They Elected YOU Treasurer!

Rochester Community Council PTA Treasurer Training – September 21, 2022

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What is the structure of PTA?

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National PTA

Michigan PTA

Rochester Community PTA Council

Your School’s PTA/PTSA Unit

Who is the Treasurer?

• The treasurer is the authorized custodian of the funds of the organization.
• All PTA monies, assets, and files are the property of the PTA. These must be surrendered at the end of your term.

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Helpful information:

PTA Finance 101

What is a 501(c)3?

• Your PTA unit is a 501(c)3 Non-Profit Corporation.
• Exempt from income or property tax
• Exempt from paying sales tax on items purchased for your PTA’s consumption/use in Michigan (although you do collect and remit Michigan state sales tax on some items you resell to parents/students)
• Contributions to your unit may be tax deductible on donors’ federal income taxes.
• Has a unique EIN (employer identification number)

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What are my responsibilities?

• Manage Finances
• Budgeting
• Banking
• Maintaining files and records
• Maintain safeguards/internal controls
• Monthly & Annual Financial Reports
• Annual audit
• Monthly bank account reconciliation
• Insurance (renewed annually)
• Comply with legal/financial requirements
• Remit dues payments for membership to MIPTA
• Fulfill MIPTA Standards of Affiliation (with help from board)
• Michigan Sales Tax License
• Charitable Gaming License (for bingo, raffles)
• File IRS annual income tax return, MI sales tax return(s)

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Training

• National PTA resources https://www.pta.org/local-leader-kit/finance
• https://www.pta.org/local-leader-kit/finance/templates-tools-resources
• Local Unit Bylaws and Standing Rules
• Michigan PTA annual convention

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Dues & Standards of Affiliation

• To Michigan PTA:
• Pay $40 unit dues December 1 (by mail or via MIPTA’s MemberHub store https://mipta.memberhub.store)
• Audit, annual budget, IRS 990 by December 1, aka “Standards of Affiliation” (uploaded to your unit’s MemberHub site)
• Membership dues by 28^th of each month ($5.50 annually per member, through your unit’s MemberHub site via EFT)
• Proof of Insurance uploaded to MemberHub by December 1
• To Rochester Community PTA Council:
• Pay $250 unit dues by November 1 (via check)
• Audit, annual budget, updated bylaws by November 1 (via email to council president or treasurer)

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Insurance

• AIM (Association Insurance Management, Inc.) is one option that provides PTA-specific insurance:
• General liability
• Accidental medical
• Bond insurance
• Property insurance
• Officers liability
• Policies typically require a signed review of monthly bank statements by a non-signer on the account as specified in their requirements to maintain bond coverage.

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Budget

• Outline of estimated income and expenses for the year
• Provides authorization for the Treasurer to pay expenses
• Is a living, breathing document that can be amended by majority vote at general body meeting when needed
• Covers the “fiscal year”, typically 7/1 – 6/30 (or 8/1 – 7/31 for LM/DK)

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Budget – Planning

• Unit bylaws specify method for drafting budget.
• Budget must be approved by membership vote.
• Should reflect:
• All income and expenses
• Your unit’s goals (short term and long term)
• National PTA’s Recommendation of 3 to 1 rule – 3 activities/programs for each fundraising event.
• Use prior year’s budget as a guide.
• Best prediction – not a mandate

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Budget - Adoption Process

Three (Typical) Steps:

1. Present proposed budget at second to last general body meeting of fiscal year (to give time for amendment requests).
2. Vote to approve provisional budget at last general body meeting of fiscal year. (This gives the Treasurer authorization to make expenditures after fiscal year begins.)
3. Vote to adopt budget (can be amended) at first meeting of fiscal year.

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Budget – Tips

• Items to consider including:
• Training
• Publishing
• Awards
• Supplies
• Founder’s Day
• Convention
• Dues

• Items to avoid:
• Petty Cash
• Miscellaneous
• Any “discretionary funds” without clear guidelines spelled out in Standing Rules

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Helpful tips:

Is Your PTA an ATM for Your School?

