Tax and Business Side of FundRaisers

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Tax and Business Side of FundRaisers

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Title: Tax and Business Side of FundRaisers


1
Tax and Business Sideof Fund-Raisers
  • Carol Oman
  • CFISD Internal Auditor

2
Agenda
  • Fund-Raiser Guidelines
  • Fund-Raiser Decisions
  • Sales Tax
  • Accounting for Fund-Raisers
  • Contributions
  • Use of Funds Raised

3
Fund-Raiser Guidelines
  • District
  • High Schools - http//www.cfisd.net/campuses/boost
    er/booster.htm
  • Middle Schools intranet
  • Elementary Schools intranet
  • For a copy of the Guidelines on the intranet,
    contact Marty Edwards, Director of General
    Administration, at 281-517-6367, or
    terry.edwards_at_cfisd.net.

4
Fund-Raiser Guidelines
  • PTOs PTO President and Principal have
    hard-copy.
  • Booster Clubs - http//www.cfisd.net/campuses/boos
    ter/booster.htm

5
Fund-Raiser Decisions
  • Who is holding the fund-raiser?
  • PTO
  • Booster Club
  • Student Group
  • School

6
  • PTO / Booster Club Fund-Raisers- These
    organizations are responsible for handling the
    money.
  • Student Group / School Fund-Raisers- School is
    responsible for handling the money.

7
  • What type of fund-raiser is to be held?Consider
    profit made from previous fund-raisers as
    compared to the work involved.Consider sales
    tax implications.

8
Examples of Fund-Raisers
  • Ads
  • Camp / Clinic
  • Candles
  • Car Wash
  • Cookie Dough
  • Concessions
  • Entertainment Book
  • Garage Sale
  • Gift Wrap
  • Magazines
  • Plants
  • Silent Auction
  • T-Shirts
  • Yard Signs

9
Raffles
  • Raffles can not be held by a student group,
    school, or the district.
  • Raffles may be held by PTOs and Booster Clubs if
    certain State criteria are met as discussed at
    http//www.oag.state.tx.us/consumer/raffle.shtml.
  • Raffle tickets can not be sold on district
    property.

10
Fund-Raiser Vendors
  • Is vendor an Approved Fund-Raiser
    Vendor?Confirm with the Director of General
    Administration, Marty Edwards, at 281-517-6367
    or terry.edwards_at_cfisd.net.

11
Vendors Fair
  • Annually (usually in February) the PTO Presidents
    Council holds a Vendors Fair.
  • The Vendors Fair allows interested parties to
    preview fund-raising options and speak to vendor
    representatives.

12
Sales Tax
  • Did you know . . .
  • Even though you have a Texas sales tax-exemption
    and have an IRS tax-exemption
  • You may need to collect sales tax and
  • You may need to pay sales tax.

13
Sales Tax Permit
  • Do you have a sales tax permit with the Texas
    Comptrollers Office?
  • The permit allows an organization to sell items
    in Texas.
  • Apply on-line for a sales tax permit at
    http//www.cpa.state.tx.us/taxpermit/.

14
Sales Tax Exemption
  • Do you have a sales tax exemption with the Texas
    Comptrollers Office?
  • Sales tax exemption allows an organization to
    purchase and sell some items tax-free.

15
Sales Tax Exemption
  • Apply for sales tax exemption. Forms are
    available on-line at http//www.cpa.state.tx.us/t
    axinfo/exempt/index.html
  • AP-204 Application is for organizations that
    have their IRS 501(c)(3) tax-exempt status.
  • AP-207 Application can be used by a PTO prior
    to receiving their IRS 501(c)(3) tax-exempt
    status.

16
Check Your Status
  • You may look up the status of your organization
    to determine if you have a sales tax permit or
    exemption at http//www.cpa.state.tx.us/taxinfo/sa
    les/tp_db_search.html.
  • Sales Taxpayer Search
  • Exempt Organization Search Verification

17
District Sales Tax Status
  • The district along with the schools and student
    groups are tax-exempt entities for sales tax
    purposes.

