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Message from the CSB Director, Lisa Knox
Greetings!
Thanks to those of you who attended the CSB Expo on February 1, as well as the various trainings regarding Student Activities and Tax Credit. I hope the Expo and trainings have been worthwhile for you. My sincere apologies for several mix-ups that occurred with respect to dates, as well as a change in the format of the PHS training with no announcement that the format was changing to focus on general booster information and spring sports.
Thank you for submitting your Form 1099 tax templates last month! There were some stragglers after the deadline, but ultimately the CSB was successful in meeting the January 31 deadline for issuing 1099’s. Treasurers, get ahead of the game this year! The template will remain on the website for your use all this year. You can begin entering your vendor information now to save time next January, when it will be due back to the CSB. We rely on each PTO and booster club to report information accurately so we can remain compliant with IRS regulations. Make sure to read the Frequently Asked Question section about 1099’s to enhance your knowledge and understanding of these requirements.
Also be sure to check out the variety of helpful tips, other frequently asked questions and the revised training schedule below.
I hope you and your family are staying healthy!
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Training Update
Here is the REVISED training schedule for the coming months. All PTOs and Boosters are welcome to attend either session.
Summer Planning and Officer Transition
Thursday, April 28, 2020
Note date change
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Wednesday, April 30, 2020
Note date change
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Centralized Accounting
The next newsletter will outline plans for the next phase of implementation for Centralized Accounting.
Stay tuned!
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2nd Semester Planning
by Michelle Dexter
The majority of volunteers come with good intentions. It can be difficult to understand the need for centralized accounting, why the state’s attorney general would be watching PTOs and Boosters closely, or how people can steal from children, but the reality is our groups raise a significant amount of money and sometimes people make bad choices.
In November 2019, an elementary PTO treasurer in Washington was charged with theft and forgery. She admitted taking $25,000 from her organization over 3 years. She used the PTO debit card and forged checks to pay her personal bills. Click HERE for full article.
In July 2019, Kyrene Monte Vista Elementary school discovered $20,000 of PTO funds, intended for their art department was “unaccounted for”. The incoming board noticed the discrepancies and notified the school district. Click HERE for full article.
In May 2019, an elementary school PTO treasurer in Mesa was charged with theft of $18,000 taken over a 7 month period. The treasurer was not keeping records and “brushed off requests for an update budget”. Click HERE for full article.
In March 2019, an elementary PTO president in Tennessee was charged with theft and fraudulent use of a credit card after it was determined $30,000 was misappropriated to the president’s personal bills over three years. She was also accused of depositing fundraising money to her personal account. Bank statements were allegedly falsified to help hide her activities. Click HERE for full article.
It is important to follow the checks and balances of your organization. Trusting your fellow volunteers is not enough when you have obligations to the students and parents of your organization. CSB encourages you to separate the people who deposit the money and who authorize the spending of funds from the person who accounts for the money. Your entire board should be reviewing bank statements regularly and have a non-board member audit your records periodically. If you do not know what you are looking for when reviewing these documents, please contact Lisa Knox for information on trainings on this subject.
Centralized accounting will not eliminate your obligation to review and audit your records. As you move to centralized accounting, you will still need to maintain your own records to verify the accuracy of the information and to review the actual authorizations given for various transactions. If something is not adding up, someone is not providing the required documentation, or someone does not want to follow the protocol, every member of your board has a duty to investigate it.
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Form 1099's
What does a 1099 report?
A 1099 is used to report payments made to independent contractors for purchased services, such as choreographers, face painters, petting zoos, DJ’s, etc. A 1099 is also used to report payments made for rentals, such as equipment rentals.
The form 1099-MISC is an information return used to help businesses/individuals accurately report their income on their tax returns and provides a mechanism for the IRS to ensure that the income was properly reported. New for 2020, the 1099-MISC will only be used to report rental payments, and a new form, the 1099-NEC, will actually be used to report “non-employee compensation”, such as what you pay for purchased services. You will still report both types of payments to the CSB; the CSB will determine which type of form to issue.
Who does the CSB issue 1099’s to?
Per the Internal Revenue Service, the CSB is required to issue 1099s to vendors which are established as Individuals, Sole Proprietors, Single-member Limited Liability Companies (LLCs) and unincorporated Partnerships. We do not send 1099s to corporations that are designated as S Corporations or C Corporations. Likewise, we do not send 1099s to LLCs that are treated as S Corporations or C Corporations or Partnerships.
How do I know what type of business a vendor is?
