FAQ

Can I pay sales tax when we purchase our merchandise for sale so I don’t have to collect it when we sell it?

No, sales tax must be collected from the end user (customer) on the retail price, not the wholesale price.

Do I have to pay sales tax on prizes purchased as giveaways at a carnival?

No, items purchased for PTA use are exempt from sales tax. As these items are not sold, neither would sales tax be collected.

If we make no profit on our school supplies, do we have to collect and pay sales tax?

Yes, profit is not a factor in determining what items you must collect sales tax on.

A local business wants to make a contribution to our PTA but needs proof of our tax-exempt status. What do I give them?

Give them a copy of our IRS determination letter. This can be obtained from your president.

Can our PTA give door prizes?

Yes, as long as the item is nominal in value and money is not collected in order to be eligible. Texas PTA legal representation has defined nominal as not more than fifteen dollars (15.00) in value.

Can our PTA be a paying member of our local Chamber of Commerce?

Yes, as long as the PTA membership has approved the membership and its associated expenditure. This expenditure is included in the budget.

Can PTAs pay for furniture or consumables for the school?

The primary allocation of PTA funds must be in areas that reflect the PTA’s mission, allow the PTA to carry out its work and benefit the students. Allocating money out of the budget for coffee service, or for new tables and chairs in the conference room isn’t applicable to any of the above categories.

Can PTAs have capital projects that benefit the school?

Unlike many other non-profits, PTAs do not have capital projects. Because we operate on a cash-based accounting method, we only look at the current year’s activity when it comes to our income and expenditures. If a PTA determines that they wish to contribute to a long term project (say donating towards the cost of a school marquee for example), they would (a) present this to the PTA membership for approval each year and (b) write a check to the school for their contribution along with completing the appropriate paperwork that specifies where this contribution will be applied and the timeframe in which the school can keep the donation. This vote takes place after all fundraisers have been held; not before. PTAs do not escrow money for long term projects. The only two escrow accounts that PTAs have are the State/National Dues escrow and the Sales Tax escrow. These are escrow accounts because these funds are not the PTA’s money; the PTA is just temporarily holding them until payment is remitted to the appropriate organization.  

Are PTAs permitted to hold a raffle where multiple prizes are awarded by drawing from multiple containers, or does this constitute more than one raffle?

Per a written response from a representative with the Office of the Attorney General, as long as the prizes are awarded at one event/occasion, multiple containers to draw from can be used to constitute only one event/one raffle.