We just discovered that our PTO had not filed taxes since their inception almost 20 years ago!
Bottom line, once you become aware of the oversight (huge though it may be) the best thing is to correct it immediately.
Our incoming President actually discovered that our organization had never filed taxes. After researching and contacting previous years' board members, it was discovered that they were all operating under the assumption that because we had nonprofit status and processed under $25,000/year that the PTO did not have to file taxes.
I was mortified because I had been active in our PTO in various capacities for 5 years at that point and had no clue and it was a new parent whom I had recruited that made this discovery!
We immediately contacted the IRS for information and were informed that we needed to file immediately...were told that we could possibly face a penalty but given our nonprofit status and the fact that we discovered and were attempting to correct the error, chances were good we would not.
Our incoming president took the initiative and contacted several local accountants for quotes to review our records and correct our status. Our files are currently being processed by our newly appointed accountant and our PTO will pay $400 for their services.
It's certainly overwhelming and feels like a daunting task, but the situation can be easily corrected by contacting the IRS directly and consulting and employing the services of a local reputable accounting firm on your PTO's behalf.
I will keep you updated on the outcome of our situation and wish you the best of luck.
I was voted President of my elementary school's PTO for the 2011-2012 school year. Inadvertently, I found out that the organization did not have non-profit status as was generally thought. I also know that taxes have not been filed for over 5 years or more.
1. What is the liability for this oversight? To whom does it extend--the current board or the previous boards?
2. Can board members be personally liable?
The PTO usually deposits between $50,000 and $75,000 into it's checking account throughout each school year. Some of this money is used to pay for fundraising orders (the product that was sold), and some of it goes to students/teachers.
3. Is there a specific % of money that is paid to the IRS if the group does not have non-profit status?
4. Has anyone else been through this with their PTO?
