Booster Clubs Questions and Answers (in italics) Board Policy (Employees) DBD Regulations: Employees and Financial Capacity 1. If an employee is in charge of a concession stand, does that fall in the same category? Any and all positions that are responsible for the ultimate safeguarding or disposition of funds may not be held by District employees. 2. Since concession coordinator is not a fundraising chair is it okay for them to be an employee? Any and all positions that are responsible for the ultimate safeguarding or disposition of funds may not be held by District employees. 3. Does this policy include Substitutes of the District? Substitutes are not District employees. Therefore, this policy does not apply. Bylaws 1. Do we only need one vote per family or officer? The Bylaws should stipulate that each member receive a vote. However, no more than one family member should serve as an officer at the same time, unless they are serving as co-officers in the same position. 2. Can husband and wife serve on the board under one vote? Only one family member should serve as officer of the club at any given time, unless they are serving as co-officers in the same position. 3. Can a district employee serve as an officer? District employees may serve as officers so long as they are not a treasurer, fundraising chair, or check signer. 4. Can the treasurer be a district employee? No. District Policy DBD Regulation specifically prohibits employees from serving in a financial position such as treasurer. Meetings 1. Is it not O.K. to hold booster club meetings off campus? Correct. Booster club meetings should be held on District premises and a campus administrator should be invited.
2. Do we need a general board meeting or is it just for officers? Meetings of the entire membership should be held as necessary, typically at least three times per year. Officer meetings are held more frequently. 3. How do we notify campus/principal of a board meeting? Typically the campus secretary or other administrative staff maintains the campus calendar. Check with the campus office staff to determine their preference. 4. What counts as notice for the meeting? Website? Please see response above. Notice to the campus office staff as well as on the booster club website should be sufficient. Internal Controls (Bank Accounts) 1. Are you saying that someone other than a booster club member must review the documents? No. A booster club member, other than the treasurer and check signers, who is not involved in financial duties should be designated to review bank statements and its contents monthly. 2. Can someone outside the booster club like a family member perform the review? Ideally, a booster club member would perform this function as they would be more aware of the activities of the club and be able to identify potential fraudulent transactions. 3. Do reconciliations have to be on paper or can you do them online? Electronic format is acceptable so long as another individual can view and approve. In addition, the reconciliation must be able to be saved for future reference. If not, the completed reconciliation should be printed and placed in a file for documentation. 4. What do you consider a small booster club as far as financially? This is really a case by case basis and is all relative. 5. Do activity funds have individual accounts? Activity funds at the campus level can have individual sub-accounts for students. 6. As an alternative, can the board review the check register only? This would not be an acceptable alternative. Review of the check register will only show what was written/typed regarding transactions. It does not show the actual transaction information only manually added information.
7. Are there any rules about online banking? There are no rules regarding online banking. However, clubs that use an electronic system should thoroughly evaluate all controls available through the bank. 8. How often should bank statements be reviewed? Bank statements are prepared by banks monthly and should be reviewed at the same interval. 9. What should the official mailing address be for Booster Clubs? Ideally, the mailing address should be to a booster club member or a post office box. No money can be stored at the campus. 10. Should coaches have access to booster club bank accounts? Booster clubs are parent organizations and therefore, the funds are administered by the membership. However, this practice may have transpired as a result of a bad experience in previous years. This issue should be addressed by the coach and/or the principal. Internal Controls (Cash) 1. Concession Sales-- Dropping off the money at the bank is impossible late at night after a particular sport such as football, how else do we secure the money without taking it home in order not to put people in danger? The optimal solution is to drop the money in the night depository after the event. If circumstances do not allow for this on occasion, it is recommended that at least two individuals have verified and signed off on the contents of the collection to ensure that there is accountability. 2. Memberships--if we deposit the money right away-- How can we be sure all the checks are valid without reviewing them and making copies for our records? In preparing the deposit, the cash and checks collected should balance to all applications received. The applications will be the supporting documentation for the deposit. The copying of checks before they are deposited is a treasurer decision. After the deposit is made, the applications can later be reviewed by the booster club. The bank notifies the booster club if a check has been returned uncollectible. The booster club will research their documentation and notify the member to request a replacement payment.