You must obtain a Form W-9 “Request for Taxpayer Identification Number and Certification” from all vendors you are going to pay for purchased services or equipment rentals. The vendor completes the W-9 and indicates their name shown on their tax return, their business name (if different from that which they use on the tax return), the federal tax classification (i.e, the “type” of business or company they are), their address, their tax id number, and a few other things.
You will only need to report payments made to vendors which check the Individual/sole proprietor or single-member LLC box OR the partnership box in Line 3. The diagram below shows both applicable boxes checked for your reference, but a vendor would actually choose only one box from the entire Line 3 options.
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What if I rent equipment (like a bounce house or other inflatable) from a company that is a C-corporation? Do I report the payment as a rental?
No. Even though you paid for a rental, you do not report the payment because the company is a corporation. You only need to report payments made to Individual/sole proprietors, single-member LLCs or partnerships.
What if I make a payment for a DJ to an LLC that is classified as an S Corporation? Should that be reported as a payment to a non-employee for a purchased service?
No. Once again, even though you are paying for a purchased service that might otherwise require a 1099, this DJ works for an LLC classified as an S Corporation. That classification eliminates the need to issue a 1099 to this vendor.
My PTO is buying t-shirts for $800 from a vendor that is a sole proprietor. Should that be reported for 1099 purposes?
No. You are not paying for a purchased service or equipment rental. The amount of the purchase and the fact that the vendor is a sole proprietor is irrelevant because you are buying items and not paying for services or equipment rental.
My booster club is paying to have the baseball dugout repainted. The painter provided a quote and invoice that is all-inclusive of paint, supplies and labor. The painter is a sole proprietor. Should that be reported for 1099 purposes?
Yes. The painter is a sole proprietor and is providing a contracted service, both of which are criteria for 1099 issuance. The full amount of the invoice would be reported.
Using the same example above, what if the painter provides a bill that breaks out the labor cost separate from the paint and supplies?
In this scenario, the only amount to report for the vendor is the amount for the labor. The paint and supplies cost are not reportable. Since the painter split the costs out on the invoice, you are obligated to report only the labor and not the full cost for the job.
I thought 1099s were issued only if the amount paid is $600 or more for services or rentals. I only paid a qualified vendor $249. Do I have to report this?
Yes, you must report amounts paid to qualified vendors (Individual/sole proprietors, single-member LLCs or partnerships), regardless of the amount your PTO or booster group paid. The information is required for aggregate calculations by CSB Administration, meaning that the CSB will tally ALL payments made to a vendor to determine if the $600 threshold is met and a 1099 must be issued.
Where do I find the template, so I can begin tracking information now, rather than waiting until the last minute next January?
Navigate to the Forms and Documents page on the Chandler School Booster website at https://www.chandlerschoolboosters.org/taxes/. Alternatively, go to Chandler School Booster website: www.chandlerschoolboosters.org. Once at the home page, click on MENU at the top of the page to access the menu options. On the Menu screen, select Forms and Documents.
On the left side of the screen, select 1099 Instructions to view or download instructions for completing the 1099 template. Select 1099 Template to download the template and begin entering the required information. At this time, you may disregard the reference to 2019; the template and instructions are not anticipated to change for 2019. The website link and document titles will be updated at a later time.
Will I be required to submit a copies of the Form W-9 I obtain from vendors?
Yes, new in 2020 is a requirement to submit copies of the W-9s you obtain from vendors. Please save the W-9s throughout the year and be prepared to scan and email them at the time the template is submitted next January.
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Is Your Entire Board Registered?
This is how you will continue to receive CSB communications. When creating your account, please be sure to fill out all information on the form.
*Please check with your board to make sure everyone has registered.
**Please pass these instructions on to incoming board members.
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Registration Forms
We also need each member group to fill out the registration form and return to Erin via email: csb_adm@outlook.com
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Review Bylaws
With the changing of officers on your board, please be sure to review your group's bylaws as well as the CSB bylaws before the start of each new school year. As a reminder, your bylaws should conform to the Bylaws Template.
And if you ever make changes to your bylaws, you must keep a copy for your records and submit a copy to Erin:
csb_adm@outlook.com
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Upcoming DatesTuesday, April 7, 2020 Keystone Graduating Seniors Workshop. Hamilton High School
Thursday, April 16, 2020 Keystone Graduating Seniors Workshop. Hamilton High School
Thursday, April 16, 2020 CSB Board Meeting. CUSD Training Room
Thursday, April 23, 2020, 7:00pm CSB General Meeting. Hamilton High School cafeteria.
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Pro Rata Shares
Invoices for pro rata shares are anticipated to be sent out to all member groups by April 17.
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