Humble Independent School District Booster Clubs and Exempt Organizations Manual

Transcription

1 Humble Independent School District Booster Clubs and Exempt Organizations Manual

2 Band Choir Drill Team NFL Orchestra Sponsors Athletics Drama Project Cheer FFA - 2 -

3 The goal of the Internal Audit Department is to ensure that Humble ISD Booster Clubs and Exempt Organizations (Booster Clubs, PTA s, and PTO s) comply with established policies, procedures and guidelines. The information in this manual is provided to assist Booster Clubs and Exempt Organizations in following pertinent policies and regulations and to provide suggestions for their organization. Internal Audit composed this manual to assist in managing your Booster Club and Exempt Organization operations. Note: This manual may also be viewed on-line in PDF format at the on the Booster Clubs and Exempt Organizations website that is linked to the Internal Audit Department. See Please note the following deadlines: Audit Committee Report- September 1st Updated Audit Checklist- September 1st Financial Certification September 1st Updated list of officers- September 1st Evidence of Liability Insurance payment for the upcoming year- June 1st GASB 39 forms- Due June 15 th. If you need any assistance with any of the required reports or have any questions, please do not hesitate to contact the department and the address below at any time. Internal Audit Department c/o Booster Clubs and Exempt Organizations Eastway Village Humble, Texas Please note: The Internal Audit Department is not an authority on specific accounting situations or tax-related issues concerning individual Booster Clubs and Exempt Organizations; therefore, Booster Clubs and Exempt Organizations should obtain competent independent counsel on accounting and tax matters related to their specific circumstances

4 Humble ISD Reference List Texas Comptrollers Office-Taxability Issues Texas Comptrollers Office-Exempt Organizations University Interscholastic League Internal Revenue Service (IRS) IRS Forms and Publications Extension IRS Exempt Organizations Texas Secretary of State Office of the Texas Attorney General Houston Office Consumer Protection Division Public Information & Assistance and Humble ISD Central Administrative Personnel Dr. Guy Sconzo, Superintendent Shawn K. Faciane, Internal Audit Director Dr. Cecilia Hawkins, Deputy Superintendent Paula Almond, Associate Superintendent Lynn Lynn, Assistant Superintendent for Finance Martha Buckner, Assistant Superintendent for Support Services Troy Kite, Director of Athletics Krista Malmstrom, Director of Athletics Janet Orth, Assistant Superintendent of Learning Support Becky Hunt, Director of Career and Technology Education Houston Hayes, Director of Arts Education Dr. Karen Perkins, Humble ISD Education Foundation

5 Table of Contents 1. General Information a. Letter from the Superintendent b. General Information c. Set Up and Organization d. Humble ISD Exempt Organizations Shall e. Humble ISD Exempt Organizations Shall Not f. Other Information 2. Operating Procedures a. Record Keeping and Administration b. Fund Raising Federal Tax Information a. Federal Tax Information Sales Tax Information a. Texas Sales Tax Rules for Booster Clubs and Exempt Organizations b. Frequently asked questions c. Non-Taxable Sales vs. Taxable Sales d. Food Sales e. One Day Tax-Free Sales Incorporation of a Non-Profit Organization- Secretary of State a. Incorporation of a Non-Profit Organization Audit Committee and Financial Report Instructions a. Booster Club and Exempt Organizations Audit Committee General Information b. Booster Club and Exempt Organization Audit Committee Instructions c. Examples of Booster Club Audit Committee Reports Report Type A Report Type B Report Type C d. Suggested Audit Programs e. Example of Booster Club Financial Report f. Statement of Income and Expenses g. Example of Balance Sheet for Boosters h. Booster Club Financial Certification U.I.L. Guidelines a. U.I.L. Guidelines (pages not numbered) Exhibits and Forms a. Exhibit A-Booster Club and Exempt Organization Registration for New Booster Clubs b. Exhibit B-Request for Approval of Fund Raising Activities c. Exhibit C-Fund Raiser Financial Recap Form

6 d. Exhibit D-Check Request Form e. Exhibit E-Sample Booster Club and Exempt Organization Constitution/Bylaws f. Exhibit F-Certificate of Incorporation g. Exhibit G-Approval of Articles h. Exhibit H-GASB 39 Form i. Exhibit I- Records Retention Schedule j. Exhibit J-Booster Club Officer Information Sheet k. Exhibit K- Booster Club Tax Exempt Status Form l. Exhibit L-Booster Club Donation Form 9. Humble Policies and Regulations (pages not numbered) a. GE Local- Relations with Parent Organizations b. GKD Local- Nonschool Use of School Facilities (page not numbered)

7 Section 1 General Information - 7 -

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9 General Information Parent support organizations may be formed to promote the school program or to compliment a particular student group or activity. Students enrich their education and expand their horizons when they participate in school activities and programs. Therefore, the District greatly appreciates the time, effort, and financial support that Booster Clubs and Exempt Organizations provide to our students. Because Booster Clubs and Exempt Organizations are formed as a support for the students in Humble ISD, the District has some latitude over their activities. Although a Booster Club or Exempt Organization works very closely with the District, it is still a legally separate entity from the District. The formation of a Booster Club or Exempt Organization must be approved by the appropriate District Principal or Administrator. In addition, an Exempt Organization must abide by all Humble Independent School District policies and procedures, University Interscholastic League regulations, Federal and Texas State laws concerning Booster organizations. If a Booster Club fails to abide by all the guidelines, the organization s activities may be suspended. The Superintendent of Schools is solely responsible for the entire educational program including curricular and extracurricular activities. All activities, events, and personnel are under the jurisdiction of the Superintendent. It is important that Booster Clubs and Exempt Organizations recognize this authority and work within the framework prescribed by the school administration. Each school Principal is directly responsible for all money raising activities carried on in his/her school or sponsored in any manner by or on behalf of his/her school or the school s children. Parent/teacher committees and faculty/student committees should work in full cooperation with the principal, and under his/her supervision in planning special programs and activities or in conducting any activity, which involves the raising of money. Long range planning on scheduling the sale of school pictures, conducting parent organization carnivals, or other Booster Club fundraising projects is necessary so that they are spread as evenly as possible throughout the school year. Principals should ensure adequate scheduling within school buildings within the same attendance zone to preclude conflicts between and among groups. The Sponsor of a student group serves as the liaison between the Booster Club/Exempt Organization and the District, under the supervision of the Principal. The Sponsor is responsible for determining the various activities and trips in which the student group will participate with the approval of the Principal. The Booster Club/Exempt Organization is responsible for supporting a student group, activity, or program. Support may be as simple as providing fan support at games and events or as complex as raising money for an out-of-state competition. The organization works through the sponsor to - 9 -

10 provide assistance for the planned activities of the student group. Sponsors and parents must work together to achieve desired goals. The parent organization decides the type and amount of assistance they will provide; however, the Booster Club and Exempt Organizations do not have the authority to decide the activities or trips in which the student group will participate. Parent Organizations may provide suggestions about particular activities; however, the Sponsor has the final decision

11 Set Up and Organization Each Booster and Exempt Organization must develop and maintain bylaws that are jointly reviewed on an annual basis by the Booster Club officers. The bylaws should contain the detail of the rules of membership. This document must address the organization s fiscal year, organizational structure and the method used to elect officers. Only active members in good standing shall be permitted to hold office or vote upon any matter of business to the organization. Booster Clubs and Exempt Organizations shall not allow members to join that do not have a child, relative, or ward actively enrolled in their school s program. Authorized Signers Appropriate written approval must be received before a District employee, substitute, or temporary worker may serve in a financial capacity or be an authorized signer on the bank accounts of a PTA, PTO or Booster Club. Financial capacity includes holding positions of treasurer, fund-raising chairperson, or serving as check signer. No principal, principal s secretary, financial secretary, or designated faculty sponsor who serves as a liaison between the parent group and the District may be approved as a signer on the bank accounts of a PTO or Booster Club. (Refer to GE Local). This requirement applies to PTA and PTSA groups as well. President Typically, the president of an organization is an individual who has previously been active in the organization. The major duties include, but are not limited to, the following: Preside at all meetings of the organization; Regularly meet with the designated campus representative regarding Booster activities; Resolve problems in the membership; Regularly meet with the treasurer of the organization to review the organization s financial position; Select an officer as the designee to receive bank statements; Schedule the annual audit of records or request an audit if the need should arise during the year; and, Perform any other specific duties as outlined in the bylaws of the organization. Note: The President does not necessarily have to be an authorized signer on the banking account. Vice-President The vice-president acts as the president s representative in his/her absence. They must remain familiar with the organization. The major duties include, but are not limited to, the following: Preside at meetings in the absence or inability of the president to serve; Perform administrative functions delegated by the president; and, Perform other specific duties as outlined in the bylaws of the organization

12 Note: Larger organizations may find it necessary to elect several vice presidents with responsibility of differing areas. Such positions shall be clearly defined in the bylaws of the organization. Secretary The secretary is responsible for keeping accurate records of the proceedings of the association and reporting to the membership. The secretary must ensure the accuracy of the minutes of the meetings, and have a thorough knowledge of parliamentary law and the organization s bylaws. The major duties include, but are not limited to the following: Report on any recommendations made by the executive board of the Booster organization if such a governing board is defined by the bylaws; Maintain the records of the minutes, approved bylaws and any standing committee rules, current membership and committee listing; Record all business transacted at each meeting of the association as well as meetings of any executive board meetings in a prescribed format; Maintain records of attendance of each member; Conduct and report on all correspondence on behalf of the organization; and, Other specific duties as outlined in the bylaws of the organization. Treasurer The treasurer is the authorized custodian of the funds of the association. The treasurer receives and disburses all monies indicated in the budget and prescribed in the local bylaws or as authorized by action of the association. The major duties include, but are not limited to, the following: Serve as chairperson of the Budget and Finance Committee if prescribed within the bylaws of the organization; Issue a receipt for all monies received and deposit in a timely manner; Present a current financial report including bank statements, bank reconciliations, and financial statements to the executive committee within thirty days of the previous month end. (Copies should be available for review by the general membership if requested); File current financial reports at the end of each semester (December and June) with the Campus Principal, Campus Bookkeeper, and the Internal Audit Department; Maintain an accurate and detailed account of all monies received and disbursed; Reconcile all bank statements as received and resolve any discrepancies with the bank immediately; File sales tax reports as required by the Comptroller s office (monthly, quarterly, or annually); File annual Internal Revenue Service form 990 in a timely manner; Submit records to audit committee appointed by the organization upon request or at the end of the year; and, Other specific duties as outlined in the bylaws of the organization

