LK Education Bulletin

Some Frequently Asked Questions from Our SSO Presentations

1. Is there not legislation currently underway to amend the reach of the SSO Act?

Three separate bills have been introduced in the House but none have made it to Committee level. These bills seek to set a threshold for fund raising before a school support organization would become subject to the requirements of the Act. Given the short time frame before this law becomes fully effective on July 1, 2008 and the uncertainty as to whether or not such amendments will take place, we believe the best practice is to move forward with those steps necessary to formalize the organizational structure with the state and IRS if appropriate.

2. Does registration and compliance with the SSO Act mean we are exempt from Tennessee Sales Tax?

No. These are two different laws. A school support organization must be compliant with provisions of the SSO Act and must receive exempt status from the state for any Tennessee sales and use tax. Exempt status is obtained by filing an Application for Exemption with the Tennessee Department of Revenue and receiving notification from the state that exempt status has been granted. A copy of the Application can be downloaded for use by going to Helpful Information: IRS and TN State section of this site.

3. Are there disadvantages in organizing as a state registered non-profit organization versus a state chartered organization with 501(c)(3) IRS status?

For contributors to be entitled to a tax deduction on their Federal Income Tax Return their contributions must be to organizations that have been granted non-exempt status with the IRS and for most such entities that means becoming a 501(c)(3) registrant.