18
Tax-Exempt Sales
  • By law, these items are tax-exempt.
  • Ads Athletic Programs, School Newspapers,
    Posters, Yearbooks
  • Admission Athletic Events, Dances, Dance /
    Drama / Musical Performances, Summer Camps /
    Clinics, Workshops, Project Graduation
  • Discount / Entertainment Cards Books

19
Tax-Exempt Sales
  • Food that is not ready to eat Cookie Dough /
    Frozen Pizzas
  • Magazine Subscriptions for more than 6 Months
  • Services Car Wash, Cleaning
  • Whole Cakes Pies

20
Taxable Sales
  • Auctions and Silent Auctions
  • Calendars and Day Planners
  • Candles
  • Clothing including T-Shirts
  • Flowers Roses, Carnations, Arrangements
  • Gift Wrap, Balloons, etc.

21
Taxable Sales
  • Magazines When Sold Individually
  • Magazine Subscriptions Sold for Less than 6
    Months
  • Plants Holiday Greenery, Poinsettias, Floral
    Arrangements
  • Rummage, Yard Garage Sales
  • School Store Spirit Items
  • Yard Signs

22
One-Day Tax-Free Sales Days
  • Exempt organizations are entitled to two (2)
    one-day tax-free sales days per calendar year
    not school year. Suggest holding one fund-raiser
    in the Spring and one in the Fall.
  • Sales are taxable unless you use a one-day
    tax-free sales day. One-day is a 24 hour
    period of time.

23
One-Day Tax-Free Sales Days
  • Select the taxable fund-raiser (exclude catalog
    sales and book fairs) that involves the most
    money received (highest gross) not the largest
    profit.
  • Document which fund-raisers are your one-day
    tax-free sales days.

24
Catalog Sales / Book Fairs
  • Catalog sales of tax-exempt items are not
    taxable.
  • Example Cookie Dough
  • Catalog sales of taxable items and book fairs are
    ALWAYS taxable.
  • Example Gift Wrap

25
Taxable Sales
  • For catalog sales of taxable items and book
    fairs, you are considered an agent of the vendor.
    These fund-raisers are ALWAYS taxable.
  • As an agent of the vendor, you can not use a
    one-day tax-free sales day.
  • Make sure that you and the vendor are in
    agreement on the handling of the sales tax.

26
  • For catalog sales of taxable items and for book
    fairs, - Collect the sales tax and remit it to
    the vendor.- The vendor will pay the sales tax
    to the Texas Comptrollers Office.

27
Fund-Raiser Taxable?
  • If you are not sure if your fund-raiser is
    taxable, contact the Texas Comptrollers Office
    at 1-800-252-5555.
  • Document the date, time, who you spoke with, your
    questions, and the answers received.

28
Fund-Raiser Taxable?
  • Research the fund-raiser using the Texas
    Comptrollers Office State Tax Automated Research
    (STAR) system.
  • The STAR system is found under Resources
    athttp//www.cpa.state.tx.us/taxinfo/sales/.

29
Sales Tax
  • If you have a taxable sale, will sales tax be
    included in the sales price or will it be added
    to sales price?
  • For catalog sales and book fairs, easiest to have
    sales tax included in the price.
  • If sales tax is included in the sales price, must
    state on brochures or signs.

30
Sales Tax Holiday
  • Usually in August, the State has a sales tax
    holiday.
  • If you sell items that meet the criteria of the
    sales tax holiday and sell them during that
    holiday, the items are tax-free. Is not
    considered as one of your one-day tax-free
    sales days.

31
Collection of Money
  • For fund-raisers involving orders
  • Will money be collected at the time orders are
    received or when product is delivered?

32
Collection of Money
  • If money is collected when orders are received,
    you can determine if any checks are returned
    prior to delivering products.
  • If money is collected when products are
    delivered, customers may order more since money
    is not needed when order is placed.

