Sales Taxes
With the passage of House Bill 232, effective July 1, 2013, PTAs will no longer need to charge sales tax when fundraising items are sold or re-sold by PTAs (like gift wrap, pizza kits, or spirit wear), in which funds from sales are deposited into the PTA account and paid out to a vendor (if applicable).
HB0232: “This bill exempts from the State sales and use tax sales made by a parent-teacher organization or other organization within and elementary or secondary school in the State or within a local school system in the State.”
Maryland PTAs must continue to file and report sales and use tax reports indicating $0 in taxable sales as required by the taxing authority. Local PTA units are still required to pay sales tax on items purchased, unless those items will be resold. PTA units with a merchant account and using their own credit card machine must collect, file, and report sales taxes in one of three ways:
1. Issue a Blanket Certificate of Sale (see Cash Encounters) to the vendor in lieu of paying sales tax.
2. Pay the sales tax, then request a refund of that sales tax from the State.
3. Apply for Sales and Use Tax Exemption Certificate. PTA units may not use the school’s exemption certificate. The exemption may be obtained by filing the current year Combined Registration Application.
PTAs must pay sales tax when they buy items for their own use such as in a cultural arts program or for their own office supplies.
PTAs are independent organizations and are not authorized to use the school tax number.
Federal Taxes
Charities and Nonprofits | Internal Revenue Service (irs.gov)
Every local PT(S)A must file an IRS 990 every year; a copy of that 990 filing also must be uploaded into Givebacks. If your unit fails to file for 3 years, the IRS will auto-revoke your tax-exempt status.
Gross receipts of less than $50,000:
Go to the IRS website to locate the form 990-N, a relatively simple form to complete online by November 15. But if you wish to file the 990-EZ instead of the 990-N, you may do so. Access the link below to file the 990N (you must have your EIN to file):
Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.
Gross receipts of $50,000, but less than $200,000 (more than $200,000 requires a 990):
You are required to file IRS Form 990-EZ and the accompanying Schedule A (Schedule B and others as necessary).
Please make sure that your 4 digit GEN code, Block F, is listed as 2155. This code identifies you as part of the Delaware PTA group exemption. Units submitted consent forms (most did this in 2022) to fall temporarily under the Delaware PTA group exemption until Free State PTA receives its own group exemption from the IRS. Please reach out to us or Free State PTA if your unit did not submit this form.
See the Resources and Guides Section of the Free State PTA website for the Delaware PTA Group Exemption Consent Form and the Delaware PTA Group Exemption FAQ.
WHY: On May 28, 1969, the Internal Revenue Service granted a blanket exemption to all Maryland state, county, and local PTA units under Section 501(c)(3) of the Internal Revenue Code. As a result, donations to your PTA are tax-deductible. If you fail to complete the form, you jeopardize your non–profit status, and will be required to pay income tax on all profits.
DEADLINE: The deadline for filing—990-N, 990-EZ, 990, or Extension—is November 15, 4.5 months after the end of the PTA fiscal year (June 30). A copy of your filing must be uploaded into Givebacks.
TIP: Once your fiscal year has ended on June 30, don’t wait until November 15 to file the required paperwork. You can do it anytime after the fiscal year has ended.
Form 990-N filing instructions:
Publication 5248, Form 990-N Electronic Filing System User Guide (PDF).
Form 990 filing instructions:
Form 990, Return of Organization Exempt from Income Tax
Form 990-EZ filing instructions:
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax
Repercussions of not filing your 990
Don’t lose your tax-exempt status!
https://www.irs.gov/charities-non-profits/automatic-revocation-of-exemption
How to handle filing Form 990 for prior years and late filings
Prior Years: You can file Form 990-N for a prior year through one of the IRS’s approved e-file service providers. However, you cannot file Form 990-N (e-Postcard) for a prior year through the link on the IRS site to the filing system.
Late Filing: The IRS will send you a reminder notice if you do not file your Form 990-N (e-Postcard) on time, but you will not be assessed a penalty for late filing. However, it is critical that you file within the 3-year period described above or your organization may lose its tax-exempt status. Learn more about automatic revocation and how to reinstate tax-exempt status.
What to do if Your Form 990 is Rejected
How to check if your 990N has been rejected.
When you file through login.gov, you’ll receive a confirmation of filing. This is NOT an acceptance of filing; it simply signifies that you filed. The filing’s status is “pending.”
You must go back to login.gov (after a short wait) to “Manage your Submissions.” When you refresh the filing’s status, you’ll see whether it’s been accepted or rejected. As noted in the post below, your filing will be rejected if your unit doesn’t fall under the Delaware PTA group exemption #2155. Even if you submitted a consent form, it takes a long time for the IRS to actually recognize a unit’s status as falling under the DEPTA group exemption. This tax-exempt status is officially noted on the IRS Exempt Organization Business Master File Extract (EOBMF). More details are in the IRS 990 section of our UNIT COMPLIANCE tab.
We know this is confusing! Free State PTA and PTA Council are here to help you work through getting into good standing with the IRS. Please reach out!