13 Parliamentarian The primary duty of the parliamentarian is to advise the presiding officer on parliamentary law and matters of procedure when requested. The president or presiding officer of the organization alone has the power to make decisions or rule on point of order. Thus, after the parliamentarian has given his advice, the presiding officer must make the ruling to the organization--he is not obligated to follow the recommendation of the parliamentarian. The parliamentarian should be thoroughly familiar with the bylaws and any standing rules of the group on which he serves. A copy of Roberts Rules of Order Newly Revised for parliamentary procedure should be maintained by the organization and referenced as needed. ( Special Committees Special committees are created for a specific purpose and voted upon by the membership. The committee is automatically dissolved as soon as that purpose is accomplished and the committee report is made. Special committees should complete their assignments within the current school year. If the objectives are not met at the end of the school year, officers will be required to reappoint members of the committee for the following school year until the purpose of the committee has been achieved. Individuals who have a conflict of interest shall not be allowed to serve as members of the committee. For example, senior parents would not be included on a scholarship committee since their child is a potential recipient of the monies. Nominating Committee The nominating committee is formed from the organization s membership in the spring of each year. The purpose of the committee is to recommend various members of the organization for office in the coming school year. The nominating committee should be charged with soliciting recommendations for officer positions within the organization. The committee should then contact the potential candidate directly to ascertain their willingness and desire to serve. The nominating committee should report back to the membership on their results in the spring (typically by mid-april) so that elections may be held. Audit Committee At the end of the fiscal year, an audit of the Exempt Organization s financial records should be conducted. The audit should be performed by individuals who are independent from day-to-day financial activities. The primary objectives of the audit are to: Verify the accuracy of the treasurer s financial reports; Ensure that the Club s cash balances are accurate; Determine that established procedures for handling Booster funds have been followed; Ensure that expenditures occurred in a manner consistent with the organization s bylaws; and, Ensure that all revenues have been appropriately received and recorded. The audit committee shall make a report to the general membership upon completion of the audit. Any discrepancies noted shall be brought to the attention of the president of the organization and a resolution reached prior to presentation. Additionally, all officers of the organization shall make records available as requested by the committee. At the year end of the

14 audit, the audit committee should produce a financial certification, an audit report, an income statement and a balance sheet. Please refer to Section 6 of the Booster Club and Exempt Organization Manual for actual examples and templates on how to complete the year end audit and financials. Election of Officers The election of officers of the organization will occur annually within the timelines and manner prescribed by the Booster organization bylaws. Typically the election of officers should occur by May of each year so that the newly elected officers may be in place for the start of the next school year. The transfer of records and audit of the accounts should be complete no later than September 1st of each year. Officers may be elected in a variety of methods (simple majority, secret ballot) in accordance with the organization s bylaws. The election of officers should be from a slate of officers presented by the nominating committee in the spring of each school year. Recommendations may also be taken from the floor at the time of the vote in accordance with Roberts Rules of Order. At no time should officers be appointed without the input and approval of the membership. Rules for Dissolution To dissolve an Exempt Organization, a resolution shall be adopted by the organization (or the executive board if the organization is inactive) stating that the question of such a dissolution be submitted to a vote at a special meeting of the members having voting rights. At least 30 days prior to the meeting, written or printed notice shall be given to each member entitled to vote stating that the purpose of such meeting is to consider the advisability of dissolving the organization. The organization must determine the distribution and usage of treasury monies and other assets before dissolution. In order to comply with Internal Revenue Service guidelines, care should be taken to ensure that excess funds are distributed within the framework of the organization s original purpose i.e. Band Booster funds would remain with the musical program at that particular campus. Any other distribution of funds could void the organization s tax exempt status and force it into a fully taxable situation. This must be noted in your Booster Club bylaws. Record Keeping The secretary and treasurer of the organization shall turn records over to the incoming officers within 30 days of election. Records should be kept for a period of 5 years for audit purposes

15 Humble ISD Exempt Organizations Shall: 1. Be voluntary and support student activities of the school. 2. Comply with all Humble ISD policies, UIL regulations, and Federal and Texas state tax laws for Booster Clubs and Exempt Organizations. 3. Submit all scheduled activities for approval by the principal prior to the beginning of each school year. 4. Comply with administrative regulations and board policy when donating money or gifts to the District. 5. Submit a copy of current adopted bylaws and operating procedures to the principal. See Exhibits and Forms Section for a sample of Booster Club Bylaws. 6. Pay all taxes and other debts incurred by the organization. 7. Incorporate with the Texas Secretary of State and obtain 501c status. Exempt Organizations may obtain their own 501c3 designation or join the District s 501c3 group exemption. 8. Provide evidence of adequate insurance coverage for all activities conducted on school premises. The District cannot provide liability insurance coverage for the Booster Club or Exempt Organization. (See section on Group Liability Insurance in Other Information ) 9. Assume liability for personal injuries or property damage arising from their activities. (The Booster will need liability insurance) 10. Have an audit committee conduct audits annually and maintain records for a period of five years. Supply copies of audited financial statements to the principal and internal auditor annually, and provide appropriate documentation for non-profit public entities. See Audit Committee/Financial Report Instructions. 11. Keep minutes of each meeting on file with the principal. 12. Keep all general club meetings accessible to the public. 13. Work in cooperation with the program sponsor/coach to develop an expenditure budget and define needs. 14. Submit the proposed budget to the principal for approval. 15. Submit the GASB 39 Form (see Exhibit H) to the Internal Audit office by June 15 th of each year. 16. Submit a year-end financial report to the principal not later than September 1st of each year. 17. Donate raised funds for authorized equipment, consultant fees, contracted services, student travel expenses etc. to the appropriate campus program activity account. 18. Have all fundraisers for the school year approved by the principal no later than October 15 th. (See Exhibit B in Section 8 Exhibits and Forms ) 19. File IRS 990 or e-postcards on a timely basis in order to not risk forfeiture of 501c3 exempt status. 20. Comply with the current advertising and media contract that the District has in place with Steeplecreek Media

16 Humble ISD Exempt Organizations Shall Not: 1. Use school facilities without prior written approval by the principal. 2. Be involved in the direction of the coach/sponsor, personnel issues, scheduling of contest, rules of participation or policy making activities for a student group or interschool program. These administrative duties are the sole responsibility of the school and district administration. 3. Have authority in directing or influencing district employees in the administration of their duties. 4. Have the sponsor as an authorized signer on the Booster Club bank account. In addition, no other employee of the District may be an authorized signer on the Booster Club bank account without written approval from the District. 5. Establish a petty cash or miscellaneous funds for the coach or sponsor to be used at his/her discretion. 6. Give a sponsor or coach a gift or cash in excess of the limits imposed by the University Interscholastic League (UIL) from any source in recognition of, or appreciation for coaching, directing, or sponsoring student activities. 7. Give anything to students, including awards. (Check with school administrators first before giving anything to a student, school, sponsor or coach.) 8. Donate any equipment to the program or the school valued at $5, or more. In order to donate equipment valued at $5, or more, an Exempt Organization will donate funds to the appropriate program activity account. The agreed upon equipment will then be purchased through Humble ISD purchasing procedures. 9. Have elected or appointed officers that do not have a child who is actively participating in the program during the current school year. 10. Allow members to join that do not have a child, relative or ward actively enrolled in their school. 11. Directly employ, contract, supplement or in any other way compensate a consultant, clinician, accompanist, or paraprofessional for work performed for the student activity. These types of working arrangements must be managed through the Principal/Sponsor and the Humble District office. 12. Sign contracts or pay expenses directly from Booster Club accounts for any arrangements for student travel associated with the organization (i.e. hotel costs, transportation, bus or airfare, fees, etc) In lieu of this, Booster Clubs and Exempt Organizations may donate money or merchandise to the school with the prior approval of school administration. 13. Conduct excessive fundraisers involving students. Careful consideration should be given to limiting the number of major fund-raising activities involving students. All such activities require the approval of the designated sponsor(s) and the principal. 14. Use Booster Club or Exempt Organization funds to support any non-school activities. This includes summer leagues and tournaments for athletic Booster Clubs and Exempt Organizations. 15. Due to the current contract that the District has with the Coca-Cola Company, all products sold on district property or at district facilities must be Coke products. 16. Use Humble ISD tax identification number as the Booster Clubs identification number. 17. Use the Humble ISD tax exemption form when making purchases for a Booster Club

17 18. Set up individual accounts. Individual Accounts are those accounts used by a Booster Club to credit an individual with revenues raised. The Booster Club would use these accounts to benefit the individual by offsetting that individual s expenses with the amount credited to that individual from the revenues raised. Note: The purpose of a tax exempt organization is to benefit an entity as a whole instead of benefiting individuals. Therefore, the use of individual accounts could result in denial of the application for tax exempt status by the IRS or the loss of existing tax-exempt status. In addition, the individual benefits received by people would result in taxable income to them. 19. Booster Cubs can not do anything which endorses a political candidate including using the candidates name on banners, programs, t-shirts, etc. See CPAB Legal and Texas Education Code Chapter 11, Section Booster Clubs and Exempt Organizations shall not pay for teacher memberships. The dollars raised by Booster Clubs and Exempt Organizations should be directed towards students. 21. Booster Clubs and Exempt Organizations shall not engage in any method of fundraising that involves fireworks or firearms

