carol oman cfisd director of internal audit 01/29/2015
TRANSCRIPT
Financial Aspectsof PTOs and Booster
Clubs
Carol OmanCFISD Director of Internal Audit
01/29/2015
Agenda Mission / Purpose of PTOs & Booster Clubs Fund-Raisers
o Tips on Fund-Raisers to Hold• Fund-Raisers that can be held• Fund-Raisers that have been held
o Sales Tax Implications• “One-Day Tax Free” Sales Days• Catalog Sales• Sales Tax Included in Price• Sales Tax Holiday
o Fund-Raiser Vendorso IRS Prohibitionso Fund-Raising Activity Report
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Agenda Contributions / Donations Revenues Expenditures Financial Deadlines
o Districto Texas Comptroller’s Officeo IRS
Record Retention
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Mission / Purpose Assist in supporting students or student
organizations
o Financial Support• Fund-Raisers• Contributions / Donations
o Support through volunteering of your time
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Fund-Raisers
Review the Guidelines PTOs
o http://www.cfisd.net/en/community-involvement/community-engagement/pto-guidelines/
Booster Clubso http://
www.cfisd.net/en/community-involvement/community-engagement/booster-clubs-guidelines/
Fund-Raiser Guidelines are included on these webpages.01/29/2015 5
Tips - Fund-Raisers to Hold
What types of fund-raisers can your organization hold?
What types of fund-raisers have you held & why?
What are the sales tax implications?
What vendor should be used?
Have you received permission to hold the fund-raiser?
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Fund-Raisers that can be Held
The type of fund-raisers that your organization can hold depends on whether you have the following from the Texas Comptroller’s Office:
o Sales & Use Tax Exemption – allows an organization to hold two “one-day tax-free” sales days per calendar year.
o Sales Tax Permit – allows an organization to sell taxable items in Texas. Apply on-line for a sales tax permit at http://www.cpa.state.tx.us/taxpermit/.
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Check Your Status Look up the status of your organization to
determine if you have a sales & use tax exemption or permit at http://www.cpa.state.tx.us/taxinfo/sales/tp_db_search.html.
o Tax Exempt Entity Search– Sales & Use Tax Exemption
o Sales Taxpayer Search– Sales Tax Permit
You may look up by name, EIN, or sales tax number.
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No Exemption, No Permit If your organization does not have a sales & use
tax exemption and does not have a sales tax permit, then only the following types of fund-raisers can be held:
o Sale of items that are tax-exempt by law – such as cookie dough, coupon books, etc.
o Sale of Catalog Items – such as gift wrap, candles, etc.
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Sales Tax Exemption If your organization only has a sales & use tax
exemption, you may sell:
o Items that are tax-exempt by law – such as cookie dough, coupon books, etc.
o Catalog Items – such as gift wrap, candles, etc.
o Taxable items on two “one-day tax-free” sales days per calendar year.
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Sales Tax Permit If your organization only has a sales tax permit,
you may sell:
o Items that are tax-exempt by law – such as cookie dough, coupon books, etc.
o Catalog Items – such as gift wrap, candles, etc.
o Taxable items.
Most PTOs need a sales tax permit since they sell spirit items throughout the year. Some Booster Clubs do not need a sales tax permit since no taxable items are sold.
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Sales Tax Exemption & Permit
If your organization has a sales & use tax exemption and permit, you may sell:
o Items that are tax-exempt by law – such as cookie dough, coupon books, etc.
o Catalog Items – such as gift wrap, candles, etc.
o Taxable items on two “one-day tax-free” sales days per calendar year.
o Taxable items.
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Tax-Exempt ItemsBy law, these items are tax-exempt. Ads – Athletic Programs, School Newspapers, Posters, Yearbooks
Admission – Athletic Events, Carnivals, Dances, Dance / Drama / Musical Performances, Summer Camps / Clinics, Workshops, Project Graduation
Catalog Sales of Tax-Exempt Items – Cookie Dough
Discount / Entertainment Cards & Books Food – Meals, Food, Candy or Soft Drinks and Concession-Stand Food
is tax-exempt if the sales are part of the organization’s fund-raising drive and all net proceeds go to the group for its exclusive use. Does not include the sales of alcoholic beverages.
Magazine Subscriptions for more than 6 Months Services – Car Wash, Cleaning
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Taxable Items Auctions and Silent Auctions (exception is tax-
exempt items, such as gift card or coupons)
Calendars and Day Planners
Candles
Catalog Sales of Taxable Items – Gift Wrap
Clothing including T-Shirts
Flowers – Roses, Carnations, Arrangements
Gift Wrap, Balloons, etc.
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Taxable Sales Magazines – When Sold Individually
Magazine Subscriptions – Sold for Less than 6 Months
Plants – Holiday Greenery, Poinsettias, Floral Arrangements
Rummage, Yard & Garage Sales School Store & Spirit Items School Supplies Yard Signs
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Type of Fund-Raisers What types of fund-raisers have you held & why?
o For Service Purposes (emphasis is not on profit)– School Supplies or a special event, such as a Carnival
o For Profit
Consider profit made from previous fund-raisers as compared to the work involved.
