Finance Basics - Annual Audit & Tax Filing
All Virginia PTA units are covered under the umbrella of the Virginia PTA's 501(c)(3) non-profit status granted by the Internal Revenue Service in 1986. This group exemption exempts your local unit from paying federal income tax on money earned, allows donations to be claimed as tax exempt and also allows your unit to apply for a Virginia Sales Tax Exemption. ALL BOARD MEMBERS, not just the Treasurer, have fiduciary responsibility for the financial position of the PTA. However, the Treasurer plays a crucial role in maintaining the health of the organization.
Most PTA's in Virginia have a fiscal year of July 1st - June 30th.
GOOD STANDING (Standards of Affiliation)
In order for Virginia PTA to include your local unit under the group exemption, we must be able to provide the IRS (if asked) with specific data about your PTA. Therefore, it's critical that you keep your PTA in "Good Standing" by annually providing Virginia PTA with documentation that enables us to maintain your 501(c)3 status. We recommend you keep a copy of the Standards of Affiliation checklist and copies of all pertinent documentation in your legal documents or treasurer binder.
You PTA is considered to be in "Good Standing" when you have provided the following items:
- Contact Information for your Executive Board
- Annual Financial Review
- Annual Tax filing for the fiscal year ending June 30th
- Membership List
- Membership Dues
- Proof of Insurance
- Bylaws Organizational Structure Form
ANNUAL FINANCIAL REVIEW (AUDIT)
The purpose of the annual Financial Review or Audit is to ensure that PTAs are following proper financial procedures, practicing financial responsibility and providing transparency for their General Membership. If they have been challenges over the past year, the Financial Review will help your PTA identify gaps and opportunities to improve financial practices and get back on track with best practices.
Timeline & Submission
Ideally, your financial review should be complete and provided to your Executive Board within 30 days of the end of your fiscal year (generally by July 30th). This allows the incoming Treasurer to fully transition into their new role at the start of August and allows the incoming Executive Board to use the valuable summer months to budget and prepare for the coming year. Completed Financial Reviews should be presented to your General Membership at your September PTA meeting and then loaded into the audit section of your MemberHub account within 15 days of adoption and no later than October 31st. Please remember that if your Treasurer leaves office for any reason in the middle of the year, a Financial Review should be completed before the new Treasurer takes office.
Conducting your Financial Review
- Your Executive Board appoints a Financial Review Committee of three PTA members who were NOT authorized signers on your unit's bank account.
- Your outgoing Treasuer prepares their books and records for review and completes the first half of the Financial Review (Audit) report.
- The Financial Review Committee conducts a materials provided by the Treasuer and completes their section of the Financial Review (Audit) Report.
- Exective Board accepts the Financial Review
- General Membership votes to adopts the Financial Review
- The president and treasurer that are in office at the time sign page 1 and scan your entire financial review (including all pages of the financial review report and any additional information from the financial review committee or auditor)
- Submit your financial review by uploading a copy to MemberHub. (Click 'Compliance' in the left menu and then the 'Submissions' box)
ANNUAL TAX FILING
All local PTA units that have gross receipts of less than $50,000 must file an IRS Form 990N (e-postcard). If the PTA's gross receipts are $50,001 or more, but less than $250,000, the unit may file a Form 990EZ. If a PTA's gross receipts are over $250,000 they must file a full Form 990. If you fail to file taxes for 3 years in a row you risk losing your federal tax-exempt status.
You should strive to have your tax filing complete as soon as possible, ideally before the new Treasurer takes over the books (so by July/August). At the very latest, you must have filed with the IRS within 5 months of the 15th day when your fiscal year ends (generally November 15th).
- Form 990N with Instructions
- Submit a copy of your 990 filing or acceptance receipt by uploading a copy to MemberHub within 30 days of filing (Click 'Compliance' in the left menu and then the 'Submissions' box)
- All PTAs must provide proof of insurance coverage by uploading your insurance certificate to MemberHub. (Click 'Compliance' in the left menu and then the 'Submissions' box)
501(c)3 DETERMINATION LETTER
Virginia PTA generally distributes your annual 501(c)(3) Verification letter in November, when all Good Standing Requirements have been met. You can give a copy of this 501(c)(3) letter to any sponsors, businesses or individuals making donations to your local unit so that they can claim their donation as tax exempt. Abiding by federal guidelines is extremely important to maintain tax-exempt status and ensuring your PTA is financially sound. You can use this form to request a copy of the 501c(3) letter if you do not have your on file.
PREPARING A BUDGET
Preparing your annual budget is an excellent opportunity for your board to talk through goals for the coming year. Remember, our mission is to advocate for the heath and welfare of children and to create a supportive inclusive school climate. You should only raise enough money to cover your needs for the year. Please be mindful of whether or not the items that you discuss raising money are items that should be paid for by the school division or create inequitibale learning across your county or region. If so, you may like to consider advocating for improved resourcecs for your entire community.
Your Executive Board should approve the proposed budget to be presented to the general membership for adoption. Per our shared bylaws, you should obtain general membership approval for any changes to the adopted budget over five hundred dollars ($500.00) per fiscal year.
Visit Treasuer Tools for sample budgets, treasurer request forms, monthly reports and a sample organization structure for your Treasurer binder.
SAMPLE SUMMER PLANNING CALENDAR
|Last Day of School||Target deadline to submit all Treasurer Reimbursement Requests|
|June 30th||Fiscal year ends and so does spending under the 20X1-20X2 budget.|
|July 1st - 9th||Treasurer reconciles checking account to June 30. Fills out their portion of the financial review report and prepares all materials for the Financial Review Committee.|
|July 10th - 20th||Financial Review Committee conducts their review and provides a full completed report to Executive Board|
|July 20th - 30th||
File 20X1 taxes for 20X1-20X2 fiscal year and send a copy to Virginia PTA.
|August 1st||Treasurer transition complete!
Treasurer starts work on the 20X2-20X23 Budget in collaboration with a Budget Committee or the Executive Board.
|Month of August||Finalize your 20X2-20X3 Calendar. Prepare for Back to School events. Conduct a practice run for processing payments and collecting membership dues!|
|First General Membership Mtg of 20X2-20X2||General Membership votes to adopt the 2020-2021 financial review report and a 20X2-20X3 budget.|
|No later than Oct 31st||Financial review report is uploaded to Audit Complaince tab in MemberHub's within 15 days of your meeting.|