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PTAs to Begin Collecting Sales Tax During Fundraisers

The state comptroller told PTA officials they had been violating tax law by not collecting sales tax.

Local chapters of the Parent Teacher Association (PTA) in Maryland will now have to start collecting sales tax during fundraisers after the state comptroller's office told officials that PTAs had been violating tax law.

Whenever a local school’s PTA hosted a bake sale or magazine fundraiser in the past, the organization usually charged a flat fee since the hosts usually already paid retail tax on the items. However, that is now going to change due to the comptroller’s interpretation of Maryland tax law, said Maryland PTA president-elect Ray Leone.

Do you believe PTAs should be required to collect sales tax? Tell us in comments.

Following the comptroller’s announcement, the more than 900 PTAs in Maryland will need to start collecting sales tax when selling goods—such as cookie dough or hot dogs—for fundraisers determined by the rate of increase between an item’s original retail price and the price then charged by PTAs.

“This is going to make life a little worse for a lot of Maryland PTAs,” Leone said. “The PTA's interpretation of the law was a little more lax apparently than the state comptroller’s interpretation of the law.”

Leone said he didn’t expect the state to ask for back taxes from PTAs—partially because of the massive task it would be.

“Going back and trying to fix [back tax issues] is a judiciary nightmare,” he said.

On average, about 80 percent of all PTA treasurers are not specifically educated or trained in advanced accounting, Leone said. But based on the complexity of many PTA financial books, he said the training is greatly needed.

Leone said he audited the records of one PTA that raised about $50,000 for the year.

“I’m auditing some books right now. We’ve paid the taxes on what they thought was right, and we’re telling them to go forward with what they know now,” Leone said.

After receiving the comptroller’s interpretation, Leone sent out a form letter to all PTA treasurers—many of whom he personally trained—informing them about the adjustment and explaining how to determine the appropriate tax amounts.

Moving forward, PTAs will need to collect taxes when selling magazines, on-site food sales like hot dogs, and cookie-dough fundraisers. Pizza dough, however, is not included in the interpretation because it was not determined to be a tax item and so it will remain a non-taxed item for PTAs, Leone said.

He was quick to point out that the tax collection adjustment is not a state-enforced move, but mainly the interpretation of one man—an interpretation the PTA wants to abide by. But that doesn’t mean Leone won’t be pushing back a little to help alleviate stress and taxation requirements for his PTAs.

“I believe personally this may be one guy’s interpretation that’s benefiting the state. We’ll probably have to engage tax lawyers to give us an exact interpretation,” Leone said. “How can you say pizza dough isn’t a snack item [non-taxable] but cookie dough is? That’s the kind of thing that’s throwing me off.” 

Information101 November 27, 2012 at 05:48 PM
Just what is the quoter from Maryland PTA saying about not getting a memo from the state related to Maryland sales tax? In the Maryland PTA Cash Encounters which is the financial how to booklet sent to every PTA in Maryland from Maryland PTA (and used in trainings) it says clearly... @@@@@@@@@ TAXES, TAXES, TAXES PTAs in Maryland are exempt from paying FEDERAL INCOME TAX on most income. PTAs in Maryland ARE NOT EXEMPT from paying Maryland State Sales Tax.
Sue Marinello November 28, 2012 at 12:20 PM
Perhaps the comptroller would be happier if all of MD's PTAs, and their volunteer labor, simply closed-up shop and allowed the state of MD to pick up the tab for all that the PTAs pay for, donate, and do for free? This is an absurd and petty interpretation of tax law which will only hinder the good works donated by this volunteer, educational, non-profit, organization. People in the 21st Century already find volunteering to be an odious task, now the state of MD is, in essence, recommending that volunteer treasurers be CPAs? If the state cannot facilitate volunteerism, then the state should be required to pick up the tab for all the extra educational advantages that volunteers bring to the public schools.
Robin Nicole November 28, 2012 at 12:31 PM
Personally I'd like to know exactly what our PTA does with the money they receive from their endless fundraisers. I always get the flyers/money requests coming home (usually the day of the event!), but we never seem to get newsletters or reports on where that money is going.
Kristin Wilson November 28, 2012 at 02:47 PM
Good thing the PTA at my kids elementary school already collects sales tax......for Robin Nicole go to the PTA meeting and educate yourself as to what the money will be used for. The board and the school principal vote on the fundraiser based on need.
Stinkbug November 28, 2012 at 05:16 PM
Ask your PTA. They will tell you. Our PTA does supply a newsletter, so maybe you should volunteer with the PTA, so you can provide that information to other parents, like yourself, who have questions. Maybe they just don't send anything home because they don't have the money to spend on newsletters. I don't know...but you will never know the answer unless you ask them. I believe they all spend in on different things depending on the schools need.
Robin Nicole November 28, 2012 at 07:53 PM
Maybe if I felt welcome I would go...but as a working mother (not a stay-at-home-mom) who did not grow up in this area I was absolutely shunned at the meetings I did try to attend. It's like when we first moved to Maryland, I sent an email out to my son's class introducing him (and me), and I asked for guidance in navigating all things Maryland...and I did not receive one single response. Not one. Even his teacher was appalled.
Stinkbug November 29, 2012 at 01:06 AM
PTA meetings are in the evening, ours are at least. I know many working parents who attend PTA meetings. Or you could contact them directly, via email. I don't feel "welcomed" I don't know anyone. I just show up, listen, and leave. But then again, I am not a friendly person and don't really care to go to meetings to meet new people.
Judy robinson January 25, 2013 at 03:34 PM
When my daughter was in school, we held endless fundraisers. We paid teachers for computer expertise, bought books for the libraries, bought supplies and equipment for teachers. We also paid for activities for children less fortunate. Have Maryland legislators gone out of their mind? The work done by PTAs, Girl Scouts, similar, non-profit organization is huge and they do it on a dime. Personnally, I would close my PTA down and tell the state to take over our "volunteer" activities.
Judy robinson January 25, 2013 at 03:36 PM
Go look at the roles of people who don't owe back taxes -- multimillionaires who really dont' care and they want to stack more gas taxes on top of the 23.5 state and 19.5 federal we already pay. I have a nice house I'll sell you so I can move!

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