PTAs may be required to pay tax on other types of income, referred to as unrelated business income. Unit, council and district PTAs with annual gross receipts associated with unrelated business income of $1,000 or more must file IRS Form 990-T, Franchise Tax Board Form 109, and report the income when filing IRS Form 990/990EZ.
Meet any of these conditions to avoid Unrelated Business Income Taxation (UBIT):
- Sell donated merchandise.
- Use substantially all donated help.
- Make sure the activity is not a “regularly carried on trade or business.”
- Make sure it furthers the PTA’s exempt purpose.
unrelated business income: Income derived from activities not directly related to the purpose or function of the PTA.