Budgeting & Special Funds

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Banking

• Have three signers on checking account (check bylaws for who they must be -- typically exec board members).
• Bank account must require two signatures on every check and use your PTA’s EIN (not the school’s).
• Pay all bills by check (signed by two people), never by cash or debit card.
• Use an endorsement stamp with your PTA’s information when receiving checks.
• Maintain detailed record of deposits and get a receipt when making deposits (mobile deposit exception).
• Reconcile monthly bank statement.
• ONLY PTA funds should ever be deposited into PTA accounts.

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Banking – Monthly Statement

• Bank statement should be opened, reviewed, and signed by a non-signer (typically necessary for insurance purposes; always a best practice).
• Reconcile bank statement with your own register (Quickbooks/Excel/MTK) each month.
• Signed bank statement with reconciliation becomes part of permanent records for 10 years.

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Money Handling

• Always maintain a paper trail.
• Two fill-in forms for money handling with your PTA members:
• Deposit/cash receipts
• Expenses (payment request/reimbursement request)

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Money Handling – Deposits

• PTA member should give money to Treasurer ASAP – ideally it should not leave school property unless in Treasurer’s possession.
• Member must fill out signed deposit form.
• Money should be counted by member and Treasurer. Sign deposit form to verify amount.
• Treasurer must give member a signed receipt.
• Treasurer should make deposit at bank promptly.
• Ask bank about 24-hour deposit box, if needed

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Money Handling – Cash Boxes

• Some events need a cash box stocked with start-up change. PTA member should submit an expense request prior to the event.
• Treasurer records the start-up cash as an expense of the event.
• Two options:
• Write check in Treasurer’s name (then signed by the two other signers), then cash check at bank and ask for denominations requested; OR
• Write check in member’s name so she/he can cash it.

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NEVER write check payable to “Cash”

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• When the cash box is turned in, it should contain the start-up cash along with any profits (and a signed deposit form).
• Treasurer writes a receipt to the member for the entire deposit amount (profits + start-up cash).

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Money Handling – Expenses

• PTA member should fill out expense request form every time.
• Include receipt/invoice with EVERY reimbursement request.
• Some stores offer duplicate receipts.
• Members can ask a store to scan items at service counter to produce an “invoice” for the treasurer to use to cut a check directly to the store.
• If a receipt is fundamentally not available for that type of purchase, then member should write an explanation/receipt, sign with third party, and date it.
• If a receipt was available for the retail purchase but the member does not turn in, the expense request must be denied – no exceptions.
• Pay vendors with checks only – never cash.
• Establish a timeline policy (i.e., requests must be in two weeks before check is needed) and stick with it.
• File all requests, receipts, and invoices in a permanent file. Note the check number on the request and attach a check stub as evidence of payment if possible.

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Money Handling – Expenses

• All PTA expenses are paid by check, NEVER cash.
• Expenses are never paid out of the event’s cash on hand (no paper trail!).
• Expenses are pre-authorized by the budget up to the category’s amount.
• Treasurer cannot reimburse any expenses above budget amount without first a vote of the general body.

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What are the money handling “nevers”?

• Never sign a blank check
• Never ask your other bank signers to “pre-sign” blank checks.
• Never issue a check made payable to “cash”.
• Never comingle PTA funds with school or personal funds.
• Never empower two related individuals to sign checks.
• Never make exceptions to your PTA’s policies for anyone.
• Never handle money for another organization (deposit money for a non-PTA related organization or event and write checks to pay for expenses). If it does not relate to a budget item and is not overseen by the PTA, the funds should not be comingled in the PTA’s account. Example: Student Council, Boy Scouts

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Meeting Reports

• The Treasurer provides monthly reports at the executive board and membership meetings.
• Budget vs. actual
• Account balances
• Does not need a motion to approve/adopt; it is a statement of facts.
• Checkbook, bank statement, and records are open and available upon request to all members (but do not need to be publicly posted).

