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Bank Requesting a FEIN#

Forums: General Discussion
Created on: 01/02/18 03:01 PM Views: 1057 Replies: 14
Tuesday, January 2, 2018 at 3:01 PM

Hi All, Hopefully someone can help me. I have handled organizing our class reunions since our first one(in 1980) that was 5 years after graduation. We have them every 5 years. We have had a bank account and keep any leftover moneys in it to start the next reunion. The bank just started charging a monthly fee on the account which was dwindling our funds quickly, so I cancelled that account and went to another bank that would not charge a monthly fee. Apparently these days to open an account the Class needs a FEIN #. We have never needed one all these years. Do I have to file to get a tax exempt status? Would the class qualify? Has anyone come up against this?

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Tuesday, January 2, 2018 at 3:21 PM - Response #1

From what I understand, you can look at the IRS website and they have info on how to call to get an EIN over the phone. Jessica says it is a fairly easy process.


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Tuesday, January 2, 2018 at 3:29 PM - Response #2

Will we then be required to pay taxes???

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Tuesday, January 2, 2018 at 4:17 PM - Response #3

Good question for when you are on the phone with the IRS. While we are not qualified to answer legal / tax questions, we do recommend that you keep records that will show that your expenditures balance out with the money brought in for the event.


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Tuesday, January 2, 2018 at 5:01 PM - Response #4

Simple (layman) answer: Use your SSN number. Some sort of TIN (Tax Identification Number) has been required for a long time. The only reason I can think of Bank asking for something else is if you identified as some sort of non-person entity.

Unless you expect a lot of interest $ (Cool), your end of year statement won't do anything to your personal taxes. Like Scott said, keep records of money in/out. It's when amounts get very large (over $10k is a trigger) that this can become an issue.

Once you get a non-SSN TIN, things get a bit messy Twisted Evil

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Saturday, January 6, 2018 at 1:25 PM - Response #5

Hi, Karen.

I have experience with this. Please bear with me while I share.

I wanted to be sure our class funds were set up specifically as class funds. As you are setting up a class account as I did, I recommend you do get an EIN number. It is easy and quick to do online.


1. I obtained EIN number via IRS online in June 2015.
Though I set up the account and my SSN is on file as doing so, the following quotes are from a pdf by "Harvard College Office of Student Life, updated 4/2014" on the process. (The pdf address is found at the end of this section.)

"The Federal Tax ID Number (also known as the Employer Identification Number or EIN) is a number used to identify a business or other organization. Student organizations wishing to open a bank account must apply for an Employee Identification Number (EIN). Organizations should not open a checking account using an individual’s social security number. The financial burden of that account then rests with that individual and
they become responsible for claiming any interest accrued on that account on their own taxes. They also become responsible for the account if there is a problem with it."

"...obtaining and EIN helps to ensure the IRS will not make any of an organization’s members personally responsible for taxes on revenue that the organization has earned."

The IRS link on the pdf did not work for me, so here is the address. Go to
https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers

The steps on the pdf are many, yet it moves quickly and you will receive your EIN the same day.

A couple of personal notes:
a. I wanted to keep class funds and my personal funds separate and clear.
b. I called the IRS in February 2017 to be sure we did not have to file any reports. In my notes I wrote "currently - no filing requirements" and "miscellaneous nonprofits". The latter may be what I chose when setting up the EIN. I do not recall.

This is the location of the info provided provided by harvard.edu. NOTE: The pdf may be written as classes MAY be starting associations. The info I provided pertains to you, I and other admins wishing to open a class account.
https://osl.fas.harvard.edu/files/osl/files/obtaining_an_ein.pdf


2. The same day I received the EIN#, I went to a Chase branch near a friend I was visiting. I chose Chase knowing there is a branch in my hometown. While setting up the account, I learned there is a monthly maintenance fee, however, the person setting up the account said that if we had a veteran to be a signatory on the account it would be free. A fellow classmate had offered to help in any way he could so I called him immediately. The next day, he took his DD-214 into his local Chase branch and signed on. There are no monthly fees.