33
Collection of Money
  • Have checks made payable to the PTO, the Booster
    Club, or the School depending on who is holding
    the fund-raiser. Do not have checks made payable
    to a school group.
  • Example Do not make a check payable to the
    Student Council, make the check payable to the
    School. In the memo section of the check,
    indicate that it is for Student Council.

34
Collection of Money
  • Endorse checks and deposit money as soon as
    possible to prevent the loss of funds.
  • Loss of funds may occur due to embezzlement,
    theft, or returned checks.

35
District - Prohibitions
  • By law, the possession or consumption of
    alcoholic beverages on school district property
    is prohibited.
  • If you have an event not on school district
    property, alcohol can not be consumed while
    students are present.
  • If alcohol is included in an event, please
    consider that some parents could be offended.

36
IRS - Prohibitions
  • Can not require anyone to participate in a
    fund-raiser.
  • Can not require that a certain amount be sold or
    that a certain amount be donated in lieu of
    fund-raising.
  • Can not penalize anyone for not participating in
    a fund-raiser.

37
Individual Accounts
  • PROHIBITED
  • Can not credit an individual based on revenues
    raised to offset that individuals expenses.
  • Amount raised must benefit a campus /
    organization as a whole.

38
Example
  • Science Club is having a fund-raiser for a trip.
    Cost of trip is 5,000 for 100 students. Cost
    per student is 50.
  • 50 students participate in a fund-raiser and
    raise 1,500.
  • The 1,500 must be split equally among the 100
    students. Cost per student is now 35 (5,000 -
    1,500 3,500 / 100 students).

39
Approvals
  • PTO Fund-Raisers - approved by PTO Board and
    Principal.
  • Booster Club Fund-Raisers - approved by Booster
    Club Board, Sponsor, and Principal.

40
Approvals
  • Student Groups / Schools - approved by
    pertinent school administrators and
    Principal.
  • Use the Fund-Raising Activity Report to request
    Permission (first page).

41
Tax Forms
  • If you are purchasing items for resale, provide
    the vendor with a Texas Sales and Use Resale
    Certificate in lieu of paying tax.
  • If you are purchasing items for resale and the
    sale will be exempt from tax due to your one-day
    tax-free sales day, provide the vendor with a
    Texas Sales and Use Tax Exemption Certification
    in lieu of paying tax.

42
Fund-Raiser Decisions
  • Who is holding the fund-raiser?
  • What type of fund-raiser is to be held?
  • Is vendor an Approved Fund-Raiser Vendor?
  • Do you have a sales tax permit?
  • Do you have a sales tax exemption?

43
Fund-Raiser Decisions
  • Are the items being sold tax-exempt by law?
  • If 6 is no, will you use a one-day tax-free
    sales day?
  • If 7 is no, sales tax needs to be collected.
    Will the sales price include sales tax or will
    sales tax be added to the sales price?
  • For fund-raisers involving orders, will money be
    collected when order is placed or when order is
    delivered?
  • Has appropriate approval been received for the
    fund-raiser?

44
Accounting for Fund-Raiser
  • As money for a fund-raiser is received, have two
    people count the money before giving it to the
    Treasurer or Financial Secretary for deposit.
  • Deposit money as soon as possible.
  • Do not use cash received to pay expenses.
    Deposit money first and then write checks for
    expenses incurred.

45
Accounting for Fund-Raiser
  • Complete the Operating Report (page 2) of the
    Fund-Raising Activity Report.
  • Depending on the type of fund-raiser, account for
    products or tickets sold.

46
Accounting for Products Sold
  • Product Received from Vendor
  • Less Product Returned to Vendor
  • Less Product Remaining on Hand
  • of Products Sold X Sales Price
  • Total (Gross) Sales

47
Accounting for Products Sold
  • Total (Gross) Sales Amount Owed (People
    received product but did not pay.Need list of
    these people and amount owed.)
  • Amount Collected / Deposited

48
Accounting for Products Sold
  • If Total Sales less Amount Owed does not agree to
    Amount Collected / Deposited, determine the
    difference and why.
  • Pursue the collection of any money owed.

