Home & School Clubs?? Fed and Calif treatment

[newtaxguy]

I have a client who is the newly elected president of the home and school club associated with her child's school. It seems that taxes have not been filed for (at least) several years.

Can anyone either explain the Federal and California rules are with respect to these organizations or point me to references?

Thanks.

The New Tax Guy

[kcjenkins]

Many of these are under the national PTA umbrella, and do not have to file.

[Gail in Virginia]

I have a client who is the newly elected president of the home and school club associated with her child's school. It seems that taxes have not been filed for (at least) several years.

Can anyone either explain the Federal and California rules are with respect to these organizations or point me to references?

Thanks.

The New Tax Guy

Most likely, they intend to be non-profit and tax-exempt under IRS code 501©3. If so, they should file the 1023 to get that status recognized and make donations tax deductible. Also, if that is the case they would be required to file a form 990EZ if their average gross receipts from all sources is $25,000 or more. If it is more than $100,000 they would have to file a 990. If they have income unrelated to their tax exempt purpose, they might have to file a separate return for that and pay taxes on Unrelated Business Income. This is a complicated area of taxation that many preparers choose not to be involved in, and what I have said is just the bare bones of the matter. I don't know what rules CA has regarding these entities. However, if they were supposed to file exempt organization returns and did not, the penalties are substantial. Most of the time, in my experience, with all-volunteer organizations, a letter begging for forgiveness, promising to do better, pointing out that the money has to come from funds meant to be used for the children, etc. Good luck!

[newtaxguy]

Thanks Gail.

You've pretty much confirmed what I expected. Apparently there's been considerable neglect among these folks and they haven't done much, if anything, over the years to satisfy the wishes of Uncle Sam or Uncle Arnold... I'll see just how much I can uncover in conversations with the current prez.

The New Tax Guy