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Helpful Tips:

Reporting (with samples)

Records

• All transactions should be recorded.
• Excel, Quicken, MTK, etc. (aka “the books”)
• An Annual/Year-End Report should be prepared at the end of the fiscal year to summarize all income and expenses.
• Keep records so that someone could step in at any moment to take over in the event you are unable to fulfill your duties. Make sure the President also has a copy of all account numbers and passwords.

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Records – Procedure “Book”

• National PTA’s Finance Quick Reference Guide and Local Unit Officer’s Handbook
• Copy of unit’s Bylaws & Standing Rules
• Copy of current budget
• Receipt book
• Checkbook
• Treasurer-related correspondence
• Copy of blank forms
• Officer/committee contact list
• Current year’s Treasurer reports from each meeting
• State of Michigan sales tax license
• Current membership roster (maintained in MemberHub)
• Financial Management Checklist from Finance Quick Ref. Guide
• Current letter of good standing from MIPTA for your unit

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Can be paper or electronic, of a mix of both.

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Records – Keep Easily Accessible

• Current year’s budget
• Current year’s bank statements
• Current year’s cash distribution requests with receipts
• Current year’s cash deposit records
• Accumulation of documents for current year’s Federal IRS taxes
• Documents for current year’s Michigan state sales taxes
• Letter of Good Standing from MIPTA
• W-9

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Records – Long Term Storage

• Past years’ budgets as adopted/amended
• Receipt books
• Checkbook registers
• Deposit slips
• Accounting book/computer file backups
• Copies of all monthly Treasurer’s reports
• Audit reports
• Bank statements
• Cash distribution documentation
• Insurance binder and any records/claims
• Legal correspondence
• Michigan sales tax filings
• Organization documents
• IRS filings

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Records – Retention

• Treasurer should maintain the “permanent records” or long-term file.
• Can be at treasurer’s house or at school.
• Use PTA funds to purchase fire safe, file cabinet, etc., as appropriate.
• Electronic copies (scans) can also be on Google Docs in case originals are misplaced or destroyed.
• Records Retention Schedule
• List of the items and how long each should be retained (see next slide)
• Label items you add to permanent records with the retention/destruction date.

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Record Retention Schedule

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Michigan Sales Tax – Exemptions

• Your non-profit PTA is exempt from paying Michigan sales tax on purchases made in Michigan. Purchases made online or at businesses located in other states are subject to the laws of the state in which that business is situated. The following criteria must be met:
• The item being purchased is tangible personal property.
• The item being purchased will be used or consumed primarily in carrying out the organization’s exempt purposes.
• The transaction does not fall under an exception.
• Michigan Sales and Use Tax Certificate of Exemption (form 3372) should be used or follow the store’s policy https://www.michigan.gov/documents/taxes/3372_216612_7.pdf
• Stores sometimes also request an IRS W-9 form in addition to form 3372 https://www.irs.gov/pub/irs-pdf/fw9.pdf
• Items purchased to be resold are also exempt from sales tax. Your PTA must, however, collect sales tax on these items when you sell them to another person or entity. The tax collected will be paid to the state of Michigan in your annual sales tax return. Make sure to account for this when budgeting. This includes AIA!

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Michigan Sales Tax – Remissions

• Remit sales tax to the state on any tangible item sold to families, even if the you do not intend to make a profit on it.
• This holds true even if you paid sales tax to purchase said items. In that case, pay sales tax on the profit earned by using line 5i of the sales tax return to deduct the amount of tax originally paid. To avoid any confusion, try instead to process the original transaction with the vendor using a Michigan sales tax exemption certificate (purchasing with intent to resell).
• Do not remit sales tax on event tickets, even if food is included in the purchase price. However, if there is an event w/food ticket price vs event w/o food ticket price, then remit sales tax on the price difference.
• Sales tax is not paid on food items that are sold unchanged (i.e., bagels that are not cut or spread with cream cheese).

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Michigan Sales Tax – Remissions

• Visit http://www.michigan.gov/taxes for more information and to obtain a Sales Tax License.
• When paying sales tax, make sure to put your Sales Tax License # (sometimes this is the same as your EIN) on your check, or else the state will return it.

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IRS Taxes

• IRS 990-N (e-postcard): gross receipts under $50,000 over an average of a certain number of years
• IRS 990-EZ: gross receipts under $200,000 and assets under $500,000
• Due by 15^th day of 5^th month following fiscal year end
• If your fiscal year is July 1 to June 30, the due date is November 15
• If your fiscal year is August 1 to July 31, the due date is December 15
• https://www.irs.gov/charities-and-nonprofits

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Audit

• Certifies the accuracy of the books/records of the financial officer
• Assures the membership that the PTA’s resources are being managed in a business-like manner
• Performed by outside auditing firm or 3-person person audit committee (may not include signers on bank account or spouses of signers)
• Performed annually after fiscal year closes or before a new Treasurer assumes the books

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Helpful Tips:

Auditing

Audit – Records Needed

• Year-End Financial Report
• Detailed list of transactions for the entire fiscal year (including total gross receipts and total expenditures)
• Budget and amendments
• Meeting minutes (as evidence of approval of budget amendments, if applicable)
• Last year’s audit report
• Bank statements, reconciliations, and deposit records
• Expense requests
• Deposit forms

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Treasurer Transition – Outgoing

• Ensure all membership dues for the school year have been submitted to MIPTA via MemberHub.
• Complete:
• Year-end financial report
• Audit (recommendation – bring new Treasurer to witness audit)
• IRS 990-N/990-EZ or have plan for doing so by due date – this is YOUR responsibility, not the incoming Treasurer’s
• Transfer all records, computer files, electronic passwords, and equipment to incoming Treasurer.
• Work with incoming Treasurer to update bank’s signature card (will typically need letter or minutes from meeting naming new signers on account – check with your bank).

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Treasurer Transition – Incoming

• Verify that:
• Audit is complete (vote to adopt the audit at the first general body meeting of the fiscal year before adopting new budget)
• Year-end financial report is complete
• IRS taxes – should be filed or have a plan for doing so
• Review:
• Audit and year-end financial report
• Treasurer’s information, files and records/permanent records
• Unit procedures, bylaws, standing rules
• Finance Quick Reference Guide and Local Unit Officers’ Handbook for Finance
• Insurance coverage
• File new signature card(s) at the bank
• Change passwords to e-banking accounts, payment processing accounts, etc. and make sure President has the new information.
• Attend Rochester Community PTA Council’s Leadership Day (typically in September)
• Join Facebook group “Rochester Community PTA Council Treasurers” www.facebook.com/groups/rochestercommunityptacounciltreasurers/

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FAQ

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How do I maintain 501(c)(3) status?

• IRS requires:
• Employer Identification Number (EIN) on file
• Group Exemption Letter on file
• Do not charter sub-organizations (such as scout troops)
• Do not pay salary of employees (of the PTA or school district).
• Follow the political lobbying rules – must be an “insubstantial” amount of time/money influencing legislation
• Do not engage in any political activity – cannot support candidates for public office
• Do not generate excessive business income unrelated to stated PTA mission and purpose
• File 990-N/990-EZ tax return by deadline
• No individual may benefit (i.e., no gifts directly to one member)

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Helpful Tips:

Your 501(c)(3) Status

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations

Can the PTA purchase gift cards?

• Yes, but only to an extent. Statement from National PTA’s CFO: “Gift cards with a value of $25 or less are a good way to provide awards or raffle prizes. Think of it as an efficient way to provide value to an event without having to worry about cash. When you give a gift card, you are transferring the value of the card to the recipient and you no longer have control over how that card is used, which is appropriate in the case of using gift cards to market or incentivize attendees, applicants, etc. Recognizing teachers with a gift card is appropriate as long as you do not give $600 to the teacher in any calendar year. When that occurs, you are required by IRS to file Forms 1096 and 1099, but common sense would dictate that you never come close to that total. Please treat gift cards like cash and document the number you purchase and the dollar amount, what the purpose was for, and who received the gift cards. Any gift cards left over should be accounted for and treated like cash.”

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PTA purchase of gift cards, cont.

