I think you are correct that you need to file for a new EIN since the IRS does not show this as being active. A friend of mine has this situation and the IRS told her to request a new one. Also, it looks like you would have to pay the $500 fee unless you expect a big change from your history.

I would be careful about using the terms non-profit and tax exempt to mean State and Federal. I don't think it is always that way and many people use the words interchangeable. For instance, we can be a non profit corporation in MI, but we are not exempt from sales tax on our fund raisers. And if we never file for §501(c)(3) status (my preferred term for Federal purposes but maybe that's because I'm a tax geek!), we would be taxable for Federal income tax purposes.
It sounds like you would probably be considered a taxable association in the years that you were not in the PTA and not listed as a non profit corporation for state purposes. That means that your past filing requirements would've been a Form 1120 (this is the theoritical answer - I have not found anyone that has actually done this). However, you probably would not owe any taxes. Like JHB said, you cannot undo the past and you were not a Board member than so it is still better to get it right going forward.

J,
You make sense. And you're right. If they want to check into things further, it's up to them.
If we do this right from this point forward, at least the new group will be okay.
Since we are a 'new' organization, we need a new (SS-4) ID #, right?
Since we do expect grossing over 10K, the 8718 will still cost us $500, right?
And tax exempt and non-profit are two different things, correct? State and Federal, sales vs. income tax exemption.
Thanks once again!!!! I'm sleeping better!!!
Enjoy your day as best as you can!!!!

This is totally, totally off the cuff advice from a mere mortal (not CPA or attorney). No criticism at all intended - just want to make clear it's my personal opinion.)

We were faced with a similar situation, plus limited historical records, new officers, needed new bylaws anyway, etc. etc.

Our decision was to just start over as a new organization and move forward. We saw nothing to be gained by going backwards and accounting for the actions of other people with limited records to even figure it out. Frankly, there's only so much you can ask of volunteers and their time. In spirit, the organization had always done what it should, money raised went to appropriate projects at school. No one was trying to deprive the government of any owed tax. It just didn't seem practical to pursue it. I think if our group were faced with complexity of figuring out the past AND getting the 501(c)(3), they probably would have just continued to operate informally and done nothing.

I think we have a responsibility to "do the right thing", but I also think practicalities of life have to be considered. I was pretty honest with the IRS rep, and he told me that was our decision to make. One thing I've found when talking to them is that while they can't give you tax advice, they do sometimes slip in some common sense responses that probably are not EXACTLY according to the tax regs.

As far as I'm concerned, the IRS is welcome to track down the former officers from any time period they want justified. We are doing our best to do what's right NOW while we run the PTO. You'll have to decide what's right for you - this is just my two cents.

[This message has been edited by JHB (edited 09-19-2001).]

Perhaps I wasn't clear....
We've been a PTO for many, many years. Long ago we were a PTA.
Several years ago, we started grossing the big bucks (over 10K, more like over 25K).
We filled out the SS-4 but for some reason didn't use the number assigned, or stopped using it. Inadvertently, we 'borrowed' the BOE's ID number and used that for our banking as well as handing out to people.
If we were still a PTA, we would be under the BOE's control and therefore could use their number. But we're not, so we can't.
After contacting IRS about the number found on an SS-4 dated 1994, they said that they have no report. The IRS rep said that if you don't use your number after so many years, they drop it from their system.
Since our PTO isn't listed as a non-profit and the IRS has no record of it, I have to assume that we've been operating under the table.
As for tax exemption, my understanding is that it only applies to sales tax, not income tax, and therefore, whether or not we are tax exempt (which I doubt we are), it still does not absolve us from income tax, unless of course we apply for and are granted non-profit status (paying the $500 since we've grossed over the $10K). Then we have to file a 990 every year, information only.
However, we still have to fess up and file something for the past few years, because both the 8718 and the 990 reference past years.
If penalized, I would expect to petition for abatement, but we can't ignore the past, right? That's tax evasion, isn't it??? Even if we are just a PTO?
Thanks everyone!!

I think there are 2 separate issues going on regarding penalties. In Chris's case, it sounds like her PTO was never a §501(c)(3)entity. To be one, you have to request it from the IRS by filing a Form 1023. If your PTO never did this, then you are a taxable entity, probably an association. In this case, you would be required to file an annual Form 1120 and pay income taxes if you had income. Any penalty you would have is based on the amount of tax you owe - in most cases, little or none. Over time, most PTO's will pay out all their earnings so they will have zero income. In this case, I would consider going forward and getting the future straightened out. The IRS is not out any money, and you cannot retroactively apply for §501(c)(3) status.
The second situation is if you are a qualified §501(c)(3)organization with over $25,000 gross receipts and never filed a Form 990. The penalties for not filing in this case are based on a certain amount per month which I do not recall the exact amount. If you have the records to file these, I would probably go back at least 3 years and file them. I would expect to get a penalty notice on this, and then I would write to the IRS and request abatement based on reasonable cause. If they are not abated, there is an IRS problem resolution department that I would contact. If that did not work, I would contact my Congressional representative. Assessing penalties on small PTO's that are trying to now do the right thing is not what Congress intended.

Chris,
We have the same situation here, going on for years and years, never filing anything, making over $25K....

I'm treasurer now and I don't feel comfortable 'ignoring the past'. To me, that's unethical, to say the least. As someone else in this forum said, 'how do we teach our kids....'.

I don't believe that we can not get in trouble if we ignore the past.
If we have to take our lumps, so be it. I doubt we'll get severely punished, but want to be prepared in the event of a fine, or back taxes.

If you find anything more, let me know. I'm still looking for something on the web. irs.gov is very helpful for forms and such, nonprofit.law helps too.

good luck!!!! I'm doing what I need to so I can sleep at night.