Question: IRS Forms for tax-exempt PTO

Our elementary school last year went from a PTA to a PTO. Recently I received an IRS notice stating that we needed to fill out a 1023 form which is not only 13 pages long to fill out but also have to pay $400. Seems a bit steep considering we only made $1000 last school year. It seems that all out hard work with selling/fundraising has been a waste of time considering almost half of what we made will have to go to the IRS!! Anyhow, I didn't know we had all these restrictions and forms to fill out...I'm learning as we go. So far all I know is that we need to fill out the 1023 form. Are there any other forms that we need to fill out and more fees to pay and are we restricted on how often we can sell?

Asked by Mariab024



Community Advice

gjcoram writes:
I think that's one of the benefits of PTA: the national organization takes care of a lot of paperwork for you -- but it costs you.

You do have to pay the fee, but as long as you stay up to date, you should only have to pay it once in the life of the organization. Note the IRS wants you to report gross income, not the $1000 net, but all the money that came in. You need to fill out a Form 990 or 990-EZ every year; you may get a fine for failure to file those forms promptly, but usually the IRS will waive the fine if you can show them that you have now established processes to ensure the forms will be filled out in the future. You may also be able to file a simpler form (990-N?) if your gross income is low enough.

Community Advice

Mrs Bridges writes:
Filling out the information may be time consuming but is worth it in the long run. You only have to file the 990N once a year and keep records of your financial transactions. The form 1023 will allow you to solicit larger donations from places who want to know that their contributions are tax-deductible (something your PTO can't claim without filing for it). PTA may have done the paperwork for you...but now that you are a PTO you have freedom from PTA to keep your funds local and run the organization according to your own bylaws.

Answer this question: