Why does my booster club need federal tax-exempt status?
IRS rules provide that ALL organizations, regardless of income, are required to file a tax return. As a member of PBUSA, your organization is recognized immediately as a 501(c)(3) organization and may File IRS Form 990, making your group exempt from paying federal income tax on its earnings. Otherwise, your organization may be required to file a corporate tax return and pay tax at corporate rates on its earnings. Please note that state sales tax exemption is a separate application process and is not included in Parent Booster USA membership.
Tax-exempt status also allows your booster club to:
1) legally accept tax-deductible contributions;
2) be eligible for grocery incentive and other programs that require c3 status; and,
3) be eligible for private foundation and corporate grants.
How is federal tax-exempt status as a PBUSA member different than applying to the IRS with Form 1023?
The IRS has authorized PBUSA as a "central organization" under a "group letter ruling" to immediately recognize PBUSA's members as tax-exempt "subordinate organizations" under section 501(c)(3). What this means is the as soon as you join PBUSA you are recognized as tax-exempt based on your membership certificate that we provide. You do not need to file IRS Form 1023. PBUSA notifies the IRS of your membership and exempt status. The IRS then updates its master file of 501(c)(3) tax-exempt organizations to include your booster club.
To maintain your federal tax-exemption under PBUSA your booster club must annually renew its PBUSA membership. The cost of registering with PBUSA and renewing membership for quite a few years is substantially lower than the registration costs with the IRS (currently $850). PBUSA also provides additional assistance, including recommended bylaws and financial guidelines to its members.
Federal tax exemption under PBUSA's group letter ruling is the same as how some state PTAs provide group tax-exemption to PTAs.
Can PBUSA members apply to obtain independent tax-exempt status with the IRS?
Yes, PBUSA members, if desired, may apply to obtain independent tax-exempt status with the IRS. To do so organizations should complete IRS Form 1023, and file it, along with the IRS filing fee (currently $850) with the IRS. IRS review time varies, but is frequently about 6 months.