content to accept our 501c3 proof as "proof" we didnt' need to collect sales tax from our customers. But frankly, I'm not convinced that's the whole story. Your best bet is to spend some time educating yourself on the rules in your state- and then follow them. Parents will understand the additional tax if you explain you're following the rules.
I don't know the rules about charging and paying sales tax. I can tell you that my last school didn't charge sales tax at the book fair for many years but starting in 2004 were told they had to. I wasn't on the committee, just a volunteer, so I don't know the details or what brought it up to begin with. It is a school staff led event, not PTO. It is an Illinois public school with 501(c)(3) status.
I wonder if folks are confused about what tax-exempt status means for their group. Even if you're tax exempt, there are still items you have to pay/charge taxes on. That's different for each state so you'll want to find out your own rules.
Right now, PTOmom, it seems that you're working with as many assumptions as your chairman. And I have the same feeling that PresidentJim has that perhaps there are personal issues clouding judgement.
I suggest everyone take deep breaths, work as a team, gather accurate information and decide together the best way to move forward.
Sales tax exemption is not an automatic status. You need to find out what the procedures are in your state and follow them. You can't simply assume you are exempt and not collect tax.
I believe that most non-profit Parent teacher groups are tax exampt, for most of their fundraisers. Gambling type events are usually the only difference (for example 50/50 raffles, etc.). I would recommend doing exactly what you said.
For the next Book Fair just don't charge tax and don't specifically say anything to anyone. If a parent says anything then you can explain the situation. If it was me, I would just explain to a questioning parent that for this, and all future book fairs, we have been able to submit our tax exempt status. Most parents aren't going to have an issue with this.
Also there seems to be more to the story than you are mentioning. You seem to be "asking permission" to cut this person out from something they seem very happy to take on. Many fundraisers, expecially book fairs, take a lot of time setting up, running and even breaking down. Do you have a major supply of volunteers to fill this person's role if you take it away from her?
At the worst, I would recommend having these fundraisers co-chaired. And one of them would of course remain this parent. At least with the book fair the problem has been solved. You're going to submit the tax exampt status and there will not be any tax charged. Problem solved.
Once again, there does seem to be more to this than you brought up. I would be interested in getting some more specifics on these fundraising issues and your group as well.
I believe the tax you are referring to is "sales tax", which is paid to the state so has nothing to do with the IRS.
You need to check on what the rules are in your state for being sales tax exempt. The fact that you are a 501(c)(3) with the IRS is a separate issue. The state will have it's own rules/paperwork.
If you ARE sales tax exempt, then you need to find out what privileges that grants you. It may not exempt you from all sales tax. For example, here in Texas, it allows us to forgo sales tax on two fund raising events (days) per year. Naturally, we pick our largest two, but collect/pay sales tax on other items like the sale of T-shirts (and bookfair, if the PTO ran it).
If you find that you DID overpay your sales tax, there's probably a fairly simple amendment form you can file, at least for one year back, to be reimbursed.
If you find you did collect sales tax, but never remit it to the state - then yes, you probably have broken some rules. But you probably need to do some research and figure out your exact situation before you decide anything.