3. Do we have to verify everything that comes in for money purposes by signing off on a cash tally sheet? The Cash Tally Sheet form is a tool to help balance the money collected with the supporting deposit documentation. It is also to prevent bank discrepancies in deposits. Internal Controls (Disbursements) 1. What if the check is a small dollar amount, does it still need two signatures? Yes, all checks should contain two signatures to authorize the disbursement. 2. What does two signatures do for us? The procedure of requiring two signatures on a check authorizes the release of the check disbursement. However, the critical piece is for the individual affixing the second signature to also review the disbursement documentation including invoices, receipts, etc. for legitimacy, reasonableness, and congruence with budget items. When fraud occurs, typically, checks are issued and disbursed by one individual. Enforcing this policy limits the exposure to the booster club. 3. Does every check need two signatures? Yes, all checks should contain two signatures to authorize the disbursement. 4. Is it required or recommended to have two signatures? Two signatures are required. See response to question #2 above for additional information. Insurance Coverage 1. Is Insurance recommended or required? Insurance is not required. For some smaller organizations, it doesn t make financial or operational sense to purchase. Insurance is on a case by case basis, but recommendation is to at least discuss and evaluate options. 2. Who do you purchase insurance with? Insurance policies may be purchased utilizing funds of the booster club. Submission of Financials 1. Is the audit report semi-annual or yearly? An audit should be performed at the end of each school year by individuals independent of the treasury/financial functions. If there is turnover at the treasurer position during the year, it is recommended that an audit be performed at that time as well.
2. Is turning your audit report into the campus office sufficient? Yes, audit report and financial reports should be submitted to the campus bookkeeper who will facilitate transfer to the Financial Services office. 3. What format is required for audit reports? Appendix A of the Booster Club Guidelines has a suggested audit program. In terms of a report, the format is up to the booster club. Typically, most reports are in Word format with details of the procedures performed, findings identified (if any) and signatures by each of the members serving in the audit role. 4. Why are the submissions of financials twice a year? The year-end financial submission is necessary to comply with GASB Statement 39. The financial submission at mid-year is primarily to ensure that the booster club is maintaining financial records and reports. Fundraising 1. Whose rules are these? The vagueness of this question makes it difficult to respond. However, referring to the section entitled Fundraising in the Booster Club Guidelines, many of these are directives or interpretations of the Internal Revenue Service, the laws of Texas, or based on experiences of booster clubs and issues that have arisen in years past. 2. Is it okay to require someone to pay for a product when it is returned damaged and not in condition to resell? That sounds like a decision to be made by the club. I would think that this would be on a case by case situation depending on other facts. 3. When only 20 kids pay for animals, can kids that don t attend meetings be docked? The booster club is a parent organization to support the activities of student activities as a whole and as such cannot dictate repercussions regarding student actions, level of service, etc. Contributions from the booster club should be to support the activities of the student group as a whole. 4. Does every child not have the opportunity to sell fundraisers to benefit their way to a particular event if their parents can t provide it? Student activity fund accounts at the campus hold fundraisers, etc. to raise money for events, equipment, trips, etc. Booster clubs can raise funds to supplement those efforts.
