In my previous post, I walked you through how to organize and file the needed paperwork to form a tax-exempt school booster club. This post is going to talk about what you do AFTER your organization has been officially formed, as well as touch on what options you have for getting your booster club reinstated as a tax-exempt organization if your club is no longer in good standing. As always, I’ll remind you that I am not a lawyer, and I don’t know your specific situation, so none of the below should be interpreted as legal or financial advice. When possible, I provide links to the information I’m sharing, and I encourage you to do your own research, and if necessary, consult with your lawyer or financial advisor for situations unique to you. And while I’ve linked to the IRS and OK information return forms, keep in mind that these are revised fairly regularly, and there may be a new form available. A simple Google search should return the needed form.

Prepare to Pass the Torch

I know, I know. You’re probably thinking “I just finished getting my organization set up, the last thing I need to be doing is planning for my exit.” While it probably feels as if now is the time to recruit the last of your board, entice volunteers to join your mission, and start raising those much needed funds for your school, I assure you if you spend just a LITTLE more time prepping for the future, it can save you loads of grief down the road. I highly recommend that you create a formal document for each board and volunteer-leadership position that describes the position, qualifications for the position (if any), and a list of required duties that the position is responsible for, along with due dates for these duties, and detailed instructions for these duties. This allows you to review the organization “to-dos” as a whole to ensure everything that needs to be done is assigned. In my experience, it also makes recruitment a lot easier when parents/volunteers are provided with a clear understanding of what a specific board position does. For example, I’ve seen parents physically recoil when asked to serve on the board as Treasurer, because they feel that formal financial training is required to handle “the money stuff.” But volunteers are normally a lot more willing when you can show them that you have an “onboarding” document that will walk them through the process every step of the way.

A fact of school booster clubs is that their board changes regularly. As kids grow up and graduate/change activities, the parents typically move with them. So it’s really important that you have some procedures in place to make sure no needed duties or “institutional knowledge” falls through the cracks.

This post will focus mostly on the financial and legal requirements, which are typically assigned to either the Treasurer, or the Secretary on your board. We’ll start with the paperwork. In order to keep tax-exempt status, booster clubs must do the following (detailed instructions provided below):

  • File a 990 return with the IRS annually
  • File a 512-E return with the State of Oklahoma
  • Renew your Business Certificate with the State of Oklahoma

In addition, I highly recommend the following actions at least annually.

  • The Treasurer should keep track of fund inflows and outlays of the club as they happen. Best practice suggests that you have a DIFFERENT board member reconciling the books to the bank statement monthly to make sure all business activity is appropriately recorded. If that isn’t possible, it’s totally acceptable for the treasurer to perform the monthly reconciliations as well. However, once a year, it is a good idea to have two volunteers/other board members review these reconciliations for accuracy and completeness. Not only will this provide a “second set of eyes” to catch any mistakes, it also prevents that thing that no one likes to talk about, but happens far more often than we would think…FRAUD. Here are only a few cases of money gone missing from school activity funds – cases in North Carolina, Texas, Tennessee, Virginia, and many others have been reported over the last few years. While we never like to think that it would happen with OUR club or OUR school, unfortunately, it all too often can. It’s best to have procedures in place to try and prevent or catch this activity sooner rather than later.
  • It’s also a good idea to read through your club’s bylaws at least once a year, and update them with any changes in policies, procedures, or activities. Bylaw changes are typically made by your board member(s) or sub committee, and then presented to your membership to vote on the changes. Examples of changes that may need to be made would be updating the bylaws to allow the board meetings to happen via teleconference rather than in person, shuffling the duties of the board if one position feels overwhelmed with tasks, adding a new board position, updating term limits for board members, changing membership fees, or other administrative tasks.

Lost Your Tax-Exempt Status? Don’t Worry, it happens.

Because of the frequent rotation of board members, it’s not a rare occasion that tasks HAVE slipped through the cracks. If a booster club fails to file their 990’s for three years in a row with the IRS, the organization’s EIN is automatically revoked. Luckily, it’s not terribly difficult to get it back. If you are within 15 months of your exempt status being revoked, you can apply for reinstatement by giving the IRS a reasonable explanation about why your club was unable to meet the needed requirements. If you are past 15 months or revocation, you will need to provide an explanation for all three years of missing the requirements. The Oklahoma Not for Profit Center Provides a great document detailing this information. To apply for reinstatement, you would fill out the same 1023 Form that you did when you first applied for Tax Exempt Status, only you would mark the appropriate Reinstatement option on this screen.

For the State of Oklahoma, you will need to file an Annual Certificate Request for each year you were NOT in good standing. Here’s a snippet from the Secretary of State’s FAQ website detailing the process.

How do I get my entity reinstated or back in good standing?

The forms to reinstate may be downloaded from the Secretary of State’s website at https://www.sos.ok.gov/business/forms.aspx. Scroll down to the forms listed under the respective entity type and the forms are listed there. A Reinstatement form has no fee but must be included anytime an entity is inactive, and an Annual Certificate form is required for each year past due.

