Finances
On this page, you will find: Non-Profit Status, Budget, Financial Report, Audit, 990 and Tax Information, Treasurer's Report, Cash Verification, Per Caps, Insurance/Workers Comp, Fundraising and Raffles, Sales Tax, Employers, Inventory, and other topics.
Insurance/Workers' Comp cost for units for the 2008-2009 year will be announced in October. Make checks payable to Fremont Council PTA.
What documentation is needed to prove our non-profit status as a PTA Unit?
When PTA Units are asked to prove their 501(c)(3) nonprofit status, they need to supply the following documentation – all of which is provided by Peralta District PTA:
- A letter from the IRS verifying the Employer’s Identification Number (EIN - the federal ID number) of the Unit. All units received one when they were first formed, but that paper is probably long ago buried. The EIN can also be found on your Audit Report Forms. If you’re unsure of your Unit’s EIN, contact the Peralta District PTA President as we maintain a list of all Unit and Council EINs.
- Letters of determination that were issued in the 1940's by the IRS and in the 1970's by the State of California stating that the California State PTA is in fact a nonprofit organization.
- A letter of "affiliation" that California State PTA provides stating your unit is in good standing and falls under the State PTA nonprofit status.
How do I get this documentation?
- PTA Units in a Council – Contact your Council President and request this packet.
- PTA Units not in a Council – Contact the Peralta District President and request this packet.
In your request, remember to include:
- Reason for the request (e.g. need for a matching grant, bank requirements, etc)
- FAX number (if you have one)
- Unit President's name and home address
After receiving the request, all of the documentation needed to prove your Unit’s non-profit status will be mailed to the home address of your Unit President of record. And it will take approximately 7 to 10 days for this to be accomplished.
EXAMPLE:
As an example, all banks now require PTAs opening a bank account to supply documentation that includes:
- Copy of IRS letters of determination as proof of 501(c)(3) status
- Copy of PTA association minutes recording the election of officers
- Copy of PTA Unit bylaws
Once you get this packet together, keep it in an accessible place, perhaps in a permanent binder that goes to a new Unit President or Treasurer with each new school year.
During the summer, the president and treasurer should prepare a preliminary budget that should be presented at the first executive board meeting, also taking place (hopefully) in the summer. Input from all board members should be considered. All budget items start at zero – there is no carryover from the previous year. There should be no commingling of funds from teacher fundraising, student body accounts, or booster clubs. The IRS considers all money deposited into the PTA account to belong to the PTA. Any commingling of funds will jeopardize your private, non-profit status.
Two sample budgets are presented here. The Easy PTA Budget is a worksheet that clarifies what income or expense goes under what category. This format is a good place to start planning your financial year. The PTA 990-EZ Budget follows the 990-EZ form and gives examples of budget categories often used by PTAs. We hope these sample budgets are helpful. There is also a sample PTA budget from the Toolkit under Forms.
The fiscal year for all Fremont units is July 1st of one year to June 30th of the next year. The End-of-Year Financial Report is completed by the treasurer after the close of books June 30th. This report accompanies the books to audit.
After reconciliation of the bank statement in July, the treasurer gives the books to the auditor. If your unit does not have an auditor, please contact Fremont Council for recommendations.
Form 990-N, e-Postcard - Big News for PTAs
Small tax-exempt organizations whose gross receipts are normally less than $25,000 and were not required to file a Form 990EZ previously will now be required to file an information form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ.
This filing requirement applies to tax periods beginning after December 31, 2006. Please note they refer to the tax year that begins after 2006 which for most PTAs will be July 1, 2007, requiring the first form to be filed in 2008, more specifically, November 15, 2008.
This form will be in electronic format only.
Any organization that fails to meet its annual filing requirement for three consecutive years will have its tax-exempt status revoked.
The IRS website, www.irs.gov, has the most current information about this change under the Charities & Nonprofits tab. This tab contains a list of FAQs that are very helpful. PTA leaders should become familiar with this major change and how it will affect local units.
IRS 990 / 990EZ Informational Tax Return
The 990 / 990EZ / Schedule A forms needed by 501(c)(3) organizations can be downloaded from the IRS web site at www.irs.gov under Charities and Forms. If your gross income (everything you deposit into your bank account plus interest and minus per caps paid to council) is over $25,000, you will be filing 990EZ and Schedule A. If your gross income is over $100,000, you will be filing 990 and Schedule A. Schedule A requires information from the previous year's tax return, so have that document available.
Although PTAs do not pay taxes due to their non-profit status, they are required to file informational returns. It is the responsibility of the previous year's treasurer to see that these forms are completed. It is the responsibility of the current board (whether the previous treasurer is a member or not) to see that this requirement has been fulfilled. If the treasurer or other board member is not comfortable with filling out the form, professional help can be sought. Tax return preparation is a legitimate PTA expense and can appear in your budget. Non-compliance with IRS regulations will result in a fine of up to $20 a day, not to exceed the smaller of $10,000 or 5% of the gross receipts, for late returns.
