Tara Tims , Activity Funds Manager Jason Gossett , Executive Director of Business Services

2. Tara Tims, Activity Funds Manager Jason Gossett, Executive Director of Business Services Merle Shefstad, CPA Reimer, McGuinness & Associates – IRS/990 Chris Brown, Texas State Comptroller’s Office – Sales Tax

3. Purpose STUDENTS • Enrich education and activities of • This is accomplished by a of parents, teachers and administrators partnership

5. August 28, 2018

6. August 28, 2018 NOT IN KLEIN ISD Use the “HEADLINE TEST”

7. Facts on Fraud • On average, fraud lasts18 • monthsbefore it is detected. • Most common method of discovery is tipsfrom employees, • customers, vendors, and anonymous sources. Second most common • method of discovery is by accident. • Typical fraud perpetrator is a first-time offender. Only 7% • had prior fraud convictions in recent survey. • Source: Association of Certified Fraud Examiners

8. Document, Document, Document! Two signatures on EVERY check No debit card Review bank statements monthly

9. Klein Parent Support Organization Website Where can I find it online?

10. Go to www.kleinisd.net Click on Family Info Click on Parent Support Organizations

12. Upcoming Due Dates October 1– Information Sheet (GASB 39) Due to Central Office (link on website) October 15 – Fundraiser requests must be submitted to the principal on the new Google form no later than October 15th(campus form links on website) October 31 – Financial Report & Audit review should be presented at a general membership by this date. Submit copies to campus administrator & to Central Office (link on website) November 15 - Form 990, 990EZ or 990N are due to the IRS on the 15th day of the fifth month after the end of the fiscal year of the parent organization. (for June 30th year-end). Submit copies to campus administrator and to Central Office (link on website) January 20 – Annual sales tax reports are due January 20th each year. (Monthly filers due on 20th of each month. Quarterly on 20th of month following quarter). Submit copies to campus administrator & to Central Office (link on website)

13. District Guidelines – Parent Organizations • Operate autonomously of the school district as separate entities • Responsible for remaining in good standing and in compliance with state & federal agencies • The principal must approve the formation of all parent organizations • Must be a 501(c)3 tax-exempt organization (group exemption option) • Must have own EIN (Employer Identification Number) with IRS GROUP EIN DISTRICT EIN

14. District Guidelines – Parent Organizations • Administrators (and/or sponsors) act as an advisor and direct the activities of the school (and/or program) • Fundraisers & Donations require administrator approval • Allowed up to 3 fundraisers each year • All students receive equal benefit regardless of fundraiser or membership participation • Money should be raised for and spent for the approved purpose

15. District Guidelines – Parent Organizations • A parent organization may not represent the District nor bind the District or any of its employees to a third party with which the organization may conduct business • Must file Form 990 (990N, 990EZ, or 990) EACH YEAR • Must operate under by-laws (submit copies when they are amended) • All meetings must be public meetings • Minutes of all parent organization meetings should be kept in writing in the permanent records of the organization

16. Financial Guidelines • The commingling of parent organization money with school money is not permitted • All funds should be deposited within 24 hours in organization bank account • Two people should always be involved in the counting/receipting of money • District employee cannot be Treasurer (or signer on bank account) • Two officer signatures on all check disbursements (not district employees) • Unused checks should be secure at all times • Checks should never be pre-signed or blank checks issued

17. Financial Guidelines • Payment may not be made to district employees for any services rendered to that organization • Finances must be reconciled monthly • Must have a financial audit performed each year that remain part of permanent files • Safe-guarding, collection, and record-keeping of all funds rests with organization’s officers • Organization is responsible for all taxes, debts, and financial commitments • Organization cannot purchase on behalf of district and seek reimbursement as this circumvents district purchasing procedures

18. UIL Guidelines for Booster Clubs • It is the responsibility of the parent organization officers to ensure that they operate within the guidelines of University Interscholastic League (UIL) • Funds are to be used to support school activities. To provide funding for non-school activities could violate UIL rules and the public trust through which funds are earned • Organization officers should get with the coach, sponsor or principal if they have questions related to the UIL

19. Becoming a Tax-Exempt Non-Profit Organization • File for incorporation with Texas Secretary of State - $25 filing fee • Apply for EIN (Employer Identification Number) from IRS • Apply for and obtain a Letter of Determination (Form 1023) from the IRS that states the organization is tax-exempt (fee varies from $275 - $600) • Apply for exemption from Texas Comptroller of Public Accounts for exemption from franchise and sales & use tax (Form AP-207) • May opt to also apply for a Sales Tax Permit through Texas Comptroller • May request to be a part of the Klein Support group exemption – omits Step 3 (total cost of $25 for incorporation filing fee) • May only become part of the group exemption once. If exemption is revoked, the organization must re-file & complete the re-instatement process through the IRS.

