Setting up a pack bank account

[packsaddle]

Having a tax ID does not, by itself, allow a claim of charity status. Neither does 'tax exempt' status. Tax exempt is good in that the organization does not have to pay taxes but the status of 'charity' is much more difficult to attain. Although there are many categories, the common one that most people think about is the IRS charity status usually referred to as a 501©(3) charity. This status DOES allow donations to be taken as tax deductions but there is a very high standard with significant reporting and accountability requirements that the organization must meet in order to get this status. Many small organizations simply don't have the resources or time to invest in the process (it often takes years). And most such groups fairly fall into the category of 'clubs' anyway, but they may qualify for 'tax-exempt' status, much easier to attain and maintain.

 

That said, unless the PTA is operated by the school or otherwise receives government funding and support, I don't understand why a private group of parents at a school cannot be the CO. But you know the details much better than I do. I do still wonder about issues such as background checks and liability insurance that might affect a loose organization of parents differently from a more-organized group such as a PTA or church. I'd like to hear more about how this works.

 

[Gold Winger]

"Odds are, all of the people and businesses who give your Pack donations will be expecting to be able to declare those donations on their tax return. Unless you are able to give them your ID # they can not use it as a charitable donation, and they will most likely be a bit upset at your organization."

 

Since a unit cannot request a donation of money, they can only get goods. I used to solicit door-prize donations for a few clubs that I belong to, it was apparent that we weren't charitable but I still got ton's of stuff. The businesses? They wrote it off as advertising.

 

 

[ScoutNut]

"We were told that we could not be chartered by a PTO/PTA because it is illegal (I'm guessing separation of church and state)."

 

There is no separation of church and state here because neither of the organizations (PTO / BSA) are state funded or a church.

 

BSA is recommending that a PUBLIC SCHOOL not be a Chartering Organization because of possible conflicts with the BSA's membership requirements. BSA does not want to put schools, who have been very supportive of the BSA throughout it's almost 100 year history, in any difficult positions.

 

Most units that were chartered by schools, changed their Chartering Organization from the school to the school's PTO.

 

 

"Also, units should not apply for their own independent tax exempt status."

 

This is correct. A unit does not have any legal status. ALL units are owned by SOME KIND of organization. Someone pays the recharter fee every year. Someone signs all of the paperwork every year. Your PACK is not applying for tax exempt status. The Chartering Organization that OWNS your Pack is. In the case of your Pack, that is the organization called "Parents of XYZ".

 

It is entirely possible that your Pack WAS chartered by the PTA at some point. Then, due to some reason that, at the time, I am sure sounded like a good one, they decided to bring the Pack parents together and form their own Chartering Organization called "Parents of XYZ".

 

You might want to take a trip to your Council offices and have a look at the Charter paperwork for the past 10 years to see EXACTLY what is, and has been, going on.

 

The problem with "Parents of XYZ" CO's, is that decent bookkeeping is never kept, and when the original parents who formed the organization leave, the organization, for all purposes fades away, leaving the unit in limbo with only a vauge notion that they owe more money and have to get someone to sign things each year.

[Karen_216]

You are correct that BSA does not allow solicitation of funds by any individual unit. The reason being scouts are encouraged to pay their own way. If you had posted on any other heading you would have had postings out the ying-ya letting you know. Believe me I know !!! It's in the back of the leaders book if you want to refer to that. I think near the request for fund raising forms.

[Scoutmoon]

Thank you all for your replies. This is awesome. I haven't been able to get much help, even from the District, for the past several months. I'll be connecting with the person who did the initial fact-finding with the local council to understand the PTA issue better.

[meschen]

I can't speak to CA state regulation, but I dissagree with packsaddle that for or charting organizations it is difficult to attain 501©(3) status.

 

As outlined on pages 18 and 19 of IRS Publication 557, if your chartering organization (including a "Parents of . . . " entity) has annual cash receipts of under $5,000 and only participates in charitable activities (running a Pack qualifies as such) then it automatically qualifies as a tax-exempt organization. Based on the guidance in Pub. 557, the parent's organization is not required to obtain an IRS determination letter to achieve tax-exempt status. You should know that if you do break the $15,000 over a three year period, then you WILL need to undertake a costly and lengthy filing process.