49
Accounting for Tickets Sold
  • Based on the beginning and ending ticket numbers,
    determine how many tickets at each price level
    were sold.
  • of Tickets Sold x Price Total Sales
  • Total Sales Amount Collected / Deposited
  • If not, determine the difference and why.

50
Sales Tax Return
  • Texas Comptrollers Office Requires submission
    of a Texas Sales and Use Tax Return
  • Due either monthly, quarterly, semi-annually, or
    annually
  • Due on the 20th day of the month following the
    end of each reporting period.

51
Tax Included Calculation
  • Example Sales Price included Sales Tax
  • Total Sales - 1,000, Tax Rate 7 ¼
  • 1,000 / 1.0725 932.40 (taxable sales)
  • 932.40 x .0725 67.60 (sales tax)
  • 932.40 67.60 1,000

52
Contributions
  • What is a contribution (donation) (gift)?
  • Money
  • Equipment or Other Tangible Items
  • Funds used to assist a student group or school
    even though, funds are not given or paid directly
    to a school or the district.

53
Contributions
  • Example 1 A PTO pays for breakfast for
    teachers for morale purposes. The amount paid
    for the meal is considered a contribution to the
    District.

54
Contributions
  • Example 2 A PTO receives items from
    businesses. The items are used as door prizes at
    a staff breakfast.
  • The businesses made contributions to the PTO.
    Then the PTO contributed these items to the
    school. These items would be considered a
    contribution to the District.

55
Contributions
  • Example 3 A Booster Club pays for some special
    uniforms. Some of the money is from fees paid by
    students / parents and some money is from
    fund-raisers held. The money from the
    fund-raisers is considered contributions to the
    District.

56
Contributions
  • Contributions to a PTO / Booster Club
  • Must be a 501(c)(3) entity as approved by the IRS
    to receive a charitable contribution.
  • Provide contributor with your organizations EIN
    and, possibly, a copy of your IRS Determination
    Letter.

57
Contributions
  • Contributions to a student group / school /
    district
  • Contribution Acknowledgment Form must be
    completed by a district employee.

58
Contributions
  • PTOs and Booster Clubs should submit to the
    school a list of their contributions at least
    once every semester.
  • Then the school should provide you with a
    Contribution Acknowledgment Form for these
    contributions.

59
Use of Funds Raised
  • For funds raised, use the money as originally
    budgeted or designated. If a change is needed,
    inform your membership and request approval as
    required by your bylaws.
  • Use funds raised in the year the fund-raisers are
    held so that the parents / students that raised
    the funds will see the benefit.

60
Use of Funds Raised
  • If an organization is working towards a project
    that will take several years to fund, inform your
    membership.
  • Do not purchase gifts for principals or sponsors
    with PTO or Booster Club funds.

61
Contacts
  • Fund-Raisers
  • Marty Edwards Director of General
    Administration
  • 281-517-6367 terry.edwards_at_cfisd.net
  • Contributions
  • Pam Scott Partners in Education Director
  • 281-894-3950 pamela.scott_at_cfisd.net

62
Contacts
  • IRS Other Questions
  • Carol Oman Internal Auditor 281-897-4111
  • carol.oman_at_cfisd.net
  • Pat Stefan Internal Auditor II 281-517-6537
  • patricia.stefan_at_cfisd.net

63
Contacts
  • Texas Comptrollers Office Sales TaxGeneral
    Information 1-800-252-5555http//www.cpa.state.
    tx.us/taxinfo/sales/
  • Exempt Organizations Department
  • 1-800-531-5441 ext. 34142
  • http//www.cpa.state.tx.us/taxinfo/exempt/index.ht
    ml

64
Contacts
  • Internal Revenue Service (IRS)Tax-Exempt
    Organizations1-877-829-5500 (toll-free)www.irs.g
    ov (Select Charities Non-Profits)

65
Questions
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