18 Other Information Raffles: The Charitable Raffle Enabling Act, effective January 1, 1990 permits organizations to hold up to two raffles per calendar year, with certain specified restrictions. A raffle is defined as the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize. Booster Clubs and exempt organizations are permitted to hold raffles within the following guidelines: A qualified nonprofit organization may hold only two raffles per (calendar) year and only one raffle at a time. (Check Section 501(c) of the Internal Revenue code for the definition of a qualified nonprofit organization) Raffle tickets may not be advertised state wide or through paid advertisements. Each raffle ticket must state the name or address of the organization holding the raffle, the name of an officer of the organization, the price of the ticket, and a general description of each prize to be awarded that has a value of over $ A prize may not be money. The organization may not permit a non-member or other unauthorized person to sell or offer to sell raffle tickets. Proceeds from ticket sales must be used only for the purpose/benefit of the organization. All prizes advertised must be purchased before tickets are sold. The winner may pay income tax on a prize. If the value exceeds $600.00, the Booster Club must provide an IRS from 1099 to the recipient. Additional guidelines on raffles can be obtained by contacting the Attorney General s Office. (See or Scholarships: Scholarships must be awarded based on a student s need or merit. The members of the scholarship committee selecting the scholarship recipients should not be related to any of the potential recipients. There should be some method of ensuring that the scholarship funds are used for their intended purpose by the recipients. To ensure that funds are used for their intended purpose, Booster Clubs and Exempt Organizations should award scholarships to students who have demonstrated their intent to seek a college education. This can be evidenced in the form of a tuition or fee bill. All scholarship award checks (academic and athletic) should be written in the name of the college or university. If there are any surplus amounts above tuition and board, the school financial aid office will write a check to the student for the amount of the refund. It may be a prudent idea to check with your college or university for specific instructions on payment

19 Carry-Over Money: No rule or regulation exists concerning the amount of funds that a Booster Club can have in their account. Any funds not used by the organization in a year merely carry over to begin the next year; however, all efforts should be made so that money fund-raised by students should be used for those students. It would be a considerate business courtesy to leave the succeeding year Booster Club with a beginning fund balance sufficient to begin business. Booster Clubs and Exempt Organizations may save money raised over a couple of years for a large expense or a trip. Please be sure to inform the membership and the school of why an excess in funds exists. You may be asked to explain how the funds will be used. Bake Sales, BBQ s Food Sales: High schools may not serve or provide access to competitive foods during meal periods in areas where reimbursable meals are served and/or consumed. All competitive foods sold or provided to students must meet the nutrition standards as set forth by the Texas Department of Agriculture. Please check with the Sponsor and/or Principal before having any food sales. Concession Stands and Building Use: Booster Clubs and Exempt Organizations are one of the organizations that the district authorizes to operate the concession stands at sporting events in order to raise funds for the organization. According to Board Policy GKD Local, District affiliated school support or booster organizations may use District facilities only with the prior approval of the appropriate District administrator. The campus principal is authorized to approve use of facilities on a school campus. The assistant superintendent for support services is authorized to approve use of all other District facilities except athletic facilities. The athletic director is authorized to approve use of District athletic facilities. All concessions held must be in compliance with the Department of Health and local city guidelines. Group Liability Insurance Basic liability insurance is a requirement for parent groups, PTO s and Booster Clubs. Internal Audit annually obtains a discounted group policy for basic liability insurance representing approximately several exempt organizations within Humble ISD. The general liability policy offers the minimum lines of liability coverage, which are $2 million in aggregate and $1 million per occurrence. The benefit to group liability insurance is that the cost is shared among several different organizations. In the spring of each year, Internal Audit begins the process to procure a new group liability policy, and all groups are invited to join in. The period of coverage for the liability policy is July 1 st -June 30 th of each year. (Note: Exempt Organizations must be in good standing with the District in order to join the policy. If you choose not to join the group liability insurance policy, you will still need to evidence your liability insurance. This can be done with a certificate of insurance)

20 501c3 Group Exemption The IRS recognizes a group of organizations as tax exempt if they are affiliated with a central organization. Internal Audit submitted documentation to secure a group 501c3 exemption number from the Internal Revenue Service. The purpose of the group exemption is to assist Booster Clubs and Exempt Organizations in obtaining 501c3 status as well as to ensure that all Organizations are compliant with District, State Comptroller, and the IRS guidelines. Any Booster Club or Exempt Organization that wishes to become part of the group exemption will have the opportunity to join annually, as long as they are in good standing with District Booster and Exempt Organization guidelines. Fireworks It is strictly prohibited for any Booster Club to participate in any fundraiser which involves the sale and/or distribution of fireworks or firearms. Donations Received: Booster Clubs and Exempt Organizations may receive monetary or non-monetary contributions from individuals or businesses. Additionally, those Booster Clubs and Exempt Organizations that have received a Determination Letter from the IRS granting 501(c) (3) tax exempt status are allowed to receive tax deductible contributions. If you accept grants and donations from private companies (e.g. ExxonMobil, Kroger, Wal-Mart, or others) please be mindful that there may be specific guidelines to follow in order to accept these donations. And even though contributions or donations received will ultimately support the student group at a school, the gift is still considered to be a gift to the Exempt Organization and not to the school or the District. (See Exhibit L) Donations Given: When a Booster Club or Exempt Organization contributes directly to a student group, the Club should receive a Donation Letter from either the school or the District. A District employee should complete a form to acknowledge the contribution and give the original copy to the Booster Club for their records. Example: ABC Booster Club is funding a portion of a student group s trip for a competition. The trip costs $50,000, and the Booster Club/Exempt Organization has agreed to pay $35,000 of the expense. Therefore, the students must pay the remaining $15,000. The $35,000 that the Booster Club/Exempt Organization donated is considered a contribution to that particular District student group and should be documented. The donation should be kept with the Booster Club/Exempt Organization s financial records. Humble ISD Volunteer Program: All volunteers should complete a Humble ISD Volunteer form. This application can be found in the Office of Community Development. For more information on the volunteer process, please contact the Office of Community Development at or via the web by going to the Office of Community Development

21 Section 2 Operating Procedures

22 Record Keeping and Administration When forming a new Booster Club or Exempt Organization, please complete Exhibit A Booster Club and Exempt Organizations Registration form (See Exhibits and Forms) and submit to the campus principal for approval. The proper collection, reporting, disbursement, and safeguarding of all money and other Booster Club assets rests solely with each Booster Club s officers, jointly and severally, not with the school district or with any of the District s employees. The principal may act in an advisory capacity only. No principal, teacher, coach or sponsor should be a signatory on a private sponsored organization s bank account. In addition, no other employee of the District may be an authorized signer on the Booster Club s bank account without written approval from the District. An Exempt Organization does not have the authority to commit or to represent in any way Humble ISD or any of its campus locations. A Booster organization is responsible for any obligation incurred by the organization whether the commitment is financial or otherwise. The school district is not liable or responsible for any contracts or expenditures made by a Booster Club. We strongly encourage any Booster Club to obtain legal assistance before authorizing or signing any agreement or contract in the Booster Club s name. Minutes of all Booster Club/Exempt Organization meetings should be kept in writing in the permanent records of the Club. Booster Clubs and Exempt Organizations should seek competent tax and legal advice on their own and at their own expense on an as-needed basis to assist and advise them on legal and tax matters. District personnel will assist in whatever manner is allowable to facilitate Booster Club and Exempt Organization needs. All Booster Club and Exempt Organizations records should be maintained in a manner to facilitate the transfer of duties to new officers each year. Copies of financial records should be maintained in the permanent records of the organization. Many of these filings become public record upon the granting of exempt status and must be maintained for public inspection. In particular, the determination letter and the application for taxexemption are subject to open records. (See the Exhibits and Forms Section for the Records Retention Schedule.) Schools are not equipped nor funded to receive, sort, safeguard, or distribute mail for all of the District s Booster Clubs and Exempt Organizations. Therefore, Booster Clubs and Exempt Organizations should obtain a post office box or a private mailing box to receive official Booster Club mail. The District does not recommend using a home address since officers change frequently. Please understand that Booster Clubs and Exempt Organizations receive several important documents from various agencies including the IRS, the Comptroller s Office, the Secretary of State, and the District. So it is very important to maintain a consistent mailing address. To open a bank account, the Booster Club must first obtain an Employer Identification Number (EIN) from the IRS. See Section 3 -Federal Tax Information for more

23 information on obtaining an EIN (Note: Specific steps for opening a bank account will vary by institution.) Booster Clubs and Exempt Organizations should not use the school s name on its checks or on its literature. The use of the school name might imply that the school or the District is responsible for any obligations entered into by the Club. A proper name on accounts and literature would be ABC High School Band Booster Club as an example. Commingling of Booster Club funds and school activity funds is strictly prohibited. Each Booster Club must have its own separate bank account at a facility in proximity to the school. All funds received should be receipted and deposited within 24 hours of receipt. It is suggested that at least two officers sign each disbursement. Both signers should be parents or guardians with children in the affiliate Booster/Exempt organization. Again, school district employees may not be the signature on Booster Club bank accounts for their own campus or programs they are the sponsor for. Capital equipment purchased with Booster Club/Exempt Organization funds become the property of the school district and must be used exclusively at the school. School employees may not accept loans of funds from parents and student organizations. Each organization must have an audit committee perform an annual audit. See Section 6 for audit instructions. All Booster Clubs and Exempt Organizations must have and show proof of liability insurance. All expenditures should be properly supported. A Check Request form should be completed for each check written and receipts attached to the form see Exhibit D (Exhibits and Forms) section. Proper documentation for expenditures requires original receipts and invoices that are attached to the Check Request form. Original invoices should be the only support to authorize payments or reimbursements from Booster Club Funds. The special regulations that follow relate to payments to clinicians, consultants, and similar arrangements: Payment from Booster Club/Exempt Organization funds may not be made to employees or to other individuals for any service rendered to a school district program unless the transaction is processed through the Humble ISD business office or the campus activity fund. The employment of clinicians by the school district may not be a substitute position or an alternative for a sponsor. A clinician is defined as a professional who is not an employee of Humble ISD whose services are contracted on an intermittent basis to give suggestions and/or help a performing group with routines/numbers that have been initially taught by Humble ISD employees. The use of a clinician requires the approval of the campus principal and/or the appropriate administrators