3. I use Quicken Deluxe for my personal funds and set up a SEPARATE account for my class. Every penny is accounted for in the Quicken register.

4. At the end of the last two reunions, I posted a financial summary for all classmates to see on our site.

5. As planning began for our recent reunion, I asked a fellow classmate to be my equal. I wanted to be sure someone had the info should I not be able to continue. She has copies of the EIN and bank info. Though retired, she has set up and run conferences across the country as well as being an executive director of a nonprofit. Her credentials are not mandatory however, I wanted someone who worked in nonprofits as I had for some years. I lucked out when she said yes.

Yes, this is long yet, I wanted to give you my first-hand experience as to how easy it is to do this. I would never recommend you mix your funds with class funds or use your own SSN. Once you have this set up, you should be fine.

Jack V., I disagree with you. It is not messy.

Happy 2018!


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Saturday, January 6, 2018 at 2:13 PM - Response #6

Like I said, if it's UNDER $10,000 no worry. Below is a link to the IRS for a starter - not an unofficial site. As a practical matter (explained earlier) you really do not need a EIN. An EIN exposes one to more paperwork, whether one realizes it or not. I had a business for 40 years Idea You are potentially exposed to a LOT of messy paperwork. KISS - Keep it Simple.

Just read the official IRS LINK not some EDU site. Always go to the source.

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Edited 01/08/18 3:43 PM
Saturday, January 6, 2018 at 2:27 PM - Response #7

As a side note - entering as some sort of "entity" requires one to literally become an organization with designated officers, bylaws and the like.

Like I said, you can't just "say" you are an organization, one also has to have the legal foundation to be be one. With all the backup paperwork. Actually says that in harvard link too, just not as succinctly. IOW, just clicking the right box in the EIN application is not enough. It has to be followed through.

Messy for me

{P.S.] if you do not do the legal paper requirements establishing an organization, one becomes personally responsible. IOW, just getting an EIN is not enough.

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Edited 01/06/18 2:39 PM
Monday, January 8, 2018 at 2:57 PM - Response #8

The last thing I want to do is to have a less-than-positive back and forth with you, Jack V. However, I have been through this and it does NOT require becoming a nonprofit and all you are saying. The bank put me down as an officer and the others but it is all good.

If you read what I wrote, you read that I called the IRS to be sure we did not have to submit reports. I worked for a nonprofit with a million in CDs and more in the bank. I pulled together the information necessary for the IRS. I know how important it is to do things right.

An EIN number is not messy.

Have a great 2018, Jack!


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Edited 01/08/18 2:59 PM
Monday, January 8, 2018 at 3:57 PM - Response #9

Relax Gwen, Please Read what I wrote carefully. Nowhere did I mention anything about becoming a non-profit.

A bank filling out a form is not the same as a person creating the paperwork background describing the organization. They just enter what you tell them. That's all I'm stating. One MUST create the paperwork backing up whatever one does.

I never saw anywhere where you did this critical step - creating official documents - to avoid becoming personally responsible (which is a non-issue for all practical purposes here, hence SSN works fine).

All the references you talked to just ASSumed that you were a legal entity that did the required background legwork too. Call them back and ask them if you have to actually create documents describing your organization. Or can anyone just say they are some group that collects and disburses money without FORMAL documentation anywhere?

I find creating these required documents messy, especially when nobody cares about small amounts. That's why nobody gets tagged. As a practical matter, SSN works fine and actually the same if one does not have official docs created describing the "organization".

As I said, most people do not realize that there's a bit more to EIN than just checking boxes. That's all I really explained. But some people like messier steps.

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Edited 01/08/18 4:12 PM
Monday, January 8, 2018 at 4:06 PM - Response #10

Read this link carefully to see the implied docs required

IRS EIN requirements

You can answer NO to all except the last section.

Do You Need an EIN?

Are you involved with any of the following types of organizations?

Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
Estates
Real estate mortgage investment conduits
Non-profit organizations
Farmers' cooperatives
Plan administrators

Which one would one pick?

Which one doesn't required any paperwork to be created?

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Tuesday, January 9, 2018 at 1:42 AM - Response #11

To avoid further confusion - here are the IRS links describing what you have to do to be "tax exempt". These are called "social clubs" (501(c)(7)) - I think that best fits here. And they are tax exempt, EXCEPT they must follow the rules and have documentation established. One's 'word' is not good enough.

LINK for social clubs

"The club must be organized for exempt purposes ." And here explicitly is what I was saying, you have to have DOCUMENTATION for the club. That is implied in all terms that use the term "organization" whether one realizes it or not. It's not a casual term here, but an actual legal status (AKA "word of art").

"A social club must be organized for pleasure, recreation, and other similar purposes. A club will not be recognized as tax exempt if its charter, by laws, or other governing instrument, or any written policy statement provides for discrimination against any person based on race, color, or religion. A club may, however, in good faith limit its membership to members of a particular religion in order to further the teachings or principles of that religion and not to exclude individuals of a particular race or color.

Whether an organization's purposes are consistent with exemption under section 501(c)(7) is generally determined based on its organizing documents."
----------------------------------------------------
This actually says if you don't supply the paperwork, the "club" is not tax exempt. IRS link
----------------------------------------------------
"Each application for exemption must be accompanied by an exact copy of the organization’s organizing document: Articles of incorporation for a corporation, articles of organization for a limited liability company, articles of association or constitution for an association, or trust agreement or declaration of trust for a trust. If the organization does not have an or­ganizing document, it will not qualify for exempt status."

Simple or Messy?

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Edited 01/09/18 1:58 AM
Wednesday, January 10, 2018 at 2:40 AM - Response #12

By having an EIN number and class account, I do not have to be concerned that the IRS or anyone is going to ask me to pay taxes on the income. That is the mess I do not want.

Again, Happy 2018!


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Wednesday, January 10, 2018 at 3:18 AM - Response #13

Gwen, you really need to READ the IRS docs. What you just said is misleading. The only thing you can be is a 501(c)(7) social club from the list of choices given.

In fact, because you didn't file organization documentation with your EIN application (clearly described in the links I gave), you are indeed personally responsible for "income". Heck, anybody could say they are tax exempt if that wasn't required.

An EIN is not just some convenient number, there are rules that must be followed. Starting with "who must get an EIN". Now read the "social club" requirements because you have to be SOMETHING to get an EIN. IOW, you are not a "person" but some sort of organization.

I don't want anyone here to think that simply getting an EIN (which indeed is simple - but not the only step) will somehow avoid having to do anything else.

Like I said, when you talked to your references, they ASSumed you filed proper DOCUMENTATION. It says that over and over in the IRS references.

Where in the IRS documentation (starting with "who must get an EIN") does it say you don't need to create paperwork AND send it to the IRS to finish the EIN application? What you did online is STEP 1. You forgot to do STEP 2 (submit documentation) because you did not realize that also has to be done. Clearly stated in form 1024.

Hint: do a google search on 501c(7) because that is what these class organizations are. I went to the trouble to find these links because I am familiar with EINs because not only was I in business but I programmed IRS stuff for various orgs for 40 years.

Here are more LINKS from the IRS for background. Please READ

Social Club description

Form 1024 see box for 501c(7) see page 11

Quote:

Attach a copy of the Articles of Association, Constitution, or other creating document, with a declaration (see instructions) or other evidence that the organization was formed by adoption of the document by more than one person. Also include a copy of the bylaws.

If one follows ALL the steps, then one is good to go. But all the steps must be followed Idea

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Wednesday, January 10, 2018 at 11:24 AM - Response #14

Thanks everyone for chiming in here. This is an area for which I am not very familiar, so your tips are very helpful. I'm sure with all that has been suggested, Karen should have all she needs at this point, if nothing else to be able to ask informed questions to the IRS help line.

Thanks again and Happy 2018 Reunion Planning!


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