Non-Profit Status

FAQs: PTA's Non-Profit Status


PTAs are 501(c)(3) organizations and have been granted tax exempt status as constituent organizations of the California State PTA and the National PTA.

California State PTA has secured from the Internal Revenue Service a group (blanket) tax exemption letter under Section 501(c)(3) of the Internal Revenue Code.  Unincorporated PTAs also have received an exemption letter from the California Franchise Tax Board confirming PTA’s exemption from state franchise or income tax under Section 23701d of the Revenue and Taxation Code.  Separately incorporated PTAs must secure their own California Franchise Tax Board letter of exemption. Both the federal and state exemption letters cover unit, council and district PTAs.


Letters of Determination = Request for Affiliation = Proof of Tax Exemption

When PTAs are asked to prove their tax exempt, non-profit status, they can request the California State PTA office provide a “Letter of Determination”, which is a packet only provided by the California State PTA office.

The packet, explained in  Letter of Determination, consists of:

1. Letter dated 1943 from the Internal Revenue Service.

2. Letter from the California Franchise Tax Board.

3. Current cover letter from the California State PTA office indicating the specific PTA unit is a

    constituent  unit and is in “good standing”. This letter also includes the unit's EIN (Employer

    Identification Number).

The president or treasurer of the PTA that needs the exemption letters must contact the California State PTA office to request a  “letter of determination”. An email can be sent to lod [at] capta.org. This request can also be made by the district PTA president.

The California State PTA office sends the packet to the PTA president.

It is suggested that each PTA download  Letter of Determination and place it in the president’s and treasurer’s  permanent procedure books.   

 

Tax Filing

PTA is an organization that operates in the public trust and it must comply with all tax requirements as

prescribed for its nonprofit status. Please see the Tax Filing Support Center at http://www.capta.org/sections/finance/tax-filing-center.cfm  for current information.

PTAs in California generally are not required to pay taxes on income earned. To retain the tax-exempt status, PTAs must be careful that fundraising does not become a primary focus. An individual unit can have an effect on the entire association. Unit, council and district PTAs do not pay tax on income from activities that are substantially related to the purpose for which the PTA was given exempt status. For more information, search “unrelated business income” at www.capta.org

When PTAs sell items but use profits exclusively to support the purpose of the association, they are considered consumers and not retailers of certain items that they sell, and as a result resale use permits are not required by units to conduct sales of those items.

 

Opening a PTA bank account

A  Letter of Determination is usually needed to open a PTA bank account. These accounts should be non-profit accounts...so that fees are kept to an absolute minimum. 

As an example, all banks now require PTAs opening a bank account to supply documentation that includes:

  • Copy of IRS letters of determination as proof of 501(c)(3) status
  • Copy of PTA association minutes recording the election of officers and/or a letter from the unit secretary giving the names of the signers elected.
  • Copy of PTA Unit bylaws

Before going to the bank, please check with the bank about any other requirements they may have. Sometimes banks require that all the check signers go to the bank together to open an account.