RE: How to get a tax ID Number. 8 years 11 months ago #77149
First of all, the tax id number is the only number the federal govt (IRS) will issue. Getting one doesn't really mean anything about the non-profit or tax-exempt status of your group -- just that you exist.
You really bring up two different points: the difference between non-profit and tax-exempt. (I am not an attorney, nor an IRS rep so take this with a grain of salt). The first step to formlizing a PTO is to get the tax id number (also called the Employer id number or EIN). Then, typically, the gruop will incorporate in its own state as a NON-PROFIT organization. That MIGHT give your group some special privileges in your state, but the laws vary from state to state. The next step is to file for the official federal EXEMPTION FROM FEDERAL INCOME TAX under section 501c3 of the tax code. In other words, to file for your 501c3. This status allows your group to avoid paying federal income tax on (some/all) of your income. In our state, 501c3 status also exempts our group from paying state sales tax on (most) purchases. In our
state, there is no other identification number than the federal tax id number. We don't get a "non-profit" number or an "exemption number".
When you say your group is non-profit, do you mean in spirit or in actual legal status in your state? I think most typical PTOs operate like non-profit organizations, but many many haven't filed with their state or feds.
Yes, you're right about the restriction on donations from outside sources. In order for them to claim their donation to you as tax-deductible, you must be a federally-registered 501c3. Having a tax id number doesn't prove you're 501c3. Some vendors might look the other way and make a donation anyway, but unless you are 501c3, you can't claim to your potential donors that their donations might be tax-deductible. This can be very important if your PTO is planning a big auction or doing a walk-a-thon where you really rely on donations.
Hope this helps. Please come back with more questions, but you might want to order a copy of the PTO Today Start Up guide (from this site) which covers all this stuff in one big binder - written in a way we all can understand, promise.