5. Is it true that it s a district policy on who does football game concessions? Historically, band booster clubs have provided the concession at football games. This is the case in many districts. 6. Is there a limit of the number of fundraisers for the Athletic booster club? There have been no limitations set on the number of frequency of fundraisers. 7. If you sell shirts throughout the year-- Do you have to include tax? Generally speaking yes unless the organization is qualified for state sales tax exemption, has designated the sale as one of the club s two tax free days per calendar year, and the shipment of t-shirts ordered was received on one day. 8. Can you use the tax free on the day the product is delivered? Yes. Refer to the District s website under booster clubs for additional information. 9. Can the Athletic Director require you to sell Warrior Cards? Booster clubs are parent organizations. Any sales of the booster club are governed by decisions made by the booster club. For booster clubs, members cannot be required to participate in fundraising. 10. Can people use credit cards for purchases? The organization would have to set up a merchant services account in order to accept credit cards. The costs associated with this arrangement may be prohibitive. 11. What credit card company do you recommend? There are numerous financial institutions and other companies that provide merchant services. These services are similar from institution to institution, although the fees may vary. Scholarships 1. Can the scholarship be paid directly from the booster club and not go through the campus? We request that funds go through the campus activity funds in order to better track and report on scholarships. Also, the campus bookkeeper and other staff work year-round and are able to respond and follow-up on questions/problems that arise from colleges and universities.
2. Can you write the check to an individual as opposed to a University? Ideally, the check should be written directly to the university to ensure that it is directed for the purpose directed by the club. If the booster club makes the donation for the scholarship to the campus, the campus will handle this for the club. 3. Do the parents on the Scholarship committee have the right to view transcripts in order to determine eligibility? The criteria for the scholarship should be developed in advance in consultation with the Lead Counselor at the campus. 4. What is the difference between advertising and scholarship income? Advertising income is typically a sale to a company or individual for printing in a program or other publication. 5. We write checks to the high school, is this O.K. or does it need to be written to the university? We request that funds go through the campus activity funds in order to better track and report on scholarships. Also, the campus bookkeeper and other staff work year-round and are able to respond and follow-up on questions/problems that arise from colleges and universities. 6. Are band camp scholarships included? Camp scholarships are a separate topic. However, guidelines for review and award should be established prior to commencement of any review of eligibility. 7. If scholarships are awarded to every senior who applies by the deadline and the same amount is given to each player, do we have to have a committee? Scholarships should be a minimal part of the club s budget. To provide scholarships to every senior calls into question the true purpose of the club and may be in violation of IRS regulations. 8. Is there a percentage guideline? Re: Scholarship budget There are no specific percentages established, but scholarships should be a minimal part of the club s budget. 9. What constitutes Minimal Amount? This is a decision to be made by the club and its membership.
501(c)3 1. Is the filing fee a one time or yearly fee? The Form 1023 filing fee is a onetime fee. 2. What is the amount that you think is realistic when hiring a lawyer to do the service of preparing reports? This is dependent on a number of variables. Some variables are whether the lawyer/cpa is preparing the Form 1023 and/or other documents or reviewing and consulting regarding them. In addition, there could be a considerable range of fees depending on the background and expertise of the individual and whether any of the work is provided pro bono. Word of mouth referrals from other clubs may be a better source for additional information. 3. Is adding a logo on a website or banner advertising income? Business Cards? Generally, an advertisement contains qualitative or comparative information that promotes the sale of the sponsor s product or use of its services. If the display of a logo or business card information is to acknowledge those who have made a donation and does not include qualitative or comparative information, then using these criteria, it should not be viewed as advertising that is subject to unrelated business income treatment. 4. Our club hasn t done any of this stuff, can booster club join together to get 501(c)3 status? It is possible for a 501c3 organization to include the activities of multiple booster clubs, but these clubs would need to be aware of the potential for accounting complexities and financial safeguards (keeping track of who has what) and also legal liability and other potential issues (for example, if one booster club faces legal trouble then all clubs included in the 501c3 may be associated with the liability). This is not recommended. 5. Do we have to claim donations as income if we are not a 501(c)3 agency? Yes. Donations are income to the organization regardless of whether it is a 501c3. If it is a 501c3, the net income of the organization is exempt from tax (without considering any unrelated business income tax issues). If it is not a 501c3, the net income of the organization is not exempt from tax and some of the expenditures of the organization may not be tax deductible.
