PTA and Taxes

From Tom Jennings, 20th District PTA President

As April 15th looms in the near future, I began to think about filing my personal tax return and the responsibilities that I, as an individual, am required to do. I have to gather up supporting documentation in order to complete and file my tax return correctly and on time. You may be thinking, “What does that have to do with PTA?” Well, it may be a stretch, but documentation is the key word.

Under Internal Revenue Service code, PTA is recognized as a public charity and, as such, is required to keep books and records (documentation) to prove that it is complying with tax rules. Due to recent changes in the tax code, every PTA will now be required to file an informational tax return annually. Your PTA must be able to document the sources of receipts and expenditures reported on your 990, 990-EZ or 990-N (also known as the e-postcard.) Which return your PTA files depends on your gross receipts. As a PTA board member, you have a fiduciary responsibility to ensure the prudent management of the organizations’ funds, this includes filing your PTA’s tax return. As an elected or appointed officer, the PTA bylaws require regular attendance at board and association meetings. It is every officer’s responsibility to review financial statements, i.e. treasurer reports, budgets and audit reports, presented at those meetings. What can you do to help ensure that sound financial practices are being followed? The following documents can assist you and your board in maintaining the documentation necessary to complete an audit and to assist you in completing your PTAs tax return.

Budget – an estimate of gross receipts and expenditures for the fiscal year.

Audit Report – an audit must be conducted twice a year: year-end and mid-year. Audits must be presented to the board and the membership for adoption.

Cash Verification Form - completed and signed by two people not related by blood, marriage, or residing in the same household. This form must be completed each time money is counted.

Payment Authorization Form - completed by the secretary or the financial secretary. Bills and/or receipts should be attached to the form as documentation. After the bill has been approved by the association, it is given to the secretary and president to sign. After signatures are collected on the form the treasurer can then write the check.

Treasurer’s Report - must be presented at every meeting of the board and the association. A beginning and ending balance along with a listing of funds received and disbursements must be included in the report. The ending balance
should match the checkbook register, the ledger, and the bank statement (adjusted for outstanding checks and deposits).

Expense Report - this is for officer reimbursement for expenses incurred completing their duties of office. Expenses must be approved by the association.

Request for Advance – a binding contract. Funds must be returned or receipts provided within two weeks of the advance. The advance must be approved by the association.

Annual Financial Report – basically, a treasurer’s report covering an entire year.

Ledger - treasurer-maintained document that lists income and disbursements. Note when bank account is reconciled and when a treasurer’s report has been made.

Check Book Register - just like your own, list deposits as you deposit funds and write down all checks at the time written. Must keep a running balance. Note when bank account is reconciled in the register and when a treasurer’s report has been made.

Bank Statements - must be reviewed immediately upon receipt by the treasurer and the auditor. Statements must be reconciled upon receipt.

For additional financial information and instruction check out your PTA Toolkit, www.capta.org, or talk to your 20th District Treasurer and attend district workshops when offered, and attend the California State PTA Convention.
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