20. Bank Account • A copy of stamped Articles of Incorporation (or Certificate of Filing) from Secretary of State and an EIN are required to open a bank account. • A member’s social security number should not be used as the organization’s EIN for banking and/or other business purposes. • Each parent organization must have a separate bank account at a facility in proximity to the school • Debit card/credit card use is prohibited.

21. Sample Financials & Tax Forms Presented by: Merle Shefstad Filing Requirements for IRS 501(c)(3) Organizations Due by the 15th day of the fifth month after organization’s year end. (November 15th for June 30th year-end) Which form is needed? Form 990N – Gross receipts normally less than $50,001 must file online with IRS https://www.irs.gov/charities-non-profits/annual-electronic-filing-requirement-for-small-exempt-organizations-form-990-n-e-postcard (no paper form) Form 990EZ – Gross receipts less than $200,000 and total assets less than $500,000. Form 990 – Gross receipts greater than $199,999 and total assets greater than or equal to $500,000. Don’t forget your boy scout troop if you charter!

22. Sample Financials & Tax Forms Presented by: Merle Shefstad FAILURE TO FILE FORM 990-N, 990-EZ OR 990 FOR THREE CONSECUTIVE YEARS… THE ORGANIZATION’S STATUS AS AN EXEMPT ORGANIZATION WILL BE AUTOMATICALLY REVOKED!!

23. Section 3 – Sample Financials & Tax Forms Presented by: Merle Shefstad How to Check 501(c)3 Status: Tax Exempt Organization Search (https://apps.irs.gov/app/eos) Contact IRS Tax Exempt & Government Entities Customer Account Services at (877) 829-5500

24. Sales Tax Rules & Reporting Presented by Chris Brown, Texas State Comptroller’s Office • All purchases made for the exclusive use (necessary to the organization’s exempt function) should be made tax-exempt • Texas Sales & Use Tax Exemption Certificate • All items purchased to resell during a fund-raising event such as T-shirts, spirit items, etc. should be made as tax-free purchases from the vendor • Texas Sales & Use Tax Resale Certificate • Sales taxes are due to the State and must be collected when taxable items (i.e. – caps and t-shirts) are sold to others • Requirement to file sales tax report at least once per calendar year with the State Comptroller's office(due January 20th). Some have to file quarterly or monthly. Texas Sales & Use Tax Return (Short Form)

25. Sales Tax Rules & Reporting Presented by Chris Brown, Texas State Comptroller’s Office • All KISD locations are currently located in a 8¼% sales tax rate area. School Fundraisers and Texas Sales Tax

26. Sales Tax Rules & Reporting Presented by Chris Brown, Texas State Comptroller’s Office • One-day Tax-free Sales • IF exempt 501(c)3 AND exempt for sales and use tax, parent organizations are allowed • one-day tax-free days per calendar yearby the State. 2 • A one-day tax-free day is a day (24 consecutive hours) a parent organization can sell taxable items and not have to collect and consequently remit the normal sales taxes due to the State. The criteria for a one-day tax-free sale have to do with when possessiongoes from the parent organization (which is tax exempt) to the buyer(which is not tax exempt). Ordersand/or collections could be taken over an extended period before delivery is made. Thedelivery just has to be advertised as one day (the tax-free day).

