Edmond Public Schools. Sanctioned Organizations

Transcription

1 Edmond Public Schools Sanctioned Organizations

2 Contact Information for EPS Jeanise Wynn, Business Manager Phone: (405) Debbie Smith, Executive Assistant Phone: (405) This entire presentation, along with other resources, will be posted on our website.

3 What is Sanctioning? Recognition & Attribution Allows organization to operate for benefit of students Permits fundraising on school property Finances are exempt from school laws over activity fund Board of Education has complete discretion whether to sanction a group

4 Sanctioning Does NOT Equal Control Board of Education does not control funds; organizations operate from their own bank accounts Organizations must obtain their own tax ID number Organizations may NOT use school district s tax ID number or tax-free status Board of Education is not responsible for ensuring that organization complies with applicable state and federal laws

5 Application Process Apply annually Due in EPS business office by late June each year Include Financial Information from June of prior year through May Approval by School Board at August meeting Board can request records at any time Board can withdraw sanctioning at any time Applications are subject to Open Records Act

6 Please let us know if any contact information changes from what was on your application. Debbie Smith Officer changes Updated information for officers address Phone number Banking information Updated signature cards

7 Hosting Events on School Property All building usage is subject to the provisions stated in District Policy #5330. Events held outside of school hours require a nominal rental fee, proof of insurance, and a completed contract. Any extra hours worked by EPS staff (custodial, event supervisor, auditorium tech) will be billed to the club. All vendors (such as food trucks, photo booths, and bouncy houses) must supply proof of adequate liability insurance and a signed Sex Offender Affidavit on file. Dunk tanks are not allowed on EPS property.

8 Compensation & Gifts to District Employees The IRS has deemed certain payments to District employees by sanctioned organizations to be taxable as if paid by the District. Compensation for services (e.g. payments to coaches, band directors, etc.) Gifts to employees of the district (unless de minimus) Call the EPS Business Office for guidance before making a taxable payment or giving a taxable gift!

9 Compensation for Services Compensation to EPS employees for services is taxable wages. Payments shall be made through EPS payroll department. Organization will reimburse the school for the compensation amount PLUS employer FICA and Teachers Retirement (totaling 25.39%). Employee will be responsible for employee FICA and income tax withholding.

10 Gifts to District Employees Taxable unless de minimis Tangible personal property of minimal value is not taxable (dollar threshold for de minimus is not defined in law) Cash and gift cards are NEVER de minimus Inform recipient of the tax consequences of your gift Inform District of any gifts given during the calendar year before Dec. 31 Income is reported on employee s W-2 Employee pays the employee FICA, federal and state tax Sanctioned organization reimburses District for employer FICA Gifts to teachers from individual parents are not taxable

11 Payments for Professional Services All individuals who will have contact with our students must have a current, clear background check on file with the district. Payment for services must be made through the school s activity fund in order to ensure compliance. This practice will alleviate the need for your club to file form(s) 1099 for these services.

12 501(c)(3) Status Exemption from income taxation by the IRS under section 501(c)(3) of the Internal Revenue Code. Certificate of Incorporation and Bylaws must be filed with the Secretary of State. Criteria and process for applying can be found in IRS Publication 557. PTAs that are members of the National Parent Teacher Association are exempt under a group and national exemption. Group exemption also available under Parent Booster USA.

13 501(c)(3) Advantages Income is tax exempt (except unrelated business income, e.g. advertising). Contributions received are tax deductible to the donor. (Many corporations and foundations require 501(c)(3) status before they will make contributions.) Individual members are protected from personal liability. Sales tax advantages. Eligible to hold bingo games in Oklahoma.

14 501(c)(3) If you have not yet received your 501(c)(3) determination letter from the IRS, EPS recommends contacting Parent Booster USA. ( PBUSA is a non-profit organization that provides services to booster clubs at reasonable prices. Tax exempt status may become a requirement of sanctioning in the near future.

15 Tax Return Requirements ALL nonprofit groups are required to file tax returns. The IRS has a rule that any organization, regardless of income, MUST file the appropriate tax return. Organizations recognized as tax-exempt file the appropriate form of IRS 990. If an organization does not have tax-exempt status it may be required to file a corporate tax return and pay tax on net income.

16 Tax Return Requirements If a booster club does not file a tax return, it risks future penalties and interest for failure to do so. If a booster club DOES NOT have federal tax-exempt status, filing a Form 990, the tax-exempt return, will raise questions

17 Tax Return Requirements The IRS expects all organizations to begin filing taxes immediately upon obtaining an EIN. Nonprofits that fail to file federal income taxes on time for three consecutive years automatically lose their tax-exempt status.