24 Fund Raising 1. All requests for fundraisers must be submitted to the principal on the Request for Approval of Fund Raising Activity Form. This form must be submitted for his/her approval in the spring semester of the preceding school year or no later than October 15 th of the current school year. Requests from musical, athletic, agriculture, drill teams, and other similar groups must be presented to the principal by the director or sponsor. See Exhibit B (Exhibits and Forms). 2. All projects that are routinely spread throughout the school year count as one activity, i.e. the sale of advertisements for football programs or the yearbook, paper drives, the sale of wearing apparel or school supplies, etc. 3. A class membership fee or assessment for grades 9-12, or the sale of food at a contest hosted by the school is not considered money raising activities. 4. Students may not participate in any door-to-door sales projects. 5. Programs of educational value must be given preference by the principal over activities primarily for the raising of funds. 6. No coercion should be exercised in fund raising activities and no student or teacher is required to raise any particular minimum of money or to sell any minimum number of tickets, etc. Under no circumstances should pressure be brought to bear on students through competition or by special recognition of sales. 7. Tax exempt organizations cannot (a) require a person to participate in fund-raising activities or (b) require that a certain amount be raised or sold per person. 8. Paid entertainment programs cannot be held during school hours. 9. Any items sold by student or adult organization members at school activities held in Humble ISD stadium must be spirit related i.e. seat cushions with school insignia, cups, hats, etc. 10. The collection of cash register tapes or product labels or coupons redeemable for monetary value is not counted against the maximum number of money raising activities that can be conducted. 11. After each fundraiser, the Booster Club s treasurer must complete a Fund Raiser Financial Recap form. This form should be turned into the principal within 30 days of the date that the fundraiser ended. See Exhibit C (Exhibits and Forms) for an example of the form. 12. Charitable bingo games are regulated by the state and require that non-profit organizations apply for a temporary license to conduct bingo games. For more information contact the Charitable Bingo Operations Division at the Texas Lottery at All athletic event concession sales are taxable unless the sales are part of a non- taxable fundraising event. 14. Texas Hold-Em Tournaments are NOT permitted. 15. Raffles are only allowed for qualified 501c3 organizations that have been in existence for at least three years under specific guidelines under the Texas Attorney General s Office. Qualified organizations are allowed two raffles a year. The prizes can not be cash, checks, or anything easily converted to cash

25 Section 3 Federal Tax Information

26 Federal Tax Information The purpose of this section is to provide general federal tax information to Booster Clubs and Exempt Organizations. According to the IRS, an organization is either a taxable organization or a tax-exempt organization. Furthermore, organizations may not represent themselves as taxexempt until they have obtained notification from the IRS stating they are a tax-exempt entity. The information provided here is not intended to be specific or all inclusive. It is each Booster Club s responsibility to seek competent professional tax advice for its own tax reporting and filing requirements. Booster Club organizations should strive to remain in good standing with all federal and state regulatory agencies. Beginning September of 2009, all Humble ISD Booster Clubs, Parent Groups and Exempt Organizations will be required to obtain federal tax exempt status. New Booster Clubs and Exempt Organizations have one year from inception to obtain tax exempt status. Assistance is available to become a 501c3 by scheduling an appointment with Internal Audit or via the Internal Audit website. Humble ISD Educational Support Groups, Inc. Internal Audit has obtained a group 501c3 tax exemption and formed a non profit corporation by the name of Humble ISD Educational Support Groups, Inc. Humble ISD Educational Support Groups, Inc. is a 501c3 charity for any Booster or PTO that wishes to become a part of the group exemption. The benefit in doing so is that it removes the lengthy requirement to apply for exemption through the Internal Revenue Service, and paying the user fee. Boosters will, however, be required to prepare their own IRS 990 s, State of Texas franchise tax reports, and sales and use tax reports. If your Booster or parent group elects to take part in the Humble ISD group exemption for parent organizations, as opposed to applying for your own individual tax exempt status, please contact Internal Audit at boosterclubs@humble.k12.tx.us or call There is also a form on the Internal Audit/Booster Club website called the Booster Club Tax Exempt Status, to indicate your organizations interest in joining this group exemption. (See Exhibit K of the Booster Club Manual, which is available for download). Those groups expressing an interest should return the form before September 30 th of each year. Whether you choose the group exemption or the individual exemption, the Internal Audit department will work with you and will guide you in completing the required steps with the state and federal governments. Appointments are currently being set for Tuesday s and Thursday s of each week from 9-3 p.m., and other days by appointment only. You may contact Internal Audit at or boosterclubs@humble.k12.tx.us to schedule an appointment

27 Why Do I Want To Be Tax-exempt? The IRS Tax Code provides for special treatment of certain organizations identified as "taxexempt." Some benefits to becoming tax-exempt as a public 501(c)(3) organization includes: 1. Taxes are not paid to the IRS for revenues raised, 2. Contributions to certain tax-exempt organizations [501(c)(3)] are tax-deductible by the contributor and, 3. Tax-exempt organizations are not required to file an information return (Form 990) unless the organization s annual gross receipts exceed $25,000. However, the following are restrictions placed on tax-exempt organizations that Exempt Organizations/Booster Clubs must follow to receive and retain tax-exempt status: Tax-exempt organizations must benefit a group as a whole instead of benefiting individual members of a group. Since Exempt Organizations/Booster Clubs usually assist student groups, all members of the student group sponsored are to be treated equally and receive the same opportunity to benefit from the Parent Organization s/booster Club s assistance. Therefore, one student cannot receive a greater benefit than another unless the criteria for financial need discussed below is met. In some instances, individuals may not be able to afford to pay the amount owed to participate in a particular event. The IRS has indicated that a group or club may establish criteria that could be used to determine if a person is in financial need. If the criteria are met, the group or club could provide the necessary funds to allow the individual to participate. The criteria should be established in writing (in the bylaws) prior to a particular situation arising. In addition, the criteria should be used consistently for all people, and the criteria should not change every year. Tax-exempt organizations cannot use individual accounts. "Individual accounts" are those accounts used by an Exempt Organization/Booster Club to credit an individual with revenues raised. The Exempt Organizations/Booster Clubs would use these accounts to benefit the individual by offsetting that individual's expenses with the amount credited to that individual from the revenues raised. Please note that individual accounts do not refer to bank accounts. The purpose of a tax-exempt organization is to benefit an entity as a whole instead of benefiting individuals. Therefore, the use of individual accounts could result in denial of the application for tax-exempt status by the IRS or the loss of existing tax-exempt status. In addition, the individual benefits received by people would result in taxable income to them. Tax-exempt organizations cannot require a person to participate in fund-raising activities. Normally, Parent Organizations/Booster Clubs raise funds for a student group through the efforts of the Exempt Organizations/Booster Club members; however, sometimes the students of the group being assisted participate in the fund-raising activities. A Parent Organization/Booster Club cannot require its members or the students in the related student group to participate in a

28 fund-raiser. Furthermore, members of the student group who do not participate in fund-raising activities would receive the same opportunity to benefit as those members of the student group who participated. Tax-exempt organizations cannot require that a certain amount be raised or sold per person. For example, a Parent Organization/Booster Club cannot require that each Parent Organization/Booster Club member or student of the assisted group sell $20 worth of candy or sell 10 candy bars in a fundraiser. When applying for tax-exempt status with the IRS, Exempt Organizations/Booster Clubs should apply for the public 501(c)(3) tax-exemption. This type of exemption means that the organization is tax-exempt; the majority of its income is from the public and all donations, subject to certain individual restrictions, are deductible on the contributor's tax return. In addition, 501(c)(3) organizations are eligible for state tax benefits and reduced postal rates. Employer Identification Number The IRS requires all organizations (entities) that conduct business to have their own Employer Identification Number. The EIN is obtained with the SS-4 Form from the IRS. A member s social security number should not be used as the organization s Employer Identification Number for banking or other business purposes. Booster Clubs and Exempt Organizations are not allowed to use the District s EIN. To obtain an Employer Identification Number: Obtain and complete IRS Form SS-4. Make a copy for the Club s permanent records. When a number is assigned to the Booster Club by the IRS, ensure that the paperwork is maintained in a permanent file from year to year. The IRS will assign a number over the telephone to the Booster Club. The (suggested) fiscal year end for the Booster Club should be June 30 th. There is no application fee required when filing Form SS-4. This EIN will be the number used to establish a bank account for the Booster Club. Note: You can now apply for an EIN number online on the IRS website. Go to and then in the Search field to the right, enter the word employer identification number. You will be brought to the link that will bring you directly to the employer identification number application page. Click on Apply Online. You will be able to complete the application process online. Application for Federal Tax Exempt Status For those Exempt Organizations/Booster Clubs who choose to secure an individual 501c3 tax exemption, it is important to note that formation of a non-profit corporation through the Texas Secretary of State does not entitle the organization to exemption from federal taxes. Until you have a determination letter from the Internal Revenue Service, you still may be subject to tax. In order to be exempt from federal taxes, please apply with the Internal Revenue Service using Form 1023-Application for Recognition of Exemption under Section 501(c)(3). With a 501(c)(3) tax exempt status, an organization may be public or private. A private exempt organization has additional requirements and constraints that a public exempt organization does