6. Is the process for filing a 1023 form simple with IRS? The process is not simple. Some clubs have determined that professional assistance is necessary due to the complexities. 7. How long does the process take with IRS to become 501(c)3? According to the instructions for Form 1023, the IRS will generally acknowledge receipt of the form within 21 days. The processing time will vary depending on whether any additional information is needed, etc. 8. Do you have to pay a fee if you don t file a 1023 form? The filing fee is submitted along with submission of the form. 9. If we don t file a 1023 form and we haven t received a determination letter on 501(c)3 status Can people still make a tax exempt donation? No. If you are not granted 501(c)3 status from the IRS, donations are not tax deductible to the donor. 10. If we don t become a 501(c)3 organization-- What form do we file for taxable income? This depends upon how the club is organized. For organizations that are formed as non-profit organizations through the Texas Secretary of State, but not qualified as a 501(c)3 through the Internal Revenue Service, Form 1120 (U.S. Corporation Income Tax Return) should be completed. 11. Is there a place we can get our determination letter or a copy of our 1023 form? Yes, copies may be requested directly from the IRS. 12. How do we get 501(c)3 status? If the club is already organized as a nonprofit corporation through the State of Texas, in order to be designated as 501(c)3 status, Form 1023 must be filed with the IRS. 13. Are there any special instructions for the 1023 form? Yes. Instructions for filing Form 1023 are available on the IRS website. 14. Is 501(c)3 an automatic exempt status with IRS? No. In order to be designated as 501(c)3 status, Form 1023 must be filed with the IRS.
15. Does 501(c)3 qualify for tax free? Yes. Obtaining 501(c)3 status results in tax exempt status from federal income taxes. However, certain activities of the organization could still be subject to federal income tax. Also, tax exempt status for purchases and sales must be applied separately through the State Comptroller s office. IRS Form 990 1. Can you go back and file a 990 form with IRS for 2007? Yes. There are late filling penalties that may be assessed by the IRS for prior years. See the instructions for Form 990 for additional information on applicable penalties. 2. Is there a penalty for filing late? Yes. There are late filling penalties that may be assessed by the IRS for prior years. See the instructions for Form 990 for additional information on applicable penalties. 3. Is there a fee per day after the 990 deadline? Yes. There are late filling penalties that may be assessed by the IRS for prior years. See the instructions for Form 990 for additional information on applicable penalties. Sales Tax Exemption 1. Is there a fee to file for sales tax exemption? There is no fee associated with an application for sales tax exemption. 2. Tax Free Sales--- Isn t it correct to say that it is per Sales Event not per 24 hour day? The sale is designated as in a 24 consecutive hour period. However, the Comptroller s office has provided additional clarification that so long as the shipment is all received in the 24 hours period, the fact that the sales or orders taken place over a period of time does not affect the club s ability to designate a one of the two tax free sales days. Refer to the District website on booster clubs for additional information. 3. If we provide meals each game day, can we use sales tax exempt form? If the clubs has tax exempt status in the State of Texas, the purchase of meals can be tax-exempt. However, providing meals to students may be a violation of UIL rules. Consultation with the coach/sponsor is recommended to ensure compliance.
4. Is it true that we must pay taxes when purchasing items if we don t have tax-exempt status? Yes, sales tax must be paid for all purchases unless the State of Texas has designated the club as tax-exempt. 5. Doesn t the EIN qualify the club as a tax exempt agency? Simply having an identification number through the Federal government does not qualify a club for tax-exempt status. Application must be filed with the Texas Comptroller s office for tax exemption. 6. If we are selling spirit t-shirts, can we write down one of the tax free dates in order not to have to charge tax? Only clubs that have applied and been granted exemption from sales tax through the Comptroller s office can use the two one day tax-free sales. All other sales of taxable items shall be taxable. 7. Can you use the tax free on the day the product is delivered? Yes, the sale can be designated as one of the two tax-free sale days for organizations that have applied and been granted exemption from sales tax through the Comptroller s office. 8. We have an EIN-- What s our status? An Employer Identification Number (EIN) is simply an assigned number through the Internal Revenue Service. It does not represent 501(c)3 status or any other status. 9. How do we get sales tax and franchise tax exemption forms? These forms can be obtained through the Comptroller s office or their website. 10. If we are exempt with IRS-- Do we still file with the Comptroller? Exemption from federal taxes is obtained through the IRS. Exemption from state sales tax is obtained through the Texas Comptroller s office. 11. How do we get an EIN? An Employer Identification Number (EIN) can be obtained from the IRS by applying online or calling toll free. 12. Is the sale of donated items tax free? No. These items are taxable and must be handled in the same manner as other taxable items.