18 Federal Filing Obligations If 501(c)(3), Form 990, the annual "Return of Organization Exempt From Income Tax,". If gross receipts are normally $50,000 or less may generally file 990-N (e-postcard) If gross receipts < $200,000 AND total assets < $500,000 file 990-EZ Searchable data base of exempt organizations as well as revoked exemptions is available at Profits/Exempt-Organizations-Select-Check If an organization has unrelated business income of more that $1,000, it must file an unrelated business tax return, Form 990-T. Taxes will be due on this income regardless of the 501(c)(3) status. (This return is in addition to the Form 990.)

19 Federal Filing Obligations If non 501(c)(3), Form 1120, corporate income tax return. 1099s to report to the IRS payments of $600 or more for compensation (contract labor). W-2G to report prizes awarded in raffles, bingo, etc.

20 State Filing Obligations Nonprofit organizations that are exempt from federal income taxes are automatically exempt from Oklahoma corporate income taxes. However, they must file an informational return, Form 512-E, annually. In addition to filing taxes, organizations must renew their registration with the Oklahoma Secretary of State annually.

21 Tax Return Requirements NEW THIS YEAR: EPS will require a copy of your most recent tax return prior to receiving approval for the school year. This requirement is for all organizations, regardless of the type of return your group files with the IRS. Copies may be ed or submitted in person with your sanctioning application.

22 Parent Booster USA Founded in 2004 by an attorney skilled in nonprofit and tax law, PBUSA has more than 3,500 member organizations in 48 states with a 95% annual renewal rate. PBUSA provides peace of mind for parent volunteers, school administrators and school district leadership.

23 $tate $ales Tax Issues Not required to collect and remit sales taxes: A public or private student group/organization, or A 501(c)(3) not using a sales tax exemption, or A PTO or PTA (even if not a 501(c)(3)) Not required to pay sales tax on purchases: A PTA (member of national association; PTOs are not included), or An organization which has acquired a sales tax permit from the Oklahoma Tax Commission for items purchased for resale, or An organization which has acquired a sales tax exemption from the Oklahoma Tax Commission The Oklahoma Tax Commission allows ONE exempt parent-teacher group per school. All others cannot be exempt.

24 $tate $ales Tax Issues Per the Oklahoma Sales Tax Exemption Packet: The entities that qualify for sales tax exemption in Oklahoma are specifically legislated. Therefore, not all entities that are recognized by the Internal Revenue Service as tax exempt pursuant to 26 USC 501(c)(3) are exempt from sales tax in Oklahoma. The organization must have a Federal Identification Number before applying. Oklahoma has ruled that Booster Clubs are NOT exempt. Booster Clubs may apply for a Oklahoma sales tax resale permit. This permit would enable the group to make purchases for resale exempt from sales tax. Periodic sales tax returns will be required for a permit holder. Sales tax must be charged to the customers for all goods sold! Collected taxes must be remitted with periodic returns.

25 Raffles and Bingo Raffles are allowed under Oklahoma law for accredited public schools and affiliated student groups, PTAs, PTOs and 501(c)(3) organizations. For bingo games where consideration is paid to play, organization must be a 501(c)(3) and must obtain a license or exemption from the ABLE Commission. May be required to report prizes: Raffles - winnings >=$600 AND at least 300 times amount of wager (net of amount of wager) Bingo - winnings >= $1,200 before deducting wager May be required to withhold federal tax: Raffles winnings >$5,000 Bingo no FWT unless they don t provide TIN, then backup w/h 28% Can t provide alcohol as prize. FYI: Although sanctioned organizations can hold bingo games, school activity cannot. Raffles are ok for both.

26 Property Donated by Sanctioned Organizations Must comply with all applicable codes Must be free of liens Becomes property of the district School must maintain and inspect School is potentially liable if injury In order to coordinate our Digital Conversion initiatives, all technology items should be purchased by the district.

27 Title IX Considerations for Booster Clubs Female athletes must be given equivalent opportunities There must be no discrimination in the provision of athletic opportunities One of the many factors considered in determining overall compliance with Title IX is the funding level of related programs. Booster club funds are considered in this analysis

28 Good business practices protect your assets, your officers, your members, and our students!

29 Edmond Public Schools Sanctioned Organizations