29 not have. General instructions on the rules and procedures can be found in IRS Publication 557- How to Apply for Recognition of Exemption for an Organization. These documents are available on the Internal Revenue Service website (refer to the References section for the website address). When completing the Form 1023, Booster Clubs and Exempt Organizations will establish their fiscal year-end (also known as the accounting year-end or official year-end). When considering a fiscal year-end date, you may wish to align your year-end with the school s year-end date of June 30 th. This way, the financial activity of the Club can relate easily to a given school year. Second, the officers can prepare the annual Financial Report and have it audited before the new school year begins. Third, the Club s Form 990 would not be due to the IRS until November 15th; therefore, the new officers would have time to prepare it after beginning the new school year. If you are joining the group exemption, you need not complete a Form Your organization s year end must be aligned with the District with a June 30 th year end. And, your form 990 would be due to the IRS by November 15 th of each year. The application must be accompanied by Form 8718, User Fee for Exempt Organization Determination Letter Request, which provides a user fee based on gross receipts to be paid to the Internal Revenue Service. Annual gross receipts are the total amount of revenue collected by an organization during its reporting year from any source. Sources may include, but are not limited to, membership fees, donations, fund raising revenues, amounts collected for the payment of expenses (e.g. uniforms, trips), and any other amounts received. Depending on the anticipated annual gross receipts, the user fee is either $400 or $850. If annual gross receipts are projected to be in excess of $10,000 over a 4-year period, you must submit payment of $850. If annual receipts will not exceed $10,000 annually over the next 4 years, submit a user fee payment in the amount of $400. Mail package 1023, Form 8718, and a check for the filing fee to: The Internal Revenue Service P O Box 192 Covington, KY Once you submit Form 1023 to the IRS, you may receive an acknowledgement letter in approximately days stating that your application has been received. This letter may give you an estimated date for which some determination on your application will be made. Upon acceptance of your organization s exempt status by the Internal Revenue Service, a determination letter will be received as evidence of approval. The letter should be kept in a safe, permanent place as it will be used time and time again to prove the organization s exempt status. In addition, a copy of the letter should be shared with the school s bookkeeper and the Internal Audit Department

30 Annual Electronic Filing Requirement for Small Exempt Organizations Form 990-N (e-postcard) Small tax-exempt organizations whose gross receipts are normally $25,000 or less may be required to electronically submit Form 990-N, also known as the e-postcard. UPDATE: For filing purposes, the gross receipts amount has been increased to $50,000 for the filing period. Due Date of the e-postcard The e-postcard is due every year by the 15th day of the 5th month after the close of your tax year (November 15 th if your year-end is June 30, XX). You can not file the e-postcard until after your tax year ends. Information You Will Need To File the e-postcard The e-postcard is easy to complete. All you need is the following information about your Organization. Click on any of the links below, if you need more information about the item. Employer identification number (EIN), also known as a Taxpayer Identification Number (TIN)). Tax year Legal name and mailing address Any other names the organization uses Name and address of a principal officer Web site address if the organization has one Confirmation that the organization s annual gross receipts are normally $25,000 or less (take an average of the current year and the two previous years) If applicable, a statement that the organization has terminated or is terminating (going out of business) NOTE TO ALL BOOSTER CLUBS AND EXEMPT ORGANIZATIONS: In order to file the 990-N, the IRS must first recognize your club as tax exempt. Therefore, if you are already tax exempt (501c3) then you will have no problems filing this form. However, if you (1) have never filed anything with the IRS, (2) you are not 501c3 tax exempt, then you need to make changes to your By-laws (governing doctrine) by adding the following: Said corporation is organized exclusively for charitable, religious, educational, and scientific purposes, including, for such purposes, the making of distribution to organizations that qualify as exempt organizations under section 501c3 of the Internal Revenue Code, or the corresponding section of any future federal tax code. No part of the net earnings of the corporation shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the corporation shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in Article Third hereof. No substantial part of the activities of the corporation shall be the caring on of propaganda, or

31 otherwise attempting to influence legislation, and the corporation shall not participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office. notwithstanding any other provision of these articles, the corporation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from federal income tax under section 501c3 of the IRS code, or the corresponding section of any future federal tax code, or (b) by a corporation, contributions to which are deductible under section 170c2 of the IRS code, or the corresponding section of any future federal tax code. Upon the dissolution of the corporation, assets shall be distributed for one or more exempt purposes within the meaning of section 501c3 of the IRS code, or the corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed of by a Court of Competent Jurisdiction of the county in which the principal office of the corporation is then located, exclusively for such purposes or to such organization or organization, as said Court shall determine, which are organized and operated exclusively for such purposes. You should then contact the IRS at and let them know that you were not able to file the 990 e-postcard and need a data sheet prepared for you. They will ask you if your organization is organized exclusively for purposes described in the section named above. Also, that the organization s organizing documents contain certain provisions. They will also ask if the above statements are in your by-laws, if you are authorized to speak on behalf of the club, and what the EIN number. Once a data sheet is prepared, it will take 6-8 weeks before you will be able to file the e-postcard. Form 990 EZ For 2009, Booster Clubs and Exempt Organizations and Parent Organizations must use Form 990-EZ if gross receipts are more than $25,000 but less than $1,000,000 and total assets are less than $2,500,000 at year-end. Form 990 Booster Clubs and Exempt Organizations must use Form 990 if gross receipts are $1,000,000 or more total assets are $2,500,000 or more at year-end. These reports are due annually by the 15 th day of the 5 th month after the organization s reporting period, due 4 ½ months after the end of a fiscal year. Instructions for Form 990-N, Form 990 and Form 990 EZ can be found on the IRS website at under forms and publications. Note: Booster Clubs and Exempt Organizations must also complete the Booster Club Financial Certification document and submit to the Internal Audit Department. (See Audit Committee/Financial Report Instructions Section)

32 Some organizations may be affiliated with national organizations that have received exempt status 501(c)(3) or 501 (c)(4) status from the IRS. A national organization that has a GEN (Group Exemption Number) can allow its subordinate members organizations to use this GEN in lieu of having each member file its own An example of a national organization that has a GEN number is the PTA. Contributions to exempt organizations are deductible as charitable contributions on the donor s federal income tax return. However, the amount of the donation may be reduced if the donor received something of value in return for the contribution. To determine if your organization has received exempt status 501 (c)(3), go to the IRS website, in the Search box input Pub 78 which will bring up Publications 78-Search for Exempt Organizations. When you click on this box and go to link search now, you will be able to search for your particular Booster Club. All Boosters should use a post office box as a permanent address. If you are not using a post office box yet, it is extremely important to notify the IRS when you have a change of address for your Booster Club. You should use IRS form Note: Instructions for completing these forms and copies of these forms can be found on the IRS website at under forms and publications. The IRS main number is , and the Tax Exempt section is

33 Section 4 Sales Tax Information

34 Texas Sales Tax Rules for Booster Clubs and Exempt Organizations Application for State Tax Exempt Status Once 501c3 designation has been achieved, the organization must apply for an exemption from sales and franchise tax from the Texas State Comptroller s Office. This is done by written request, which includes a description of activities, copies of articles and bylaws, and a copy of the IRS letter granting tax exemption. Further information may be obtained on the Comptroller s web site at Important Rules to Remember: Purchases by the school are tax-exempt. No tax should be charged and paid by the school. No reimbursement will be made for taxes paid from a school or a school organization. However, Booster Clubs are not tax exempt unless they have filled out the proper application forms from the Texas Comptroller of Public accounts and have been given tax exempt status. All Booster Clubs and Exempt Organizations must apply for a sales tax permit number once they receive an EIN if they are selling items to students and/or parents. This allows Booster Clubs to purchase items without paying the tax up-front. The Booster Club gives the seller a properly completed resale certificate called Texas Sales Tax Resale Certificate with their sales tax permit number filled in. The tax is then paid later (and remitted to the state by the organization) at the time of the sale of the items to the students and/or parents. Sales by a Booster Club and Exempt Organizations are generally taxable. If you are ever in doubt about taxability, you should call the Comptroller of Public Accounts at or All organizations must apply for their own sales tax permit number. They may not use the number of another Booster Club or the number of Humble ISD. TAXABLE STATUS OF PURCHASES An organization must provide the vendor with a valid signed exemption certificate when claiming state sales tax exempt status. Exemption certificates do not require tax identification numbers to be valid nor is the vendor required by law to honor the exemption. The District s exemption status may not be utilized by parent, Booster, patron, or alumni organizations to secure exemption from sales and excise taxes. Parent/teacher organizations, Exempt Organizations, and Boosters Clubs must apply for their own exemption. Items which become the personal property of the student (cheerleader uniforms, band t- shirts, etc.), even though connected with a school or organization, are not exempt from tax. Items which are purchased by the organization through budgeted funds as an award to a student are not taxable. Meals purchased by the organization for athletic teams, bands, etc. on authorized school trips are exempt from sales tax if the organization contracts for the meals. The organization must pay for the meals with a check and provide an exemption certificate

35 Frequently Asked Sales Tax Questions What can an exempt organization buy tax-free? Organizations that have applied for and received a letter of exemption from sales tax don t have to pay sales and use tax when they buy, lease or rent taxable items that are necessary to the organization s exempt function. An authorized agent or employee can make a tax-free purchase for an exempt organization by giving the vendor a completed exemption certificate. No item purchased tax-free by an exempt organization can be used for the personal benefit of a private party or other individual. When buying an item to be donated to an exempt organization, an individual can give the seller an exemption certificate in lieu of paying tax. If the individual uses the item before donating it, however, the exemption is lost and tax is due. An employee of an exempt organization cannot claim an exemption when buying taxable items of a personal nature, even if the organization gives an allowance or reimbursement for such items. For example, meals, toiletries, clothing and laundry services are for personal use and are taxable. How do I get a permit? You must submit a completed application for a Texas Sales and Use Tax permit to the Comptroller s Office. An application can be downloaded from the Tax Forms Online page. (See You can also obtain an application by calling Is there a fee charged for a Texas Sales and Use Tax Permit? There is no fee for the Texas Sales and Use Tax permit. However, based on your application, you could be required to post a security bond. Should I notify the Comptroller s office if I change my business address or mailing address? Yes. They need to update their records to ensure that your tax returns are mailed to the correct address. You can make the changes in these ways: Open the link and select webchange (towards the middle of the page) Use the address change block on your Texas Sales and Use Tax Return. Call to change your mailing address for sales tax. tax.help@cpa.state.tx.us

