From: Birdville ISD Council of PTAs
To: Principals and Local Unit PTA Presidents
Re: Filing of 990s and Sales Tax
The 990 EZ:
All non-profit organizations, including PTAs, that averages a gross income of $25,000 over the span of three years is required by the IRS to file a 990 EZ within four and a half months after the end of their fiscal year. For example, if a fiscal year runs June 1 through May 31 the 990 EZ must be filed by October 15.
Filing deadlines are as follows for most local units in BISD:
Fiscal Year ending May 31 - deadline is October 15
Fiscal Year ending June 30 - deadline is November 15
The Schedule A must be included with the 990 EZ. The Schedule B is only filed if a local unit qualifies. If the local unit does not qualify for filing the Schedule B, then it must be marked as not needed on the 990 EZ. If these forms are not included, or the box is not marked as not needing the Schedule B, the IRS will not show the 990 EZ has been filed. This may result in a late filing penalty assessed to the local unit. This penalty is not covered by insurance.
Materials needed to complete the
990 EZ include the instructions and the prior fiscal year’s annual report. As in the example above, a full financial
report with a beginning balance as of
Who fills out the 990? Traditionally, since it is due in the next fiscal year and new treasurer term, the new treasurer typically completes and files the form after the audit report has been adopted. TXPTA suggests that the outgoing treasurer complete the 990 EZ and Schedule A to include with the audit. Upon the Audit Committee’s finding the records accurate and complete the 990 EZ, Schedule A and other supporting information can then be filed or corrected and filed.
It is suggested that the 990 EZ, Schedule A and any supporting information be made available to the local unit executive board prior to mailing to ensure the board’s financial responsibility that it has been filed and on time.
The IRS mails each local unit the 990 packet directly to the school. Information, forms and instructions can also be found on their Web site at www.irs.gov.
Beginning with the 2007-2008 fiscal year, all non-profit organizations will need to file some sort of 990. Units who gross below $25,000 will receive an e-mail 990N. Units grossing between $25,001 and $100,000 will file a 990 EZ, Schedule A and other supporting materials. Units grossing $100,001 or more will file a 990, Schedule A and supporting materials.
The Sales Tax:
All non-profit organizations, including PTAs, are required to file with the Texas Comptroller a sales tax return. This return must be filed even if the local unit does not need to collect sales tax. A report of all fundraising activities and the portion that is tax-free either by established tax-free events or are not taxable must be made. A full list of what is taxable and what is not taxable can be found in the Treasurer’s Guide from TXPTA. The establishment of the two tax-free events must be approved by the association and follow the guidelines of one tax-free event per calendar and fiscal year.
The sales tax return is due each January 20 for the calendar year: meaning January 1 through December 31. The outgoing treasurer should complete and submit a Fundraising Activity Report dated January 1 through the end of the fiscal year. This report should be passed onto the new treasurer to be able to then add any activities from the beginning of the fiscal year through December 31.
Sales tax, like the National and Texas PTA portion of dues, should be kept in escrow. The local unit is collecting this money for another entity and should not report it as income and expenses in the budget. Dues should be sent to TXPTA in the amount of $3 per member (unless they are a TXPTA Life Member) in a timely manner so this escrow amount should be zero.
The sales tax escrow may have some money that is carried over between bank statements and financial reports and should be reported. Some units report it as “Beginning Balance including the Sales Tax Escrow is…” The TXPTA accounting software is a great tool in accounting for sales tax. When a financial report is generated, it automatically presents the unit’s financial report as well as the escrow report so all monies are accounted for. The program goes one step further in helping separate the income from the sales tax: once the total income is entered, it is highlighted and the Calculate Sales Tax button is clicked and the sales tax applied is automatically deducted from the income and placed in escrow.
This return is mailed to each local unit at the school by the Texas Comptroller and can be found on the website www.window.state.tx.us.
Examples and support:
Examples and further information regarding the 990 and sales tax can be found in the President’s Handbook through TXPTA. This handbook is given to each local unit president and can be purchased through TXPTA on a disk or packet. It is also available to everyone for free on their Web site at www.txpta.org. To find materials log into the members only section, click on resources then handbook and literature. (The Treasurer’s Guide and all other guides can be downloaded as well.)
If any local unit would like for a Birdville ISD Council of PTA board member to assist them with preparing the 990, sales tax return or for anything else, please contact the current president.
Jennifer LePla
2007-2008 Birdville ISD Council of PTAs President