  • The IRS has a great document called “Lifecycle of a Public Charity” that shows everything required to set up and maintain a Public Charity (which is what your booster club is, if you’ve followed the Setup Instructions). Please consider this document the “BIBLE” if this post contains anything information that conflicts with what is here.
  • The State of Oklahoma also has a resource page for not-for-profits. You can find that here. https://www.sos.ok.gov/charity/Default.aspx
  • ParentBooster.org is a treasure-trove of Booster Club information, and they also offer a paid “keep you legal” service for an annual fee. This is one of my favorite reference documents from their site.
  • Oklahoma Center for NonProfits is another good information site – they provide info on NFPs in general (not just Booster Clubs) and have good resource documents, training, a place where you can advertise your events on their calendar, and they also offer paid consulting/bookkeeping services.
  • I did want to make a note of this, because I’ve had clients confused on the difference between being a Tax-Exempt organization in the eyes of the IRS, and being SALES TAX exempt in the State of Oklahoma. These are not the same thing. In fact, in many cases, even though you are a not-for-profit organization, you are still required to pay sales tax. Meaning if you sell physical merchandise (like t-shirts, concessions, desserts, etc), you are technically required to remit sales tax equal to 8.513% (depends on county) of what you sell. You can, however, submit an application for Oklahoma Sales Tax Exemption by using this form.
  • The term EIN and FEIN mean the same thing. The F just stands for (F)ederal (E)mployer (I)dentification (N)umber.
  • While I checked with my local school, and they do not have one of these, I love this document that a school created as an information packet for their booster clubs. (Keep in mind this school is based in California, and state laws may differ)

How to file a form 990

The form 990 is due on the 15th of the 5th month following the organization’s year end. So if you are a calendar year end (Jan-Dec), the due date is May 15th. Here’s a link to a handy chart showing due dates for various fiscal year ends.

There are four* versions of the form 990 available,

  • 990-PF – this one is used for private foundations – we won’t be covering it here
  • 990-N – this version can be used for orgs with under $50k in revenues annually, and is the one I recommend you file if your organization qualifies. It is by far the shortest and easiest, and requires very little detailed financial information to be gathered. I’ve detailed the steps below.
  • 990-EZ – You may hear this referred to as the “mid-form”, and is used for orgs with under $200k in revenues and under $500k in assets. While longer than the postcard version, you’re not required to provide as MUCH information as the 990. The IRS provides instructions for this form, but if you get confused, I recommend reaching out to your tax pro.
  • 990 – otherwise known as a “long-form”, this is used for orgs with over $200k revenues/$500k assets). This one gets fairly detailed in terms of what and where you need to report items, and I recommend you considering hiring a professional tax preparer to file for you.

*If you have unrelated business income, there’s also a form 990-T. Unrelated business income is income that your club might earn, but is not related to your organization’s mission or activities. For school boosters, this is uncommon, but an example might be that your club owns a building, and rents this building out to tenants. This rental income is not related to your club’s mission of supporting your school activity, and you would need to pay income tax on this.

There are a few nuances in how to determine the form your organization must file. This link will provide you with additional information on which one your organization needs to file. The postcard is the easiest, and is online submission only, and if you qualify to use this one, I highly recommend it, because very little information is needed in order to submit. The link to the postcard page is here.

You will need to register yourself with the site if you have not already done so, and either select or enter the EIN of your organization. (If you do not have an active EIN, I recommend you review my post on how to apply for an EIN, or the instructions on how to request reinstatement below.)

Enter your tax year end date. If your organization is still active, select “No” from the first dropdown, and “Yes” for the Gross Receipts. (Remember, if you have gross receipts OVER $50k/year, you should not be using this form). Enter the legal name and EIN (You can get this from the letter you received from the IRS when you applied for the EIN)

If you use a different name than your legal name, enter it in the DBA field, then enter the organization’s address and officer information.

How to file an OK Form 512-E

Just like the IRS’s 990-T, even though you are a tax-exempt organization, the State of Oklahoma would still like to collect taxes on any “unrelated business income.” Regardless of whether you actually have unrelated business income or not, you are still required to file form 512-E. Because situations like this are uncommon for school boosters, I’m not going to detail how to fill this out…most of it will likely be 0’s for you. This form is due a little earlier than the IRS form 990 at 4.5 months from the end of the fiscal year, so Calendar year folks would have this due on April 15th each year.

How to Renew Your OK Business Certificate

You are also required to renew your business license on an annual basis. This is a fairly simple process. The fee for this renewal is currently $15 if your gross receipts are under $10,000 per year, and $65 if over that amount.

Start here.

Select “Start New”

If you still have your filing number from when you first filed, you can type that in. Otherwise, leave the field blank, and click the magnifying glass. I’m unfortunately unable to provide step by step screen prints for this part at this time, because you have to have a not-for-profit up for renewal, and I don’t have any clients at this stage yet. I will attempt to remind myself to update this section when I DO have screen prints to share.

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