36 Non-Taxable Sales vs. Taxable Sales The following lists of items or activities have been identified as being taxable or non-taxable by the Comptroller s Office when sold or sponsored by a school, by an organization within a school, PTA s, Booster Clubs, and employee associations. The lists are not all-inclusive but may help you make determinations on other similar sales. Non-Taxable Ad sales-in yearbooks, athletic programs, newspapers, posters Admission-athletics, dances, dance performances, drama and musical performances. Admission- Summer camps, clinics, workshops. Admission- Banquet fees, prom, homecoming Admission- Tournament fees, academic competition fees Cosmetology services (products sold to customers are taxable) Deposits (lockers, etc). Discount/Entertainment cars and books Facility rentals for school groups Food items sold during fundraisers, including a PTA carnival Labor-automotive, upholstery classes (parts are taxable) Magazine subscriptions greater than six months Parking permits Services-car wash, cleaning Student Club Memberships Agenda Books Agricultural Sales Art-supplies and works of art Athletic-equipment and uniforms Auction items sold Band- equipment, supplies, patches, badges, uniforms Book covers Books- workbooks, vocabulary, library, author (when we are the seller) Taxable Musical supplies-recorders, reeds Parts-career & technology classes (not to include products used in cosmetology) Parts-upholstery Pennants Pictures-school group (if school is the seller) Printing fee-computer Rentals-equipment of any kind Rentals-towels

37 Brochure items Calculators Calendars Candles Car-painting, pin striping Clothing-school, Club, class Computer-supplies, mouse pads Cosmetology products sold to customers Cups-glass, plastic, paper Decals Drafting-supplies Family and Consumer Sciencesupplies and sewing kits Fees-copies, printing, laminating Flowers-roses, carnations, arrangements Greeting cards Handicrafts Horticulture items Hygiene supplies Identification cards- when they are sold to entire student body (not just the fine for lost cards) Locks, sales and rentals Lumber Magazines-subscriptions less than six months Magazines-when sold individually Merchandise, tangible personal property Rentals-uniforms of any kind Repairs to tangible personal property (i.e. computer repair, house, remodeling) Rings and other school jewelry Rummage and garage sales Safety supplies School publications-athletic programs, posters. School publications-brochures. School publications-magazines (unless > six month subscription. School publications-newsletters, newspapers (unless printed on newsprint more than once/month & is < $.75/copy) School publications-reading books School publications-yearbooks School store-all items (except food) Science-science kits, boards, supplies Spirit items Stadium seats Stationery, note pads, etc. produced in the classroom or vocational class. Supplies-any sold to students Transcripts Uniforms-Any type sold to include PE, dance team, drill team, cheerleaders, athletic Club shirts Vending-pencils and other non-edible supplies when the school services the machine. Wood Woodworking crafts-entire sale to include parts and labor Yard signs

38 Food Sales The sales tax statute exempts the sales of food, including meals, soft drinks, and candy, by a group associated with a public or private elementary or secondary school when the sales are part of a fund-raising drive sponsored by the organization, and all net proceeds from the sale go to the organization for its exclusive use. Student groups, PTA s and Booster Clubs are included in the provision. It does not matter if the sale is during the school day, the evening, or on a weekend; if it is a fund-raiser, it is not taxable. All athletic event concession sales are taxable unless the sales are part of a fundraising event. Please refer to Food Ruling as well as the bulletin for Exempt Organizations in Exhibits and Forms section. These can be located on the website under the Publications and Rules links. One Day Tax Free Sales Effective August 30, 1993 each school, each organization within a school (Student Council, National Honor Society, Band, Senior Class, Orchestra, etc.) each PTA, and each Booster Club can have two (2) one day tax free fundraisers per calendar year according to the Texas State Sales Tax Law. Note: Faculty organizations are not permitted to have one-day tax free sales. 1. Items sold at one-day tax free sales should be purchased tax-free by issuing a Texas Sales Tax Resale Certificate to the seller. A one-day tax free fundraiser can add to the profitability of a fundraiser and/or reduce the total costs to the buyers. Proper planning can qualify an organization s fundraisers as one-day tax free sales. One way to qualify a fundraiser as a tax-free sale would be to deliver the items being sold to the buyers on a single day. Orders and/or collections could be taken over an extended period before delivery is made. Please note: This information is not all-inclusive. If you have any specific questions, you should call the Texas Comptroller of Public Accounts at

39 Section 5 Incorporating a Non-Profit Secretary of State

40 Incorporation of a Non-Profit Organization Boosters and parent groups must have 501c3 designation in Humble ISD. In order to be a 501c3 organization, you must incorporate through the Texas State Secretary of State first. Listed in the section below are some basic guidelines. Per the State Comptroller s Office, the primary benefit to incorporating is the limited liability. The following excerpts were downloaded from the Texas Secretary of State s website. The information documented below is subject to change by the Texas Secretary of State. Therefore, for the most up-to-date version of this information, please go to: A non-profit corporation is created by filing a Certification of Formation with the secretary of state in accordance with the Texas Non-Profit Corporation Act (TNPCA), articles and "Non-profit corporation" means a corporation in which no part of the income of which is distributable to members, directors, or officers (TNPCA, article A(3). A signed certificate of formation should be submitted to the secretary of state for filing. The filing fee for a non-profit corporation is $ If the articles conform to law, the secretary of state will stamp the documents "filed", issue a Certificate of Formation and return the certificate and a stamped copy to the remitter. The filed copy of the Certificate of Formation is conclusive evidence of corporate existence. Tax Exemption Not all non-profit corporations are entitled to exemption from state or federal taxes. The Texas Secretary of State does not make such determinations. The Secretary of State only incorporates organizations. Only non profit corporations that have 501c3 federal status are considered exempt. You should consult the Internal Revenue Service (IRS) prior to filing the articles to determine what provisions must be included in the articles for the corporation to be exempt from federal taxes. IRS Publication 557, titled "How to Apply for Recognition of Exemption for an Organization," describes the rules and procedures for non-profit organizations requesting exemption. The publication can be obtained from the IRS. A non-profit corporation may be exempt from the payment of state franchise taxes if its purposes fall within one of the exemptions listed in the Texas Tax Code, Chapter 171, Subchapter B. Questions on exemption procedures should be addressed to:

41 Comptroller of Public Accounts Tax Assistance Exempt Organizations Section Austin, Texas (512) or (800) TDD: (800) or (512) Certificate of Formation for a Non-Profit Corporation The Secretary of State has promulgated a website designed to meet the minimal filing requirements of the relevant statutory provisions. Please refer to This site may not meet the particular requirements of every transaction, but it gives general information. The information provided is not intended to provide legal or business advice and is not a substitute for the services of an attorney or tax specialist. If you have concerns or legal questions regarding a specific transaction, you should consult a private attorney. Should you have additional questions, please contact corpinfo@sos.state.tx.us. Instructions for the preparation and filing of Certificate of Formation for a Non-Profit Corporation can be located on the website for the Secretary of State. Please refer to

42 Section 6 Audit Committee/Financial Report Instructions

43 Booster Club and Exempt Organizations Audit Committee General Information General Information Each organization is required to have an audit committee conduct an annual review of the organization s revenues and expenditures. The audit committee may include officers (not the President or Treasurer) and Club members. At least half of the committee must be non-officer members and should not be signers on the checking account. The audit committee should not be made up of the same people every year. The sponsor for the organization should be knowledgeable of the organization s activities; however, the sponsor should not be one of the members of the audit committee. An outside party, such as a CPA or an accountant, may be used to audit the financial information versus an audit committee. If an outside party performs the review, their results should be shown in their own report format. The outside party would need to sign and date their report. The examples of the Audit committee Report show space for four (4) members; however, the Club may have more or less committee members. The same information must be documented for each of the committee members, regardless of the size of the committee. The audit committee should include at least the following number of members, based on the membership in the Booster Club organization: Less than 50: Two Members Three Members : Four Members : Five Members 300+: Six Members Have the Treasurer prepare the written report of revenue and expenditures (financial report) for your Booster Club. The report should include information for the full applicable year. The Booster Club may use July 1-June 30 as their reporting period (this is the preferred reporting year). See the Audit Committee Instructions page for an example of this report. Note: There are some Booster Clubs and Exempt Organizations that use January through December as their reporting period. They must notify the Internal Auditor in writing of a change in reporting periods and send a supplemental report if there is any financial activity until the District reporting period of June 30 th

44 Booster Club and Exempt Organization Audit Committee Instructions The Audit Committee should select one of these examples (based on the findings during the audit) to document the results and conclusions of their audit: Type A Type B Type C Audit was performed with no exceptions noted; therefore, the Financial Report appears proper and correct. Audit was performed with immaterial exception(s) being noted. The Financial Report was either corrected or exceptions did not have a material effect. Except for these minor exceptions, the Financial Report appears proper and correct. Audit was performed with material exception(s) being noted. Because of the material exception(s), the Financial Report is not proper and correct. In some instances, due to material exception(s), the committee may not be able to determine whether the Financial Report is proper and correct. When this situation occurs, the committee may state that status of the Financial Report could not be determined because of material exception(s). If exceptions are noted during the audit, consult with the organization s Treasurer and President (if necessary) to resolve the exception(s). The Treasurer is responsible for making any corrections to the records, checkbook, and Financial Report. If material exceptions have been noted, prepare recommendations to prevent the future occurrences of these exceptions. The organization s Treasurer and President are responsible for acting upon recommendations made by the Audit Committee. Maintain a COPY of the Financial Report and a COPY of the Booster Club Audit Committee Report on file with the Treasurer of the Booster Club. The file with these reports should be kept at least five (5) years and should be forwarded to the new Treasurer each year. Submit the ORIGINAL of the Booster Club s Financial Report, Audit Committee Report and Booster Club Financial Certification to the District s Internal Audit Department at Eastway Village, Humble Texas by September 1st. Please call the Internal Auditor s office at if the reports will be late

45 Report Type A Page 1 of 1 (Proper and correct with no exceptions) EXAMPLE High School Booster Club AUDIT COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 through June 30, 2011 The financial data contained in the following financial statement(s) for the time period of July 1, 2010, through June 30, 2011, have been audited in detail by the Audit Committee members named below. These members agree that these financial statements are proper and correct to the best of our knowledge. No exceptions were noted during the review. Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date