• It's still best practice not to use them for things like Classroom Funds for the teachers -- obtaining receipts as backup is necessary to make sure the purchases were for the classroom.
• Use gift cards sparingly because they truly are very easy to lose, and more importantly they are a tool that can be used for fraudulent transactions and phishing schemes.
• PTA and exec board members should purchase the gift cards themselves and then seek reimbursement with a properly filled-out Request for Reimbursement form. There is no reason the treasurer or president always needs to be the one to personally front the money. Never EVER send the gift card numbers to anyone over text or email.

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What about donated gift cards?

• A donated gift card can be used:
• in a silent auction or raffle,
• as a contest prize, or
• to purchase items that benefit the PTA.
• When gift cards are donated to the PTA, extensive accounting controls must be in place for distribution (since having gifts cards on hand is the equivalent of having cash on hand). These are recommended controls and procedures for the distribution and use of gift cards, gift certificates, and pre-paid cards:
• Keep a log of all donated gift cards, gift certificates, and prepaid cards, including the donor’s name, the date of receipt, and the value.
• When gift cards are used, a disbursement voucher should be completed with receipt(s) attached for the for the audit committee to verify that funds were spent appropriately.
• The log and receipts should be filed in the Treasurer's books and provided for the audit.

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What about donated items?

• Also called “gifts in kind”, these must be recorded as income to your unit and you must give a gift receipt to memorialize the donation.
• Record the income as the fair market value of the item – if you had purchased the item for the unit, how much would you have paid?
• When gifts in kind are donated to the PTA, extensive accounting controls must be in place just like you would for gift cards, gift certificates, and pre-paid cards:
• Keep a log of all donated gift items, including the donor’s name, the date of receipt, and the fair market value.
• If the value of the item is significant, consider providing a receipt to the ultimate recipient indicating the transfer of ownership.
• The log and receipts should be filed in the Treasurer's books and provided for the audit.

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Can the PTA buy items directly from Amazon to avoid paying tax?

• Not easily. Even if you create an Amazon Business account (and jump through the hoops to confirm as a 501(c)(3)) for the PTA to try to avoid paying sales tax, purchasing items online will require a credit card or some other form of payment that circumvents the two-signer requirement. (Do not maintain a credit/debit card for your bank account!)
• If you did create an Amazon Business account, you could provide the login and password to a member to make a tax-free purchase using a personal credit card (and then request reimbursement), but then best practice would be to change the password afterward to avoid accidental non-PTA-related purchases. It is also possible to contact Amazon and provide documentation for a tax-exempt purchase through a personal account.
• Best practice is still to find an online vendor who will provide a tax-exempt purchase, generate an invoice for you, and allow you to pay by check. Until better guidance comes from National PTA or Michigan PTA on this subject, checks are still safest.

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Can my non-profit PTA make a profit?

• Non-profits can, and should, bring in more money than they spend to build enough reserves to carry through tough years.
• No pre-determined limit on reserves
• Enough to maintain cash flow before first fundraiser of year
• Enough reserves to replace a major fundraiser (National PTA recommends ½ - 1 year’s worth of typical expenses)
• Save for a large purchase in the future
• Can purchase CDs or establish a money market account if unit votes to do so

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Can my PTA accept credit cards for payment?

• Yes. (If using PayPal to process payments, make sure you go the extra step to register as a charitable organization to receive lower processing fees. Stripe will only grant a lower fee if your unit’s income is at least 80% purely tax-deductible donations.)
• Your PTA unit should not, however, utilize a physical debit or credit card for making PTA purchases. This circumvents the two-signer requirement for PTA expenditures. Online purchases currently must still be made by an individual and reimbursed by the PTA.

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How does my PTA gift items to school?

• Money must be approved through the budget
• Recommendation: gift the MONEY, not the item, for major purchases
• Limits future liability claims
• Does not require PTA to pay for future related expenses
• Write a memo of understanding that states the intended usage and expected future maintenance responsibility.

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How do I handle a returned check?

• Have a policy in place before it happens (in bylaws or standing rules).
• Mail a letter to the family and stick to the facts.
• Request reimbursement for the check amount, as well as your bank fees, by cash or certified check.

