By Lisa Holbrook, Texas PTA Treasurer and Alex Peterson, Texas PTA Director of Finance
Recently, the IRS issued letters revoking the tax-exempt status of numerous organizations, including many local PTAs, for failure to file information returns for three consecutive years. In particular, the revocations resulted from a failure to file required annual electronic notices, known as the Form 990-N e-Postcard, for taxable years 2007, 2008, and 2009. Many smaller organizations were not required to file annual information returns prior to 2007. Every exempt organization must now file a return annually.
Texas PTA has established a special committee, the IRS Revocation Committee, to address this issue and assist local and council PTAs with the reinstatement process. In addition to a reinstatement fee of $100, the IRS will require the following:
- Cover letter from Local or Council PTA to IRS;
- Copy of checklist for IRS Form 1023;
- IRS Form 1023, signed by the PTA president;
- Attachment(s) to IRS Form 1023 (PTA name and EIN number must be printed at the top of each page);
- Copy of the Articles of Incorporation (if incorporated);
- Copy of the most recently approved bylaws;
- Bylaws Certification, signed by two officers;
- Copy of the Local/Council PTA Ethics/Conflict of Interest Policy (signed by all executive board members); and
- Schedule E and/or H (if applicable).
The IRS Revocation Committee will publish samples of all the nine items listed above for the Local or Council PTA to use as a guideline when preparing the needed documentation. These materials will be published on the Texas PTA website next week. In addition, Texas PTA will schedule several webinars in the months of October, November and December to assist PTAs with this process. Texas PTA staff and volunteers will contact those PTAs that have received notification from the IRS.
Your Local or Council PTA is only eligible to participate in this reinstatement program if its annual gross receipts were less than $25,000 in each fiscal year of 2007-2008, 2008-2009 and 2009-2010. There is a separate process for PTAs with gross receipts exceeding this amount.
The Form 1023 does require that every PTA applying for reinstatement provide four years of financial data. This data will be from fiscal years 2007-2008, 2008-2009, 2009-2010 and 2010-2011. In order to expedite this process, Texas PTA recommends that all Local and Council PTAs who received notice of revocation to gather this information as quickly as possible. This information is part of the PTA’s annual report, which is prepared each year in conjunction with the fiscal year end and the financial reconciliation. If a PTA cannot access this information, then it will need to create annual reports for the fiscal years stated above based on other financial records, such as the checkbook and previous bank statements.
Texas PTA’s goal is to have all affected PTAs’ paperwork processed and remitted to the IRS by December 31, 2011.
After communicating with the Texas Comptroller’s office in Austin, Texas PTA has determined that PTAs should continue business as usual as it relates to using the Sales and Use Tax Exemption Certificate or the Resale Exemption Certificate when making purchases for the PTA. In addition, PTAs are free to continue to utilize their two tax-free days per calendar year. However, for those PTAs that are no longer considered tax-exempt by the IRS a donor (a company or individual) will not realize the benefit of their contribution being tax deductible until the PTA’s status has been restored.
If you have any questions please contact, Alex Peterson, Texas PTA Director of Finance, at firstname.lastname@example.org, or Lisa Holbrook, Texas PTA Treasurer, email@example.com. Please use the words “IRS Revocation” in the subject line of the e-mail.