Consider sales tax implications.
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Sales Tax Did you know . . .
Even though you have a Texas sales and use tax-exemption:o You may need to collect sales tax ando You may need to pay sales tax.
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“One-Day Tax-Free” Sales Days
Organizations exempt from sales tax are entitled to two (2) “one-day tax-free” sales days per calendar year not school year. Suggest holding one fund-raiser in the Spring and one in the Fall.
Sales of taxable items are taxable unless you use a “one-day tax-free” sales day. “One-day” is 24 consecutive hours.
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“One-Day Tax-Free” Sales Days
Select the taxable fund-raisers (exclude catalog sales and book fairs) that involve the most money received (highest gross) not the largest profit.
Document which fund-raisers are your “one-day tax-free” sales days.
You may take orders and receive the items on one day or deliver the items to the customers on one day. This would be considered your “one-day tax-free” sales day.
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Catalog Sales For catalog sales of taxable items and book fairs, you are
considered an agent of the vendor. These fund-raisers are ALWAYS taxable.
As an agent of the vendor, you cannot use a “one-day tax-free” sales day.
Make sure that you and the vendor are in agreement on the handling of the sales tax before the fund-raiser is held.
Collect the sales tax and remit it to the vendor. The vendor will pay the sales tax to the Texas Comptroller’s Office.
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Sales Tax Included? If you have a taxable sale, will sales tax be
included in the sales price or will it be added to sales price?
For catalog sales and book fairs, easiest to have sales tax included in the price.
If sales tax is included in the sales price, must state on brochures or signs.
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Sales Tax Holiday Usually in August, the State has a sales tax
holiday.
o Sales Tax Holiday – August 7-9, 2015
o School Starts – Monday, August 24, 2015
If you sell items that meet the criteria of the sales tax holiday and sell them during that holiday, the items are tax-free. Is not considered as one of your “one-day tax-free” sales days.
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Fund-Raiser Taxable? If you are not sure if your fund-raiser is taxable,
contact the Texas Comptroller’s Office at 1-800-531-5441.
Document the date, time, who you spoke with, your questions, and the answers received.
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Fund-Raiser Vendors Is vendor an Approved Fund-Raiser Vendor?
The Approved Fund-Raiser Vendor list is on the PTO and Booster Club Guidelines webpages.
If they are not on the list, request the vendor to submit applicable information to the Director of General Administration to become an approved fund-raiser vendor.
See http://www.cfisd.net/en/community-involvement/community-engagement/fundraiser-guidelines/. 01/29/2015 24
IRS - Prohibitions Cannot require anyone to participate in a fund-
raiser.
Cannot require that a certain amount be sold or that a certain amount be donated in lieu of fund-raising.
Cannot penalize anyone for not participating in a fund-raiser.
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Individual Accounts Individual Accounts for Revenues Raised -
PROHIBITED
Cannot credit an individual based on revenues raised to offset that individual’s expenses.
Amount raised must benefit a campus / organization as a whole.
For fees and expenses that students must pay, these can be tracked individually. You just cannot reduce the fees or expenses based on funds raised.
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Fund-Raising Activity Report
Permission Request – Due by September 30 or at least 30 days before fund-raiser is to be held. Submit to Principal (PTOs) or Sponsor / Principal (Booster Clubs).
For fund-raisers to be held at the beginning of the school year, submit your permission request as soon as possible.
Operating Report – Complete within one week of projected end date of fund-raiser. Complete applicable attachment. Submit to Treasurer for PTOs and Booster Clubs.
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Fund-Raising Activity Report
Examples
o Catalog / Product Sales (Attachment A)
o Ticket Events with Entry or Participation Fees (Attachment B)
o Concessions (Attachment C)Before the first concession sale, the products should be counted and documented. The ending inventory may be performed after each concession or less frequently. At a minimum, inventory the products at the end of each semester. The internal controls over products normally improve when inventories are performed more frequently. Also document any purchases of products that are added to the inventory during this time period.
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Contributions / Donations
Contributions / Donations to a PTO / Booster Club
May be monetary, equipment or other tangible item.
Must be a 501(c)(3) entity as approved by the IRS to receive a charitable contribution.
Provide contributor with your organization’s employer’s identification number (EIN).
If requested, provide a copy of your IRS Determination Letter.
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Revenues For fund-raisers involving orders, require money
to be collected at the time orders are placed. You can determine if any checks are returned prior to delivering products.
Have checks made payable to the PTO or the Booster Club.
Endorse checks and deposit money as soon as possible to prevent the loss of funds.
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Revenues As money for a fund-raiser is received,
have two people count the money before giving it to the Treasurer for deposit.
Do not use cash received to pay expenses. Deposit money first and then write checks for expenses incurred. This method provides a good audit trail.
Suggest making a copy of all checks received prior to deposit for backup purposes.
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Expenditures For funds raised, use the money as
originally budgeted or designated. If a change is needed, inform your membership and request approval as required by your bylaws.
Use funds raised in the year the fund-raisers are held, when possible, so that the parents / students that raised the funds will see the benefit.
