Question:

We have completed our financial review and decided that we might as well file our federal informational tax return at the same time.  I understand that the income levels that determined which form we file (990N, 990EZ, or 990) have changed but I’m still unclear on a couple of points.  Our revenue in previous years has generally been below $50,000, but last year one of our fundraisers was more successful than expected (Yeah!) and our revenue was slightly more than $51,000.  Does that mean we still have to file a 990EZ? 

 

Answer: 

What a great idea to file your tax return when you have all the information in front of you from the financial review—getting it completed and filed now means you won’t have to worry about meeting the November 15th deadline!  You are also correct about the revenue levels changing. 

Here are the revised levels for the 2010-11 fiscal year:

• Revenue less than $50,000, file the 990N
• Revenue $50,000 to $200,000, file the 990EZ
• Revenue more than $200,000, file the 990.

Now to answer your questions, keep a couple of things in mind.  First, remember that when you compute your PTA’s revenue for the purpose of the IRS filing, you can deduct that portion of your dues that is forwarded to your council, the state and National PTA.  Second, the form that should be used is based on the PTA’s ‘normal’ level of revenue, not necessarily the actual income for the particular year.  To determine the ‘normal’ level you average the year in question plus the previous two years.  Thus to determine the appropriate form for 2010-11, you would average the revenue for 2008-9, 2009-10 and 2010-11.  If the average for all three is less than $50,000 your PTA can file the 990N electronic postcard; if the average is higher, your PTA should file the 990 EZ for the 2010-11 fiscal year, even though your revenue for that year may have been slightly more than $50,000.  Finally remember even if your PTA is eligible to file the 990N, you have the option of filing a 990EZ, but heed the IRS’ caution here.  

Who can be on a financial review committee?

Question: 
We are getting ready to conduct our annual Financial Review, and both the outgoing and incoming treasurer have expressed a willingness to serve on the Financial Review Committee.   According to the Money Matters section of the Leadership Packet (page 16), the outgoing treasurer is “not a member of the financial review committee [but] a resource to the committee [who] is normally not present when the financial review committee meets, but should be available by phone to answer questions.”  However, having the outgoing treasurer present would seem to expedite the process because she is very familiar with the financial records, and the incoming treasurer should start getting familiar with the records.   Why can’t they both be members of the committee? 

Answer:  
Under the Uniform Bylaws, no one who had signing authority on the PTA’s account(s) can be a member of the Financial Review Committee.  Assuming the incoming Treasurer was not a signer on the account during the past year, appointing that person to the Committee is a very good idea for the reason you mentioned.  The purpose of the financial review is to provide an independent review of the PTA’s financial records, which can only take place in a setting where the committee members will not feel reluctant to ask what may be difficult questions.  That’s why WSPTA recommends that the outgoing Treasurer not be present, but be available to answer questions. 

Can a PTA leader endorse a local candidate?

Question: 

I am well-known in my community as a leader in the PTA, and I’ve been asked to endorse a candidate who is running for the school board.  I would like to support this candidate, but I know that PTA is not supposed to get involved in partisan campaigns, but I’m not sure if that extends to nonpartisan offices such as school board.  What are the rules? 

 

Answer: 

You are correct that PTAs do not endorse candidates for public office, and that prohibition applies regardless of whether the race is partisan or nonpartisan.  This prohibition is in the Uniform Bylaws (Article 2, Section 1(a)) and also a requirement to maintain tax exempt status under Section 501(c)(3) of the Internal Revenue Code.  While individuals who are PTA leaders are not prohibited from exercising their personal rights to be involved in the election process, they should take pains to make sure that such participation does not imply support from the PTA rather than from just the individual.  This would be particularly true in the situation you describe, i.e. the fact that you are well known to be a PTA leader may make it difficult for the average voter to distinguish you as an individual from you as a spokesperson for the PTA.  One step you can take is to not include your PTA affiliation in any printed material that includes your endorsement, or if reference to your PTA affiliation is necessary for identification purposes (“Which Mary Smith is it who has endorsed Candidate Jones?”).  If so the reference should include a statement that the PTA affiliation is for identification purposes, and does not imply endorsement by the PTA itself.  One final consideration, assuming you are in a leadership position with the PTA, is the impact of an endorsement of a candidate on your ability to be effective as a PTA leader if your candidate doesn’t win the election.  Unlike the endorsement question, this one doesn’t have a hard-and-fast rule, but you should definitely consider this aspect and perhaps talk to the others on your PTA’s board to get their perspective before making a final decision.