27. Sales Tax Rules & Reporting • List of Common Taxable Items List of Common Non-taxable Items • Athletic equipment and uniforms • Balloons • Band equipment and supplies - reeds, recorders • Books, workbooks, etc. • Candles • Catered dinners/banquet, if not part of fund-raiser • Clothing - T-shirts, all other clothing items • Concessions, if not part of a fund-raiser • Copies - collections from coin or manual copiers • Cups - glass, plastic, paper, etc. • Directories - student • Drafting supplies • Flower sales • Garage sales • Gift-wrap paper • Handicrafts • Horticulture items • Magazine subscriptions (< 6 months) • Musical supplies • Pennants • Pictures/photographs • Plant sales • Publications – yearbooks, football programs, memory books • Programs - athletic, music, etc. • Recorders - musical • Retirement plaque • Rings - school • School Store - all items sold by school stores • Silent Auctions (if not part of one-day tax-free day and is for items such as free golf round, membership to a health club, other recreational-type items, etc.) • Spirit Items – ribbons, banners, pom poms, pennants, cups, bracelets, etc. • Stationery • T-Shirts, all other clothing items • Uniforms - PE, cheerleader (when student property) • Vending - pencils and other non-edible supplies • Yearbooks, if not part of one-day tax-free day • Advertisements sold for school newspapers, athletic & booster club programs, etc. • Bake/food sales • Car wash • Catalog sales (organization is acting as agent of seller & receives a commission-see 6.0 below) • Concessions, if part of a fund-raiser • Dinners – when prepared by parents or catered as part of a fund-raiser of a parent organization and not in direct competition of local vendors • Discount cards • Dues • Gold-C and Entertainment coupon books • Golf tournament entry fees • Fees – clinics and workshops • Jog-a-thon • Magazine subscriptions (6 months or more) • Raffle tickets • Silent auctions (all if part of one-day tax-free day; if not part of one-day tax-free day and is for items such as gift certificates for dinner, manicure, facials, haircuts, stay at a hotel, etc.) • Tickets for admission to athletic events, drama productions, dances, school carnivals and other similar entertainment events (including tickets sold to play a game at a booth for a prize)

28. Fundraising….Incentives Per Klein Policy…… No coercion should be exercised in fund-raising activities and no student or teacher is required to raise any particular minimum of money or to sell any minimum number of tickets, etc. Under no circumstances should pressure be brought to bear on pupils through competition or by special recognition for sales with individual prizes. • Benefits given by a parent organization cannot be distributed based on participation in a fund-raiser or based on revenues individually generated in a fund-raiser.

29. Fundraising….Food Guidelines The District’s nutrition guidelines for reimbursable school meals and all other foods and beverages sold or marketed to students during the school day shall be designed to promote student health and reduce childhood obesity and shall be at least as restrictive as federal regulations and guidance, except when the District allows an exemption for fundraising activities as authorized by state and federal rules.

30. Fundraising….Food Guidelines District is audited by Texas Dept. of Agriculture & violations can have financial repercussions for district All items sold to schools from midnight to 30 minutes after bellmust meet USDA Smart Snacks or occur on one of six (6) exemption days

31. USDA Smart Snacks Nutrition Standards • Any food sold must be one of the following: • whole grain rich or • have fruit, vegetable, dairy, or protein as first ingredient or • be a combination food that contains at least ¼ cup fruit or vegetable • Nutrient Requirements • Meet calorie limits, sodium limits, fat limits, sugar limits • All Schools May Sell: Plain Water, Unflavored low fat milk, Unflavored or flavored fat free milk, 100% fruit or vegetable juice • Size limits for milk and juice: • Elementary 8 oz portions • Middle and High Schools 12 oz portions • No portion size for water • High School Students are allowed no calorie or low calorie drinks • Calculator to determine: • https://foodplanner.healthiergeneration.org/calculator/

32. Fundraiser Food Exemption Policy • Texas allows 6 days per campus per school year to sell foods and beverages that do not meet nutrition standards • Each campus determines six exemption days • Exempt foods may be sold anywhere on campus except during meal service and where reimbursable meals are being served

33. Fundraising….Raffles • Refer to the guidelines set forth by the Texas Attorney General to ensure your organization qualifies to hold a raffle • If a raffle is conducted, it will count as one of the three (3) fundraisers allowed • Students may not assist in the sale of raffle tickets • Item(s) to be raffled must be approved by the Campus Safety and Support Department at Central Office • Restricted to selling raffle tickets at one school activity/event, in which the student group it represents is performing or participating

34. Don’t forget to log your volunteer hours! • Why? • Gives the district a record of community involvement • Aids the district when applying for grants as community involvement is an important grant criteria • How? • Use the CERVIS database • Can bulk add the hours or have individual volunteers add • Who do I contact with questions? • Julie Stevens (jstevens1@kleinisd.net)

35. Questions?