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Expenditures If an organization is working towards a project
that will take several years to fund, inform your membership.
Do not purchase gifts for officers, sponsors, or principals with PTO or Booster Club funds unless the gift is a token of service recognition or special award with a value of $25 or less according to the IRS.
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Financial Deadlines District
o File Financial Report and Review Report with Principal (PTOs) or Sponsor, Principal, and the Director of General Administration (Booster Clubs) by 9/15 each year.
o For fund-raisers to be held, submit Permission Request of the Fund-Raising Activity Report to the Principal (PTOs) or Sponsor / Principal (Booster Clubs) by 9/30 or at least 30 days prior to a fund-raiser being held.
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Financial Deadlines Contributions to the District
o At the end of the Fall and Spring semesters, compile a list of expenditures that were used to benefit students, a student group, or a school.
Examples of benefits provided may include money given directly to a student group or school, items purchased for a student group or school, and assistance provided to pay for all or a portion of a student trip / competition. Most money expended by a PTO or Booster Club would be used to benefit students, a student group, or a school.
o This list should be provided to your Principal, Sponsor, or VIPS Liaison.
o The school should provide a contribution acknowledgment form to the PTO / Booster Club for the above contributions or benefits provided.
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Financial Deadlines Texas Comptroller’s Office – If your organization
has a sales tax permit, then you must:o Submit a Texas Sales and Use Tax Return
o Due either monthly, quarterly, semi-annually, or annuallyon the 20th day of the month following the end of each reporting period.
If quarterly, due by 1/20, 4/20, 7/20, and 10/20.
Each time a return is submitted late, a $50 penalty plus interest is owed.
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Sales Tax Included Calculation
Example: Sales Price included Sales Tax
Total Sales - $1,000, Tax Rate – 8 ¼%
$1,000 / 1.0825 = $923.79 (taxable sales)
$923.79 x .0825 = $76.21 (sales tax)$923.79 + 76.21 = $1,000
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Financial Deadlines IRS
o Must file Form 990-N, 990-EZ, or 990 annually.• 990-N – (online) Gross Receipts are $50,000 or less• 990-EZ – Gross Receipts are greater than $50,000 and less
than $200,000• 990 – Gross Receipts are $200,000 or more
o Due 4.5 months after fiscal year end.• Fiscal Year End – May 31 – 990 Form due October 15• Fiscal Year End – June 30 – 990 Form due November 15
If form is not filed for 3 consecutive years, the IRS automatically revokes the organization’s 501(c)(3).
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Record Retention - Permanent
Internal Recordso Registration & Approval Form (Booster Club)o Articles of Incorporation or Associationo Bylaws / Charter / Constitutiono Minutes from Meetings
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Record Retention - Permanent
State of Texaso Sales Tax Permit Applicationo Sales Tax Permito State Sales & Use Tax Exemption Notificationo Certificate of Formation (if applicable)o State Franchise Tax Exemption Notification (if applicable)
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Record Retention - Permanent
IRSo Form SS-4 – Application for Employer Identification
Number (EIN)o Form 1023 – Application for Recognition of Exemption
(include all attachments)o Form 8718 – User Fee for Exempt Organization
Determination Letter Requesto Acknowledgment of Your Requesto Determination Letter
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Record Retention - Temporary
Keep the temporary records for a minimum of the current year and the four (4) previous years.
Before discarding any records, confirm with the Texas Comptroller’s Office and the IRS that your organization is in good standing and that no open items or issues exist related to the time period involving the records that you would like to discard.
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Record Retention - Temporary
Financial records and backup including checkbook and bank records
Financial Reports and Review Reports Contributions received by the organization Financial Aid Guidelines (if applicable) Sales Tax Reports IRS 990-N, 990-EZ or 990 forms filed Correspondence with the Texas Comptroller’s
Office and the IRS
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Contacts Financial Questions
Carol Oman – Director of Internal Audit – [email protected]
Pat Stefan – Internal Auditor III – [email protected]
Janett Tapia-Gonzalez – Internal Auditor II – [email protected]
Booster Clubs & Fund-RaisersKristi Giron – Director of General Administration – [email protected]
Contributions, PTOs & VolunteersLeslie Francis – Director, Marketing and Business Relations – [email protected]
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Contacts Texas Comptroller’s Office – Sales Tax
Exempt Organizations Department1-800-531-5441http://www.cpa.state.tx.us/taxinfo/sales/ http://www.cpa.state.tx.us/taxinfo/exempt/index.html
Internal Revenue Service (IRS)Tax-Exempt Organizations1-877-829-5500http://www.irs.gov/Charities-&-Non-Profits
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ContactsThe following websites have copies of IRS tax returns. Some reports are free while other reports may be purchased.
Economic Research Institute (ERI)http://www.eri-nonprofit-salaries.com/index.cfm?FuseAction=NPO.Search&SearchType=Advanced&CobrandID=0
GuideStarhttp://www.guidestar.org/Home.aspx
National Center for Charitable Statistics (NCCS)
http://nccsdataweb.urban.org/PubApps/search.php01/29/2015 46