46 Report Type B Page 1 of 1 (Proper and correct with immaterial exceptions) EXAMPLE High School Booster Club AUDIT COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 through June 30, 2011 The financial data contained in the following financial statement(s) for the time period of July 1, 2010, through June 30, 2011, have been audited in detail by the Audit Committee members named below. These members agree that these financial statements are proper and correct, except for the following exceptions. Check #5257 cleared the bank for $25.20 instead of $2.52. Check #5263 did not have 2 authorized signatures as required by the Booster Club bylaws. The check only contained 1 authorized signature. The Program Ad Expense account contains six expenses that did not have the related invoices as documentation for the expense. The undocumented expenses totaled $ Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date

47 Report Type C Page 1 of 2 (This is not proper or correct due to material exceptions) EXAMPLE High School Booster Club AUDIT COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 through June 30, 2011 The financial data contained in the following financial statement(s) for the time period of July 1, 2010, through June 30, 2011, have been audited in detail by the Audit Committee members named below. These members agree that these financial statements are not proper and correct, due to the following exceptions. No documentation of cost existed for the 100 new uniforms purchased. Checking and savings accounts were not reconciled during the year. Only one (1) authorized signature appeared on all checks written instead of the two (2) required authorized signatures. To prevent the above exceptions from occurring in the future, the following steps should be taken: Documentation of all expenses, such as an invoice, should be received prior to payment of expenses. Documentation should be kept with the other Booster Club records. All bank accounts should be reconciled on a monthly basis. All checks issued should be signed by a least two authorized persons

48 Report Type C Page 2 of 2 (This is not proper or correct due to material exceptions) EXAMPLE High School Booster Club AUDIT COMMITTEE REPORT FOR THE TIME PERIOD July 1, 2010 through June 30, 2011 Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date Printed Name Title Signature Date

49 Booster Club and Exempt Organization Suggested Audit Program Audit Procedures: The following suggested instructions are designed to assist the Audit Committee in conducting a thorough audit of the Organization s financial activity for the applicable school year. Bank Reconciliations 1. Trace ending balances on the reconciliations to bank statements, outstanding check lists, and other reconciling items. 2. Verify that bank reconciliations were completed within 30 days of bank statement ending date. 3. Ensure that any outstanding or reconciling items on the reconciliations were cleared the following month. 4. Verify that the balance in the bank account (at beginning of school year), plus total deposits per check register, minus total disbursements per check register, balances to ending bank account balance (at end of school year). Bank Statements 5. Determine whether a procedure is in place for a Club member, other than those that have check signing ability, to receive bank statements by mail and review for reasonableness. 6. Determine whether any cash corrections were identified on bank statements. Ensure that reasonable explanations are available. 7. Compare the number of cleared checks included in the bank statement with the number that is noted on the bank statement to ensure agreement. 8. Ensure that cleared checks contain signatures of individuals authorized to sign checks. Ideally, bank accounts should be established to require two signatures. Receipts 9. From the check register or other accounting records, schedule each deposit (use of spreadsheets is helpful). If volume is significant, consider selecting only a representative sample. 10. Trace deposits to collection documentation and prepared cash receipts for agreement. 11. Trace deposits to bank statements to ensure agreement. 12. Ensure that receipts are presented for deposit in a timely manner by reviewing the dates of prepared cash receipts with the date of deposit on the bank statement. Disbursements 13. From the check register or other accounting records, schedule each check, withdrawal, or other debit (use of spreadsheets is helpful). If volume is significant, consider selecting only a representative sample. 14. Trace checks to supporting documentation such as invoices, receipts, approved expenses related to fundraisers, or other reasonable explanations

50 15. Review the canceled check to ensure agreement of payee name, endorsement, and check amount. 16. Trace disbursements to budget approved by the membership or meeting minutes. 17. For bank withdrawals for the purpose of establishing a change fund for an event, confirm that the change fund was later re-deposited. Fundraisers 18. Evaluate each fundraiser individually by calculating the value of items available for sale or number of tickets sold, and comparing to deposits and remaining inventory, if any, to ensure agreement. 19. Determine whether fundraiser applications were prepared and submitted to the campus principal for each fundraiser. Miscellaneous 20. Inventory remaining check stock to confirm that all checks are present and sequential. Ensure that the check number for the last check issued and first check available in check stock are sequential. 21. Confirm that check stock is retained in a secure place when not in use. 22. Determine whether any checks were voided during the course of the year. Ensure that any voided checks are retained in the records, but have been sufficiently modified to eliminate the possibility of clearing the bank (i.e. signature portion has been cut out of the check and VOID has been written across the check). 23. Ensure that sales tax reports were prepared and filed timely. 24. If IRS 990 form was filed, review for reasonableness

51 (EXAMPLE OF BOOSTER CLUB FINANCIAL REPORT) High School Booster Club CASH BASIS FINANCIAL REPORT From July 1, 2010 through June 30, 2011 Beginning Cash Balance as of July, 1, 2010 $5, INCOME Concession Stand Sales $2, Fall Dance $1, Membership Dues (225 members) $5, Program Ad Sales $1, T-shirt Sales $3, Total Income $13, EXPENSES Concession Stand Supplies $1, Fall Dance Expense $ Miscellaneous Supplies $ Postage $ Program Ad Expense $ Cost of T-shirts $2, Total Expenses $5, i. Ending Cash Balance as of June 30, 2011 $13, Cash Basis Financial Report Prepared By: Printed Name Title Signature Date

52 Statement of Income and Expenses For the Year (July 1 to June 30) INCOME Members' Fees $2, $2, $2, $2, $2, Fund Raising Income Trips Income , Events Income , , NHLBCC Income Bank Interest Donations Total Income Miscellaneous EXPENSES 4, , , , , Newsletter Printing $ $ $ $ $ Newsletter Postage 1, , , , Fund Raising Expense Trips Expense , Events Expense , , , Promotional Expense NHLBCC Expense Office Supplies Expense Membership Supplies Business Expenses Bank Charges Charitable Donations Depreciation Expense Miscellaneous Expenses Total Expenses 4, , , , , Surplus (Loss) for the Year ($431.54) ($714.18) ($1,636.15) ($476.01) ($245.60)

53 Example of Balance Sheet for Boosters Balance Sheet As at June 30 Current Assets Cash $6, $4, $3, $ $ Petty Cash NHLBCC Legacy Fund 14, , , , , Prepaid Expenses Merchandise Inventory Office Supplies Membership Supplies 1, , , , , Total Current Assets 23, , , , , Fixed Assets Furniture (Booth sign, Fax) Less: Depreciation Total Fixed Assets Total Assets $23, $22, $20, $20, $20, Current Liabilities LIABILITIES AND NET WORTH Bills Payable $ $ Total Liabilities $ $0.00 $0.00 $0.00 $ Net worth, June 30 23, , , , , Surplus (Loss) , Net worth, June 30 23, , , , , Total liabilities and net worth $23, $22, $20, $20, $20,

54 BOOSTER CLUB FINANCIAL CERTIFICATION To the best of my knowledge, (PTA or Booster Club name) total gross receipts (income) do not OR does exceed $25,000 for the fiscal year ending. (Note: if your annual gross receipts are normally greater than $25,000, the Booster Club must file the IRS Form 990 or Form 990 EZ.) (PTA/Booster Club Officer) (Title) (Date) (PTA/Booster Club Officer) (Title) (Date) Forward completed Financial Certification to the Internal Audit Department no later than September 1st of each year. Humble Independent School District Internal Audit Eastway Village Humble, Texas NOTE: Instructions for Form 990 and Form 990 EZ can be found on the IRS website at under forms and publications

55 U.I.L. Guidelines Box 8028 Austin, Texas Street address: 1701 Manor Road Austin, Texas, Phone: (512) Fax: Phone Drama Only: (512) Refer to:

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60 Section 8 Exhibits and Forms

61 EXHIBIT A Booster Clubs and Exempt Organizations Registration (NEW BOOSTER CLUB) To: Campus: (Principal) Re: Authorization to form a parent support organization/booster Club. Name of Organization: Purpose of Organization: Organization to be supported: Number of parent supporters: Please submit a roster of members upon approval by the principal. Please provide home addresses, and day and evening phone numbers for all officers. President: Vice President: Treasurer: Secretary: A copy of the Booster organization s Constitution and Bylaws is to be submitted with this registration form. Financial statements attached: Submitted by: Date: (President) Date: (Second Officer)

62 Notary Public in and for the State of Texas Notary Public in and for the State of Texas Date Commission Expires (Notary Seal) Date Commission Expires (Notary Seal) Accepted by: (Principal) (Program Sponsor)

63 EXHIBIT B HUMBLE INDEPENDENT SCHOOL DISTRICT REQUEST FOR APPROVAL OF ORGANIZATION FUND RAISER Booster Clubs and Exempt Organizations To: (Principal) Campus: Organization: Type of Activity/Product to be sold: Vendor: Estimated profit from this fund raiser: $ Profit to be used for: Dates: Beginning Ending Parent Group Chairperson: Date: Signature of Sponsor: Date: (if applicable) Signature of Principal: Date: Exceptions to Board Policy FJ (LOCAL) shall receive approval in writing from the building Principal and the appropriate Assistant Superintendent. Assistant Superintendent: Date: All fundraiser requests must be submitted to the Principal for his/her approval in the spring semester of the preceding school year or no later than October 15 of the current school year

64 EXHIBIT C HUMBLE INDEPENDENT SCHOOL DISTRICT FUND RAISER FINANCIAL RECAP Booster Clubs and Exempt Organizations Description of Fund Raiser: Program/Sponsor: Date of Activity: Multiple days of fund raising should generate funds each day and should be accounted for accordingly. TOTAL EXPENSES OF FUND RAISING ACTIVITY Inventory Reconciliation: Total number of items for sale: Actual number of items sold: Number of items unaccounted for: Income Reconciliation: Actual number of items sold: Sale price per item: Total Sales: Prepared by: Date: Verified by: Date: Treasurer Approved by: Date: President Fundraiser recaps must be submitted to the Bookkeeper no later than two weeks after the completion of the fundraiser

65 EXHIBIT D Booster Clubs and Exempt Organizations Check Request Form Date: Please make check payable to: Amount: $ Reason for Expenditure: Please attach all original receipts to this form. Request made by: Check request approved by: Check #:

