Sanctioned
Organizations
Legal Considerations
Presented by
Stephanie J. Mather
October, 2014
What is Sanctioning?
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Recognition &
Attribution
Allows organization to
operate for benefit of
students
Board of Education
has complete
discretion
Sanctioning Does NOT Equal
Control
Board of Education does not control funds
 Board of Education does not ensure that
organization complies with applicable state
and federal laws
 Organization may NOT use school
district’s tax-free status
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$tate $ales Tax Issues
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68 O.S. Sec. 1356 provides various exemptions from paying sales tax. They include:
13. a. Sales of tangible personal property made by:
(1) a public school, …
(3) a public school district,
(4) a public or private school board,
(5) a public or private school student group or organization,
(6) a parent-teacher association or organization other than as specified in subparagraph b of this paragraph, or
(7) public or private school personnel for purposes of raising funds for the benefit of a public or private school,
public school district, public or private school board or public or private school student group or organization, or
b. Sales of tangible personal property made by or to nonprofit parent-teacher associations or organizations
exempt from taxation pursuant to the provisions of the Internal Revenue Code, 26 U.S.C., Section 501(c)(3)
and nonprofit local public or private school foundations which solicit money or property in the name of any
public or private school or public school district.. …
15. The first Seventy-five Thousand Dollars ($75,000.00) each year from sale of tickets and concessions at
athletic events by each organization exempt from taxation pursuant to the provisions of the Internal Revenue
Code, 26 U.S.C., Section 501(c)(4)….
AS OF NOVEMBER 1, 2012, the following law (68 O.S. Sec. 1356.2) is in effect:
A. No person shall claim a sales tax exemption granted an organization pursuant to Section 1356 or 1357 of Title
68 of the Oklahoma Statutes in order to make a purchase exempt from sales tax for his or her personal use.
B. Any person who knowingly makes a purchase in violation of subsection A of this section shall be guilty of a
misdemeanor and upon conviction thereof shall be fined an amount equal to double the amount of sales tax
involved, or incarcerated for not more than sixty (60) days, or both.
C. In addition to the penalty provided in subsection B of this section, any person violating subsection A of this
section shall be subject to an administrative fine of not more than Five Hundred Dollars ($500.00). Administrative
fines collected pursuant to the provisions of this subsection shall be deposited to the General Revenue Fund.
Common Mistakes made by 501(c)3
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Form 990: IRS Form 990 is the annual "Return of Organization Exempt
From Income Tax,". It is not required when gross receipts are less than
$50,000. However, most small tax-exempt organizations whose annual
gross receipts are less are required to electronically submit Form 990-N,
also known as the e-Postcard, unless they choose to file a complete Form
990 or Form 990-EZ instead. An organization that does not file for 3
consecutive years will automatically lose its tax-exempt status.
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Many organizations overlook the need to report compensation of $600 or
more to the IRS. Awards, fees, and similar payments must be reported on
Form 1099-MISC, which must be sent to the recipient no later than January
31st, and to the IRS, with a Form 1096 transmittal, no later than February
28.
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Unrelated Business Income -- Many organizations keep their members
informed with a regular newsletter or via the website, and help defray the
costs by accepting paid advertising. Unfortunately, the IRS considers this
advertising income to be unrelated to exempt purposes, and therefore
taxable. Up to $1,000 in unrelated income can be earned without having to
pay tax, but an organization that receives at least $1,000 in advertising or
other unrelated receipts must file Form 990-T, and pay any tax due.
Beware the IRS
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The IRS may deem
payments to District
employees by sanctioned
organizations to be
taxable compensation
If your organization would
like to make a gift of any
amount, or thing of value,
to a District employee,
please contact the District
to ensure the gift is
processed through the
payroll office
RAFFLE CONSIDERATIONS
...or don’t forget about those friendly folks at the IRS
No outside contractor may be used on school
district raffle. School personnel must manage.
 Remember, this is gambling - notify winner of
value
 Must report to the IRS if value over $600.
 Must withhold if value over $5,000.00
 Can’t provide alcohol as prize
 Cannot do raffle unless you are a 501(c)(3)
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B-I-N-G-O
…in Oklahoma, regulated by the ABLE Commission
§3A Okla. Stat. Sec. 405. Limited charity game activities - Exemptions.
A. Any organization which conducts any charity game activities not more than four times per year may
obtain an exemption from specific provisions of the Oklahoma Charity Games Act, Section 401 et seq.
of this title, as provided in this section. Such exemption shall be obtained by the filing of a verified
application with the ABLE Commission signed by the executive officer of said organization and
containing the following information:
1. The name and address of the organization;
2. The name, address and telephone number of the executive officer of the organization or such other
person authorized to receive documents or other information from the Commission on behalf of the
organization; and
3. A statement that said organization shall conduct a charity game session four or fewer times per
calendar year and the dates and times and location wherein such activities shall occur.