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Things to consider:

• Ask the principal whether there might be extenuating circumstances for the family.
• Maintain a budget line item for supporting students to make PTA-related purchases (mini-grant).
• Can refer family to RAYA for assistance.
• Can refuse to accept checks from that family again after repeated returned checks.
• The matter is private and confidential.

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Does my PTA need a gaming license?

• Yes, if you conduct a:
• Raffle (pay per ticket)
• 50/50 drawing
• Bingo
• Visit http://www.michigan.gov/cg for more information and allow yourself several months to obtain the license before the event.

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Do I need to write donation receipts?

• Yes. It can be paper or electronic. Members and contributors may claim federal tax deductions for:
• Amount of membership above $5.50 remitted to state
• Any cash or item donation
• Volunteer expenses not reimbursed by the PTA
• What shouldn’t I write a donation receipt for?
• Tickets for events
• Items purchased (Yearbook, bagels, directory subscription, spirit wear, AIA books, etc.)
• Any payment for which there is a benefit (tangible or intangible) conferred that is comparable in value to the dollar amount paid.

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A Sample Fundraising Donation Receipt can be found in the Nation PTA’s list of Downloadable Finance Tools.

What information should a donation receipt include?

Hart Middle School PTSA is a 501(c)(3) non-profit subordinate association chartered by the Michigan Congress of Parents and Teachers (Michigan PTA) and is included in its group exemption. Donations made to the Hart Middle School PTSA may qualify as a charitable deduction for federal income tax purposes. If, as part of this transaction, any goods or services were provided in return by Hart Middle School PTSA, any charitable deduction is limited to the excess, if any, of your contribution over the value of these goods or services. Consult your tax advisor or the IRS if you have any questions regarding the deductibility of said donation. Please keep this written acknowledgment of your donation for your tax records. 

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PTSA MICHIGAN CONGRESS OF PARENTS TEACHERS AND STUDENTS d/b/a Hart Middle School PTSA

6500 Sheldon Rd., Rochester Hills, MI 48306

EIN: 38-2937037

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• Name of donor
• Date
• Dollar amount of donation (or place for donor to estimate the value of goods or services donated – let the donor determine this)
• Fair market value of any goods or services given in return for the donation
• authorized signature of PTA board member or committee chair (if receipt is not electronically generated as part of a transaction through MemberHub or Membership Toolkit, etc.)
• The fine print (including legal name of your PTA, address, and EIN):

Phishing/Smishing

• From time to time, you may receive an email or text from someone pretending to be another executive board member asking you to purchase gift cards, scratch off the back, and send the serial number as soon as possible. DON’T DO IT!
• This is a common phishing/smishing (electronic fraud) scheme. Always insist on a completed check request with invoice/receipt before writing a physical check. If anything ever feels fishy about a request, trust your gut and verify by voice call rather than a text or email.

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What happens if someone doesn’t cash a check?

• Make every effort to contact the recipient of the check to clear up the situation. The full address and phone number of the recipient should be on the Request for Payment form.
• If the check is truly lost and you issue a new one, keep careful records indicating that. That way, if the original check is later cashed, you will have recourse to recoup the money.
• Checks become “stale”, but they do not ever expire. Stop payment orders from the bank typically cost about $25 and these orders do expire after a few years. Be careful issuing checks and stay on top of what checks have not been cashed.
• If the check is still uncashed after 3 years, the amount of the check is over $50, and you have exhausted all efforts to contact the recipient, you may report it to the state as “Unclaimed Property”. For guidance on this subject, please click here.

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Where can I find help?

Rochester Community PTA Council

Rochesterptacouncil@gmail.com

P.O. Box 81913

Rochester, MI 48308

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Michigan PTA 734-975-9500 Secretary@michiganpta.org

National PTA 800-307-4782 info@pta.org

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www.irs.gov

www.michigan.gov/treasury

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https://www.facebook.com/groups/rochestercommunityptacounciltreasurers

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This training is not a substitute for your own review your unit’s bylaws, PTA guidelines, and applicable state/federal laws.

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