The IRS Makes the Rules

The U. S. government makes provisions through the Code of Internal Revenue for groups such as the National PTA to operate in a non-profit status for charitable purposes .

This means PTAs are prohibited under federal law from engaging in substantial business activities that are unrelated to their tax-exempt purposes. This would also apply to a PTO who files for tax-exempt status.

Non-profit fund raising activities by a tax-exempt organization will be considered commercial if they consist of selling goods or services that do not contribute significantly to education or advocacy for children, even if the revenue raised from the activity is used for education or advocacy.

The IRS looks at the source of funds, not the use of funds, to determine commerciality.

If you are a parent group raising funds for a public or private school, without being a tax-exempt organization, you could be required to pay taxes on all funds raised even if the intent is non-profit and charitable for educational purposes.

Remember, IRS RULES when it comes to fund-raising, not the PTA. The IRS can be found online at www.irs.gov

Click here for National PTA's article on new IRS rules for 2006

Click here for new IRS rules concerning non profits with less than $25,000 in income.