Appointing a Financial Review Committee

Question: 

I am the newly elected President of my local unit, and I have discovered that my predecessor did not appoint a financial review committee.  Should I ask him to do so now?  Also, from my quick look at the records, it appears that some items are missing—what should I do about those.     

 

Answer: 

Because you are now the President of your unit you are the person authorized to appoint a financial review committee.  Once you have made the appointment, the review committee should be given the financial records that you have, and the committee should note in its report what items, if any, are in fact missing.  Sometimes it’s just a matter of incomplete documentation, but other times the absence of information to support an expenditure could indicate a more serious issue, so until the review has been completed and the report submitted it’s difficult to advise what other steps—if any—you should take.  The review committee’s reports should include recommendations about how to make sure the unit’s financial records are complete going forward.

Treasurer Preparing For Next Year

Question:

I am the newly elected Treasure of my local unit, and I’ve received the check book and other financial records from my predecessor.  The financial review has been completed and everything was in order.  Fortunately all of our bills have been paid and we’re not planning on receiving any funds until late August.  Is there anything I need to do in the meantime to get ready for next year?  

 

Answer: 

Thanks for your willingness to step up to this important leadership position, and congratulations on getting off to what looks like a great start.  This time of slower activity is an opportunity to make sure the procedures are in place for the coming year.  For example, do you have at least 3 signers on the bank account, so that you’re able to have two signatures even when one of them is out of town?  Also, has your Executive Committee identified a non-signer board member to review the bank statement each month and then pass it along to you?  Even though the Federal income tax return (990, 990EZ or 990N) isn’t due until November 15th, you can file it early—and the same for your unit’s annual report to the Charities Program at the Washington Secretary of State’s Office, which isn’t due until next May 31st.  And of course don’t forget that even though there’s little or even no activity during July and August, you need to prepare and submit a financial report for those months, just the same as for the months when there’s a lot more going on.  Finally, make plans to attend your region’s Fall Conference and PTA and the Law workshops where you will receive a lot of useful information to help you be successful in this important role.  Keep checking your region’s web page on the WSPTA website for updated information about the scheduling of these events.

  

What to do When an Elected Officer Resigns

Question:

We elected officers last spring, but now one has had to resign because of a job transfer. Can the Executive Committee appoint a replacement?

Answer:   

Article 5, Section 6 (e) of the Uniform Bylaws covers this: If a vacancy occurs in an office, the executive committee may fill the vacancy until the next general membership meeting at which time nominations shall be made from the floor with the consent of the nominee. A quorum being present, a majority of all votes cast is necessary to elect. . . .  

So to answer your question, the Executive Committee makes an interim appointment to fill the vacancy, and then there is an election—including the nominations from the floor—at your PTA’s next general membership meeting.

Updating an Annual Review

Question:  

When I filed our annual corporation renewal with the Washington Secretary of State’s office in February, I noticed that there was a place to list the officers.  I updated the information then, but of course now our officers are changing—should I file another renewal? 

Answer:

Yes.  The law requires that any nonprofit corporation file an annual report during the month of the anniversary of its incorporation.  That report is required regardless of whether anything has changed since the preceding year’s report.  In addition, however, you should also update the annual report any time during the year that there’s a change in any of the required information, which includes a change in the officers.  The annual report can be filed online or you can download the form and file it by mail—either way there’s a $10.00 fee.  More information and a link to the applicable forms can be found on the Secretary of State’s website here.