B. Any organization which conducts any charity game activities not more than four times per year
which has obtained an exemption from the Commission shall not:
1. Be required to obtain any type of license required by the Oklahoma Charity Games Act;
2. Be restricted to the use of bingo faces as defined in the Oklahoma Charity Games Act but shall not
be authorized to use electronic facsimile of faces;
3. Be required to purchase charity game equipment from persons or business entities licensed
pursuant to the provisions of the Oklahoma Charity Games Act; or
4. Be subject to any restrictions in this act or rules of the Commission relating to conducting charity
games on certain days of the week or during certain hours.
Hazing Prohibited
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A.
No student organization or any person associated with any
organization sanctioned or authorized by the governing board of any public or private
school or institution of higher education in this state shall engage or participate in
hazing.
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B.
Any hazing activity described in subsection F of this section upon
which the initiation or admission into or affiliation with an organization sanctioned or
authorized by a public or private school or by any institution of higher education in this
state is directly or indirectly conditioned shall be presumed to be a forced activity,
even if the student willingly participates in such activity.
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C.
A copy of the policy or the rules and regulations of the public or
private school or institution of higher education which prohibits hazing shall be given
to each student enrolled in the school or institution and shall be deemed to be part of
the bylaws of all organizations operating at the public school or the institution of
higher education.
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D.
Any organization sanctioned or authorized by the governing board of
a public or private school or of an institution of higher education in this state which
violates subsection A of this section, upon conviction, shall be guilty of a
misdemeanor, and may be punishable by a fine of not more than One Thousand Five
Hundred Dollars ($1,500.00) and the forfeit for a period of not less than one (1) year
all of the rights and privileges of being an organization organized or operating at the
public or private school or at the institution of higher education.
Hazing Prohibited
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E.
Any individual convicted of violating the provisions of subsection A of this
section shall be guilty of a misdemeanor and may be punishable by imprisonment for not to
exceed ninety (90) days in the county jail, or by the imposition of a fine not to exceed Five
Hundred Dollars ($500.00), or by both such imprisonment and fine.
F.
For purposes of this section:
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1.
"Hazing" means an activity which recklessly or intentionally endangers the
mental health or physical health or safety of a student for the purpose of initiation or admission in
to or affiliation with any organization operating subject to the sanction of the public or private
school or of any institution of higher education in this state;
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2.
"Endanger the physical health" shall include but not be limited to any brutality
of a physical nature, such as whipping, beating, branding, forced calisthenics, exposure to the
elements, forced consumption of any food, alcoholic beverage as defined in Section 506 of Title
37 of the Oklahoma Statutes, low-point beer as defined in Section 163.2 of Title 37 of the
Oklahoma Statutes, drug, controlled dangerous substance, or other substance, or any other
forced physical activity which could adversely affect the physical health or safety of the individual;
and
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3.
"Endanger the mental health" shall include any activity, except those activities
authorized by law, which would subject the individual to extreme mental stress, such as prolonged
sleep deprivation, forced prolonged exclusion from social contact, forced conduct which could
result in extreme embarrassment, or any other forced activity which could adversely affect the
mental health or dignity of the individual. (21-1190)
Beware Copyrights and
Trademarks
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Sanctioned groups
should be careful in
their marketing and
advertising efforts
Companies must
protect their
copyrights and
trademarks
This includes
pictures!
Considerations on Giving to the
School District
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Must comply with all
applicable codes
Must be free of liens
School must maintain
and inspect
School is potentially
liable if injury
Equity issues
Title IX considerations for
Booster Clubs
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Female athletes must be given
equivalent opportunities
There must be no
discrimination in the provision
of athletic opportunities
One of the many factors
considered in determining
overall compliance with Title IX
is the funding level of related
programs.
Booster club funds are
considered in this analysis
Volunteer Protection Act – A volunteer is not
liable pursuant to federal law if:
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must have been acting within the scope of the
volunteer's responsibilities in the nonprofit
organization or governmental entity at the time
of the act or omission.
if it is required or appropriate, the volunteer
must have been properly licensed, certified, or
authorized
the harm may not have been caused by willful
or criminal misconduct, gross negligence,
reckless misconduct, or a conscious, flagrant
indifference to the rights or safety of the
individual harmed by the volunteer.
may not have been caused by the volunteer
operating a motor vehicle, vessel, aircraft, or
other vehicle for which the State requires the
operator or the owner of the vehicle, craft, or
vessel to possess an operator's license or
maintain insurance.
Ways to Protect Against Liability
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Spend the Money on what you said you were
going to do!
Insurance and bonds
Good procedures
Written documents to provide club “memory”
Well thought-out activities and services
Consider national affiliation (PTA vs. PTO)
Consider not being sanctioned – participate in
activity fund activities