13. Is it sufficient to pay sales tax to the garment company and not charge individuals for it? For clubs that are designated as tax-exempt through the Comptroller s office, there is no sales tax charged for the club s purchase of the items. The sales tax is charged to the buyer of the item unless the sale is designated as one of the tax-free sales. For clubs that are not taxexempt, a Texas Sales and Use Tax Resale Certificate should be presented to the vendor at the time of purchase. The sales tax is charged to the buyer of the item. Other Compliance 1. Is paying someone to do reporting of IRS reports a service? Yes, the payment of a CPA firm or other organization/individual to complete reports is a service and a 1099 should be issued. 2. Is it cumulative or just for a one time job? The amount set for 1099s is cumulative over the course of the tax year. 3. Do we have to have a 1099 for a vendor like Varsity for uniforms? For organizations that are incorporated, a 1099 is not necessary. However, generally speaking, uniforms are customized and therefore a service has been provided and a 1099 would be required, if the company is not incorporated. General Questions 1. Are there specific rules on what booster clubs are to pay for versus what the activity fund should cover? Generally no. Teacher sponsors and booster club officers should work closely to understand the needs of the club and identify ways the booster club can support the school organization/activity. However, booster clubs cannot pay for salaries of District employees unless expressly approved by the Chief Financial Officer. 2. Are there any UIL rules on the subject? The vagueness of this question makes it difficult to respond. However, a document entitled University Interscholastic League Booster Club Guidelines is posted on the District website under Booster Clubs. This document may be helpful in answering questions. 3. Project Graduation--- Students constantly drop off money-- Where should the money be going? Typically, parent volunteers arrange schedules to be on the campus when collections or large checks are expected.
4. Can a person donate to sponsor an individual instead of sponsoring the booster club itself? Booster clubs must be organized to support an activity as a whole. Individuals cannot individually benefit. If a person wishes to support an individual rather than the club, the check should NOT be funneled through the booster club, but directly to the individual. Obviously the contribution would not be tax-deductible. 5. How do we operate as a booster club now and not follow past club rules? Booster clubs should do the best to implement any changes during the year. The expectation is that changes are made to continually improve upon operations. 6. Who can we contact to ask the security officers to stay after the event to escort parents with money? The school district contracts directly with the city and county for security officer services. To ask officers to escort parents with money would increase the District s cost. Perhaps having two club members make the trip to the bank together would ease concerns about safety. 7. Can we use QuickBooks software reports? Booster clubs use a variety of software applications for tracking expenditures and financial information, including QuickBooks. 8. How do we identify information? Student ID? The vagueness of this question makes it difficult to respond to this question. 9. If someone wants to support a booster club, can they make a check to the school? Booster Clubs are separate entities. Contributions to booster clubs should be made directly to the organization. 10. What about barter? The vagueness of this question makes it difficult to respond to this question. 11. Are there any special rules regarding sponsorship banners? Does it go to the athletic fund? The District Athletics Director should be consulted regarding the posting of vendor sponsorship banners, etc. on fields and fences.
12. What is a Margin tax? In 2007, the legislature changed the franchise tax laws to include additional organizations such as partnerships, limited liability partnerships, and general partnerships. Margin represents one of three available calculations to arrive at the franchise tax liability. This does not affect booster clubs. 13. How does the district support booster clubs when something goes wrong? In many cases, the District is asked to assist when situations go awry in booster clubs. As booster clubs are separate entities, assistance is limited primarily to consultation and recommendations. Although in some situations, directives may be given in order to continue to utilize District facilities, etc.