Tax Information
District and Council PTAs are not allowed to instruct units on how to fill out 990 or 990-EZ IRS Informational Tax Returns. The official policy of the California State PTA is that the unit should hire a professional to aid in tax return preparation and that this is a legitimate PTA expense. We are allowed, however, to give you information on how to prepare your budget, your treasurer's reports, and your annual financial report in order to facilitate the organization of your data for the tax accountant. Here are several documents that may aid in your data organization.
- Synopsis of Annual Tax Returns Filed by PTA Units (PDF)
- Tax Preparation Checklist (PDF)
- www.irs.gov - Website of the IRS for downloading this year's forms. Select "Charities and non-Profits" then "Resources - Forms and Publications."
A treasurer's report should be given at every meeting detailing income received and checks written. It should include a beginning balance and an ending balance. A year-to-date total of all budget items is a nice addition to any treasurer's report. The report is not approved by the board; the correct wording by the president is: "The treasurer's report will be filed for audit." If the unit has a financial secretary, this report can be give before the treasurer's report. The principal duty of the financial secretary is to collect the money counted by fundraising chairmen and deposit it in the bank. It does not matter who deposits the money, the treasurer or financial secretary; the money should be deposited as soon as possible.
The most important document for units in dealing with PTA money is the Cash Verification Form. Click here to view and download a copy of this form: Cash Verification Form.pdf. It can also be found in the Toolkit that all unit presidents receive. There is also a CD of the Toolkit with downloadable forms; it can also be found on the State PTA web site under Finance/Forms. www.capta.org The form requires the signature of two people who have counted the money; more signatures can be obtained if desired. DO NOT SKIP THIS STEP! Make sure your handwriting is legible to avoid discrepancies in the deposit amount. Attention to the small details with this form is critical to proper record keeping by the financial secretary and the treasurer.
The due dates for per caps are listed on the Home Page. The remittance form for Fremont Council units can be accessed at: remittance form. (Excel spreadsheet) Fill out both the top and bottom of the form and send it to the council financial secretary; one copy will be returned to you as a receipt.
All PTAs are required to carry insurance and Workers Comp (even though you may have no employees.) The premium is a joint premium and is renegotiated each fall by the State PTA with our insurance company. The president has a copy of the Insurance Loss and Prevention Guide that is sent in the fall mailing. It details coverage that your unit has. It also has a valuable section on "Green Light Activities" – activities that are acceptable; "Yellow Light Activities" – activities that may need permission or additional insurance; and "Red Light Activities" – activities that are prohibited under all circumstances. Holding a prohibited activity may void your insurance for the year. Contact the insurance company if you have any doubt about an activity. Please turn in insurance/Workers Comp form on the regular Fremont Council remittance form along with the State Workers Comp form which is found at: Workers Comp form.
Fundraising projects must appear in the budget and have the approval of the membership in advance of the event. The project must support the goals of the PTA and be related to the educational, charitable and philanthropic purposes of the tax-exempt organization. Funds are exempt from income tax because a majority of the work is performed at the unit level by volunteers.
A completed registration form and registration fee must be submitted by September 1st of each year (September 1 through August 31) during which a raffle is expected to be conducted. A check in the amount of $20.00 payable to Department of Justice must accompany this registration form.
A Nonprofit Raffle Report must also be submitted for each raffle conducted the previous year (September 1 through August 31.) Reports are due on or before September 1st. Both these forms can be downloaded from the Attorney General's web site: www.ag.ca.gov/charities/forms.htm.
There are additional reporting requirements (Form W2-G) for winnings of $5,000 or more or if the winning amount is more than 300 times the cost of the ticket. Consult the web site for these requirements.
Sales tax is paid by units at the time of purchase. Consequently, resale use permits are not required by units to conduct sales of those items. Units are exempt from collecting and remitting sales taxes for items sold. Units may have to inform the vendors of their exclusion status and insist on paying sales taxes to the vendors. Units may have to adjust vendor invoices to reflect sales taxes. If units are unable to obtain the cooperation of the vendors, they may have to consider using different vendors. If no other vendor is available, sales taxes should be remitted by the unit to the Board of Equalization via written letter. For further information, the web site for the Board of Equalization is: www.boe.ca.gov.
For clarification of determining whether a person is an employee or an independent contractor, see the California State PTA Toolkit (5.6.1.)
Due to the increasing reporting requirements of the State of California, the State PTA recommends that if you want to pay someone for a service, you go through your school or school district. The school district, in paying the person, assumes withholding responsibilities and also liability for the employee / independent contractor.
The California State PTA Finance Commission has developed helpful guidelines to aid in keeping track of inventory. The following is a document of sample inventory report forms: PTA Inventory.
The California State PTA web site has an excellent section on specific questions on the topics of sponsorship, Scrip, fund raising, carry-over funds, budget, banking, taxes, E-commerce, check writing, audit, commingling of funds, treasurer, and gifts to schools. Please access: www.capta.org/sections/finance/faq.cfm.