October 25, 2014
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Tax status of PTA topic of special meeting

It was February when John Brown Francis Elementary School’s Parent Teacher Association (PTA) president, Jackie Harris-Connor, received a letter from the IRS. In it, the IRS informed Harris-Connor that the school’s PTA had failed to comply with new 501c3 regulations beginning in 2005, and their tax-exempt status would be revoked.

The problem, said Harris-Connor, who spoke candidly about the issue, is not one person’s fault.

“There were a lot of small mistakes that happened, and now we’ve got a big problem,” said Harris-Connor.

In 2005, the IRS began to require that small, tax-exempt organizations, like the JBF PTA, file 990 forms. But a lack of communication lead PTA members to believe that their fiscal year ended on June 30, when the IRS had it documented as Dec. 31. By the time the PTA had filed a 990 in June, they were already six months late. Although they received notices saying the 990’s they filed in 2008 and 2011 were accepted, the letter they received in February of this year informed them that their returns from 2006, 2007, 2008 and 2009 were all late, and therefore, unacceptable.

Since February, Harris-Connor has been busy trying to fix the problem, calling the Rhode Island PTA, the National PTA and Representative James Langevin’s office, which offers tax filing assistance. Although Langevin’s office was helpful, neither the state nor national PTAs provided her with any help, said Harris-Connor.

A call to the Rhode Island PTA president was not returned as of press time.

Harris-Connor has also been informing people and companies that have made donations to the PTA, and their recent reading garden project, that they can no longer utilize the JBF’s PTA non-profit status for tax-exempt contributions.

James Martinez, spokesman for the National PTA, said although the changes in the IRS non-profit system have undoubtedly affected a “handful” of PTAs nationwide, the problem is not widespread.

“We’re not seeing drastic changes in numbers because of [the IRS changes],” said Martinez. “But this isn’t a one time incident. It has to be just a handful of PTAs … certainly not in a way that affects our numbers.”

Martinez said the bulk of the reason for the decrease in PTA numbers from their all-time high of 12 in the early 1960s is due to two events: the civil rights movement in the 1950s (when the PTA consolidated from two groups) and the work-force shift in the 1980s. Recently, he said, numbers have leveled around 25,000 PTAs, or 5 million to 6 million members nationwide.

But Harris-Connor said at least 1,000 PTAs have been affected by the IRS switch.

Martinez said the National PTA has put out multiple resources over the past three years to help local PTAs navigate the new tax requirements.

“But they still have certain responsibilities that we can’t be responsible for,” said Martinez.

At a meeting scheduled for tonight at 7, Harris-Connor will outline the options for the future to the current PTA members. Ultimately, Harris-Connor hopes to re-apply for the 501c3 status, but whether the IRS will approve it is the true question. Harris-Connor has been working with a third party accountant to complete the process, which includes a lengthy 1023 form. The 1023 requires paperwork from the JBF PTA’s origin in the 1960s, documentation Harris-Connor says the organization no longer has. They also must provide financial statements from 2005, which Harris-Connor has access to. The final component, a four-year projection of future finances, is where the accountant comes into play.

“This is not something a lay person can do,” said Harris-Connor.

Pleas to the state and national PTA for help on the matter resulted in referrals to websites and pamphlets.

“They haven’t helped us at all,” said Harris-Connor, who was hoping for tangible assistance.

Martinez said that he understands that PTA members, volunteers with other responsibilities, can sometimes get bogged down or confused by the plethora of IRS paperwork.

If the JBF PTA is unable to regain their 501c3 status, they have several options. They can stay a PTA and become a taxable organization. One of the benefits of the PTA umbrella, which all local PTAs pay state and national dues to be a member of, is the 501c3 status. By staying a PTA, they could continue to pay dues but remain a taxable entity.

They can also choose to dissolve the PTA and form a PTO, Parent Teacher Organization, which would mean they would operate independently.

In the meantime, if the members decided to continue to pursue another 501c3 designation, the JBF PTA will pay taxes, although the IRS has agreed not to penalize them. The process of regaining a 501c3 could take upwards of nine months, and the option of dissolving and reforming another PTA has been ruled out as unethical.

Harris-Connor said she would not cast a vote at the meeting, and let the decision of what to do next be entirely up to the membership. Tonight’s meeting will include an overview of the options, as well as a schedule presentation from the Rhode Island PTA. If there is enough time, the issue will go to a blind vote. If not, it will be tabled until the next meeting.

The JBF PTA has approximately 130 members, each of whom pays a $5 membership. Most of that fee, said Harris-Connor, goes to state and national dues.

“We’re upset that the state and national PTA have not been supportive,” said Harris-Connor. “Why are we paying all these dues? Where’s the help and guidance?”

Whatever the outcome, Harris-Connor is hopeful the parent and teacher group can continue to provide services to the school in the way it currently does.

As for now, “Everything is at risk,” she said.


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