Exempt Organizations
The State of Texas exempts qualified organizations from
sales, franchise, and hotel taxes. Organizations that might
qualify include certain 501(c) organizations, (booster
clubs) homeowners associations; and educational, religious,
and charitable groups. Federal Tax exemption is not necessary
in all categories of exemption that are provided under
current Texas Law. However, it is required in certain instances
such as for Booster Clubs. The categories of exemption
are outlined along with the application and documentation
required for each category in Publication 96-1045, Guidelines
to Texas Tax Exemptions. The URL address is http://www.window.state.tx.us/taxinfo/taxpubs/tx96_1045.html
The pro cess for obtaining an exempt identification number
is as follows. The process is broken out into two categories:
PTO/PTA's and Booster Clubs.
PTO and PTA Organizations
PTA's and PTO's facilitate student education at a place
where the educational activities regularly occur. PTO and
PTA organizations qualify for exemption as educational
organizations. A qualifying nonprofit educational organization
must be devoted solely to instruction of students within
the regularly scheduled curriculum.
To apply for an exemption, PTA's and PTO's simply need
to complete the application (form AP-207- educational organizations)
and forward it to the Comptrollers Office along with a
copy of their governing documents that show the group is
nonprofit and a list of all of the activities provided
by the organization. (See http://www.window.state.tx.us/taxinfo/taxforms/ap-207.pdf )
Booster Clubs
Booster clubs help support school organizations and school
activities outside of the classroom curriculum such as
Football, Baseball, or Project Prom, etc. Booster clubs
qualify for exemption from tax if incorporated, meaning
they must receive 501(c) exemption status from the IRS
first. This may be a lengthy process. To apply, they should
complete AP-204-(miscellaneous organizations), and forward
the application and a copy of the IRS determination letter
to the Comptrollers Office. See ( http://www.window.state.tx.us/taxinfo/taxforms/ap-204.pdf ).
Booster Clubs will need to file Form 990EZ or Form 990
at year end if the gross receipts exceed $25,000.
Once the Comptrollers office receives the application,
there is usually a turnaround time of about 5 days of its
receipt. This may vary depending on the workload at the
time, or the complexity of the application. The Comptrollers
Office telephone number is 1-800-252-5555. This is the
tax assistance line, if you have questions please ask for
exempt organizations.
Opening a Bank Account
Most banks usually accept a TIN or a Taxpayer ID Number
for an exempt entity to open a checking account. The Taxpayer
ID number may be the ID number you receive from the State
of Texas or it may be the Federal Taxpayer Identification
number that you receive from the IRS. The IRS can help
with questions regarding taxpayer numbers. Their number
is 1-877-829-5500, or the website is http://www.irs.gov .
As an exempt entity, a bank may also ask:
1) For minutes from a meeting to verify that the person
opening the account is an authorized individual,
2) For proof of non profit status, and,
3) To complete a form called an unincorporated organization
resolution. The resolution identifies the account holder's
officers and authorized agents of the unincorporated organization
along with guidelines for authorized actions on the account.
(Note: these steps for opening a bank account may vary.
The steps listed here are based on the policy with Bank
of America.)
Other
PTA/PTO and Booster Club Organizations must collect and
report sales tax for all taxable transactions. However
each booster club may have two (2) tax free fundraisers
per calendar year according to the State Comptrollers Office.
|
