I have found myself in this same situation except...we are not 501(c)3 and are not incorporated. Last year we had gross receipts of over $35,000, and so far this year are a little over $24,000.

My question is do we have to file a 990? Do we have to pay tax on our income even though we are exempt from paying state tax? I am so confused, and have placed a request in our weekly newsletter to get a parent CPA to volunteer some time to help with things. Of course...no reply. *sigh*

Any help is GREATLY appreciated. I know that the IRS isn't a group you want to mess with.

This situation happened to our group a few years ago. We found that two different treasurers simply didn't file 990's for three years. We got a letter from the IRS and we were looking at fines of over $20,000. Unfortunately, the records from those years were also missing!

The first thing we did was hire a CPA and reconstruct the records, then fill out the missing 990's. Don't forget that you also have to file the state taxes, too. We required that the president of the board for the years that were missing actually sign the returns. We sent them to the IRS along with a letter of explanation. We filed to have the fines forgiven and contacted our local congressman about it - his office contacted the IRS and helped convince them to forgive the fines.

We did get the fines forgiven. It was a very stressful time. Now we automatically get our stuff to a CPA immediately after our fiscal year and we also have an audit done (by members of our group who are bookkeepers) so that we are covered and have a safety net.

In our state (California) we also have to file with the Attorney General's office of charities. That wasn't done, either.

Don't panic - I think it happens more than you know. My neighbor, a tax attorney who deals with the IRS all the time, told me that they really don't want to fine you and will actually encourage you just to get the paperwork filed.

A similar situation occured with a PTO in our District. The ball was dropped between one treasurer and the next and no 990's were filed for about four years. They were advised it was better to take the inititive and come clean, than to wait till they were found out. The new treasurer back filed all the old tax returns (I hope you at least have good records), and they received fines totaling about $5,000. Once the fines were received the next step was to file for abatement. (emphasizing - we are an all volunteer organization, we made a mistake and took the initive to correct it) There was a lot of nail biting, but in the end the fines were all waived.

The question of other groups using your EIN is an interesting one. If you ask them to stop, and then they don't, what do you do next? The IRS might have some good advise on this question also.


Stick to your guns and resign if the other officers are not willing to this right. The 990 Instructions say "there are penalties - fines and imprisonment - for willfully not filing returns and for filing fraudulent returns" Good Luck!!!

Yikes!!!!! I would also contact the IRS & find a new CPA. THese clubs should be using the school's EIN not PTO. I would also ask the IRS about that, too. I don't know how much trouble it would be for your PTO to change its EIN but if these other clubs won't stop, it may be an option. Also go to your school board for help to get these clubs to stop using your info. Good luck!!!!!

I've never been in your situation, but I feel for you! What a mess you inherited. I would start with a phone call to the IRS tomorrow! It's not easy, and you may still be assessed fines, but I would think it's way better to come forward than continue to plead ignorance. Frankly, I'm surprised the CPA would recommend your PTO just act like it didnt' need to file the missing years. Aren't they going to wonder? You can certainly call the IRS anonymously and ask advice...bump the call to a supervisor if you feel you need more info.

I would also put a stop to the other clubs using the PTO's EIN immediately. They are abusing the PTO's status. If the club is a school club, then maybe the school would be ok with then using it. Lots of schools do that for their clubs. You're absoluely correct about the money reporting for those organizations. Often people don't veiw all this stuff as very important...we're only a club. But the IRS and the banking industry are very professional. They may not catch every casual practice, but why take the chance?

Good luck. You are doing the right thing.

Please keep us posted. Your experience will be a very valuable lesson for the rest of us.

Ok, here's another thought. Is your PTO incorporated?

I'm kind of freaking out! I became the treasurer of our PTO this year. Finally, after asking since I was elected, I received a box full of old records. We are incorporated and have 501c(3)status. I found a letter from the IRS asking if we needed to file a 990. It was dated 2002 and was asking about the 1998-1999 tax year. The previous treasurer checked that we had receipts of less than $25,000 for that year so we didn't need to file. While that was true for the year 1998-1999, every year since we have been well over $25,000. No return has been filed for any year since. I figured up a rough estimate and it looks like we could have penalties in the $18,000 range! :eek: Apparently, the way the old treasurer decided to take care of this was to ignore the problem. Had she filed then, we would have only had about $7,000 in penalties! I'm not sure what to do now. One CPA advised to file for last year only and ignore the other past years. He was the old adviser for the past treasurer.
Schedule A asks for past years info so what would I put down? That just doesn't seem ethical to me. Any help is appreciated! I'm not even sure where to start!

I've also found out that a few clubs in our school and a teacher's fund use our EIN number on their accounts without reporting anything to me! I didn't even know about the other accounts until the secretary of the school accidently gave me a statement for one of the groups! I told them that they needed to get their own EIN or give me all financial records. Needless to say, I'm not very popular right now at school! All of their money should be reported in our gross receipts. I've been told that it's always been done this way and I'm the first person to have a problem with it. I've told the current president that I would resign if the PTO wouldn't file the 990s. I just don't know where to go from here!