66 EXHIBIT E Sample BOOSTER CLUBS AND EXEMPT ORGANIZATIONS CONSTITUTION/BYLAWS CONSTITUTION ARTICLE I ARTICLE II The name of this organization shall be the. The purpose and aim of this non-profit organization is to: Section I Raise monies for an annual scholarship. Section II Raise monies for the enhancement and development of the program for all students. ARTICLE III MEMBERSHIP: Section I Section II Membership in the, shall be open to any person interested in the enhancement and development of the program for all students. The title Honorary Membership may be conferred upon any man or woman whom the organization desires to honor. ARTICLE IV OFFICERS: The officers of this organization shall be a President, Vice President, Secretary, and a Treasurer. All officers shall be active members in good standing with a student active in the program. ARTICLE V MEETINGS: Section I Section II Meetings of the organization shall be held. Special meetings may be called by the President. The President shall call a special meeting upon written request of five (5) members. No business can be transacted at a called meeting except that for which the meeting was called

67 ARTICLE VI AMENDMENTS: This constitution may be amended at any regular meeting of the organization by a vote of active members present, provided that the proposed amendment has been submitted in writing to the President

68 Sample BYLAWS ARTICLE I MEETINGS Section I The order of business shall be as follows: 1. Call to Order 2. Program 3. Reading of Minutes 4. Report of Treasurer 5. Report of Committees Standing Committees Special Committees 6. Unfinished Business 7. New Business 8. Announcements 9. Coach has floor 10. Game film viewing 11. Adjournment Section II Roberts Rules of Order Revised shall be parliamentary authority. ARTICLE II DUTIES OF OFFICERS: Section I Section II Section III The president shall preside at all meetings of the organization and perform all duties pertaining to the office. He/she shall, with the approval of the Board and members, appoint all standing and special committees, and he/she shall be an ex-officio member of all committees. The vice president shall aid the president with all duties pertaining to the office. He/she shall in the absence of the president, perform all duties of the office of the president. He/she shall serve as chairman of the Audit Committee and shall furnish the Board and members with the findings of said audit. He/she shall be an ex-officio member of all committees. The secretary shall keep an accurate record of all the proceedings of the organization and shall furnish the president copies of all minutes to be filed with the appropriate school board members. He/she shall conduct all correspondence of the organization as directed by the president, issues notices of all meetings of the organization, and shall read all communication directed to the organization at its scheduled meeting time

69 Section IV The treasurer shall keep accurate records on the organization fund raising and purchases. Books will be of audit quality to pass an annual audit by the school district or IRS authority. Accounts should be reconciled monthly, annual state sales tax reports filed and income tax reports to the IRS to be filed annually. Supply the president with monthly balance sheets on the organization s funds balance. Process checks for organization s purchases as approved by President. Checks require the President s signature and one other authorized signee. ARTICLE III ELECTION OF OFFICERS: The president shall appoint a nomination committee of three (3) active members at the December meeting. Booster Club members interested in one of the Board positions will be required to contact one of the three (3) nomination committee members to place their name on the ballot. Nominations from the floor will be excepted as a write in on the secret ballot issued at the January meeting. However, if there is only one candidate for any office, the election for that office may be by voice. A majority vote constitutes an election to that position. Newly elected officers shall be installed at the March meeting. Term of office shall be for one year, commencing July1 and ending June 30 of the following year. No officer shall serve in the same capacity for more than two (2) years. Vacancies during the year shall be filled by special elections. ARTICLE IV DUES: Dues in the amount of $15.00 per family shall be paid to the membership committee chairperson who will turn over funds to the treasurer. ARTICLE V COMMITTEES: There shall be standing committees elected at the time board member elections occur. The president retains the right to appoint any member in good standing to any committee created after elections which are held in March, or fill any vacancy during that calendar year. Revisions Committee Audit Committee Nomination Fund Raising Committee Ads/Program Sales Shirts/Hats etc. Spaghetti Dinner Silent Auction

70 McDonald Pancake Varsity Banquet Scholarship Team Level Representative Varsity Jr. Varsity SophomoreG Freshman ARTICLE VI AMENDMENTS: These bylaws may be amended at any regular meeting of the organization by a vote of the membership in attendance with at least (5%) of the active members present, provided that the proposed amendments shall have been submitted in writing to the Revision Committee and President for study

71 High in the Saddle FFA Booster Club Exhibit F

72 Exhibit G

73 Humble Independent School District Booster Clubs and Exempt Organizations (281) GASB 39 Form Exhibit H The Governmental Accounting Standards Board (GASB) Statement #39 requires school districts to consider the financial activities of all parent-teacher organizations, parent-teacher associations, booster clubs, foundations and other fund-raising entities for inclusion in the district s financial statements. In order to determine whether financial information for these groups must be included, it is necessary to gather data regarding the financial activities of these organizations. The following information will enable school district officials and auditors to determine if financial activities of the Boosters/PTA/PTO s must be included in the annual financial report. This information is needed no later than June 15th of each year. Keep in mind that external auditors who prepare the district s audit may require additional information. Name of Booster Club/PTA: School Name: 1) What is the activity of Booster Club/PTA? 2) What is the Booster Club/PTA s Tax ID Number? 3) What is the date of your IRS Letter of Determination? 4) What is the total amount of funds in your Booster Club/PTA bank? As of what date? 5) What is your Booster Club/PTA s fiscal year end? 6) Does your Booster Club/PTA s gross receipts normally exceed $25,000 per year? (IRS defines gross receipts as all revenues generated before subtracting any expenses.) 6a) If yes, did you file a Form 990 and Schedule A last year? Date filed: 7) What are the total annual contributions to the school district and/or students? I confirm that the information provided on this form is accurate to the best of my knowledge. Signature Printed Name Booster Club/PTA Position Phone Number

74 Records Retention Schedule Exhibit I Booster Clubs and Exempt Organizations should establish a record file that is passed to the new officers each year. Some items need to be kept indefinitely while other items only need to be kept for a certain length of time. The record file should contain at least the following items on a permanent basis: Permanent Records Internal Records: State Records: Federal Records: Booster Club Registration & Approval Form Articles of Incorporation/Articles of Association Bylaws/Charter/Constitution Minutes from meetings Sales Tax Permit Application Sales Tax Permit Certificate of Incorporation from State of Texas (if applicable) State Sales Tax Exemption Notification State Franchise Tax Exemption Notification (if incorporated) Copy of IRS Form SS-4, Application for Employer Identification Number Copy of IRS Form 1023, Application for Recognition of Exemption, with all attachments Copy of IRS Form 8718, User Fee for Exempt Organization Determination Letter Request, and copy of check sent to IRS with this form Acknowledgement of Your Request Determination Letter Copy of IRS Form 8734, Support Schedule for Advance Ruling Period, and the IRS s notice granting a permanent exempt status to the organization, if applicable For non-permanent records, the Texas State Comptroller s Office and the IRS have different retention periods as discussed below. In addition, certain circumstances, such as fraud, would allow the retention period to be extended beyond the normal requirement

75 According to the Texas State Comptroller s Office, this office has four (4) years from the date the tax becomes due and payable in which to assess the liability. This statute of limitations may be extended beyond the four (4) years, if an agreement is made in writing between the Texas State Comptroller s Office and the Booster Club. In cases of fraud, or if the sales tax returns have not been filed, the statute of limitations does not apply and the Texas State Comptroller s office may assess and collect taxes, penalties, and interest at anytime. The statute of limitations does not apply when information contained in the sales tax report contains a gross error and the amount of tax due and payable after the error is corrected is 25% or more than the amount initially reported. In addition, other exceptions to the statute of limitations may apply. According to the IRS, Booster Clubs and Exempt Organizations must keep each annual information return (i.e. Form 990 or Form 990-EZ) for 3 years from the date the form is required to be filed or from the date the form is actually filed, whichever is later. However, if fraud is suspected or if returns have not been filed as applicable, the IRS could request information prior to the 3 year period discussed above. Non-permanent Records Internal Records State Records Federal Records Financial Reports and Review Committee Reports All financial backup including checkbook and banks records Information related to donations received by a Booster Club from individuals or businesses Financial Aid Guidelines Sales Tax Forms Filed (Quarterly or Annually) Copy of correspondence with the Texas Secretary of State and the Texas State Comptroller Copy of IRS Forms 990 or 990-EZ filed Copy of correspondence with the IRS Before discarding any records, confirm with the Texas State Comptroller s Office and the IRS that your organization is in good-standing and that no open items or issues exist related to the time period involving the records that you would like to discard

76 BOOSTER CLUB OFFICER INFORMATION SHEET Exhibit J Send an updated copy of this form to the Internal Audit Department and to your School Principal or Administrator as new officers are elected or as information changes. 1. Official Booster Club Name: 2. School Name: 3. Sponsor s (Teacher) Name: 4. Official Mailing Address: PO Box / Street Address: City, State & Zip Code: 5. Date of Change in Officers: List Below the Current Booster Club Officers for the school year: Officer Name Office Held Address Hm. Phone Cell Phone Please return to: Humble Independent School District Internal Audit Department Eastway Village Humble TX Boosterclubs@humble.k12.tx.us (281)

77 BOOSTER CLUBS AND EXEMPT ORGANIZATIONS Tax Exempt Status Please indicate below your booster club s preference regarding tax-exempt status. Our booster club is interested in a group tax exemption. Exhibit K Our booster club is interested in an individual tax exemption. Name of Booster Club Contact Person Address Phone number School Please provide copies of: EIN Number Booster Club Bylaws Certificate of Liability Insurance Please return to: Humble Independent School District Booster Clubs/Exempt Organizations Attn: Internal Audit Eastway Village Humble Texas (phone) (fax) Or you may completed forms to: boosterclubs@humble.k12.tx.us

78 Exhibit L Your Booster Club Name Here EIN # Donation Form Donor Donor s Address Donor s Phone What will the donation used for? MONETARY DONATION Check# Amount Cash Amount Attach copies of all checks donated. NON-MONETARY DONATION Value Description Condition (Set by donor)

79 Section 9 Humble ISD Local Policies

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