 

As of this year, if you are have and EIN and fall under the $5,000 limit, all you need to file is an Form 990-N, which is VERY simple and can be doe on-line.(This message has been edited by meschen)

[packsaddle]

In our state, it took very little effort for our charitable club to attain non-profit status:

http://www.nonprofitlawblog.com/home/2005/01/nonprofit_vs_ta.html

 

This varies from state-to-state... but it took years for our non-profit club to attain tax-exempt status and much effort to maintain it.

 

Read this carefully:

http://www.rurdev.usda.gov/rbs/ezec/toolbox/501c3factsheet.html

 

and the code itself:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+26USC501

 

then take the course:

http://www.stayexempt.org/

 

and then knock yourself out.

 

 

[FScouter]

"Tax exempt" means the organization is exempt from PAYING income tax. This should hardly be an issue for a Cub Scout pack since they don't make enough "profit" to pay taxes anyway.

 

"Tax deductible" means contributions by others to the organization are deductible by the donor on the donor's personal income tax return. Just because an org is "tax exempt" does NOT mean that contributions to it are tax deductible. The organization must have a determination letter from IRS. It is not particularly "difficult" to obtain IF THE ORG MEETS ALL THE REQUIREMENTS and can document it. That is the difficult part. Clearly, a pack is not a "charitble" organization as defined by IRS and would not qualify for 501©(3), but it might as an educational org.

 

Page 18-19 of Pub 557 (June 2008) doesn't seem to relate. Are you referring to an older version?

[Scoutmoon]

In the past, our Pack itself has handled the rechartering. Our dues will probably amount close to or over $5000 alone. Adding popcorn sales of around $4000 will take us to $9000, so I think we will exceed the $5000 tax-exempt limit unless the popcorn shouldn't be added into the equation.

 

I received information on why the PTA will not act as our chartering org, as stated here straight from the PTA handbook (don't know how long this has been in place):

 

"Boy Scout Groups

The California State PTA continues to support scouting and the opportunities scouting provides for young people. However, the Boy Scouts of America seeks local organizations as sponsors (signing charters) and the Scouting Annual Charter Agreement includes the following responsibilities for that organization:

 

Conduct the scouting program according to its own policies as well as those of the Boy Scouts of America,

Include scouting as part of its overall program for youth and families,

Appoint a member of the organization to coordinate all scouting operations at the site. He or she will represent the organization to the scouting district and serve as a voting member of the local Boy Scout council,

Select a scouting committee (minimum of three) of parents and members of the organization who will screen and select local scouting leaders. While an individual may choose to volunteer with Boy Scouts of America or other youth groups, the California State PTA directs local PTA units, councils and districts: DO NOT SIGN ANY CHARTER OR YOUTH GROUP SPONSORSHIP OR RENEWAL FORM WITH THE BOY SCOUTS OF AMERICA as:

A PTA representative may not commit the PTA to the bylaws and other regulations of Boy Scouts of America.

Local PTA leaders are generally not qualified to screen and select the local scouting leaders.

The California State PTA insurance program provides no coverage for a PTA leader sitting as a representative to the scouting council nor for sponsoring another organization.

The California State PTA insurance program provides no liability coverage for the actions of any individual acting as a leader, a participant in, or in some other capacity for another organization."

 

 

[FScouter]

Sounds like the PTA doesn't understand the agreement.

Chartering orgs do not "sponsor" a unit. The org uses the BSA program for their boys. Not BSA boys, their boys. They don't "sponsor" anyone other than themselves.

The charter org is not committed to BSA bylaws. They just have to agree to use the BSA program in the way it was designed.

If PTA is not qualified to select unit leaders, how qualified could they be to select PTA leaders?

No PTA insurance is needed. BSA provides liability insurance for the leaders selected by PTA.

 

By the way, "Scout", "Scouts", and "Scouting" are always capitalized.