Doesn't the IRS automatically consider a sole owner LLC to be a sole proprietorship (unless they have elected to be treated as a corporation)? As such, would this sole proprietorship not be eligible for a NOW account?
In Reg Z and RESPA, investment property which will not be owner-occupied is considered business purpose. I'm referring to RESPA 3500.5(b)(2) and Reg Z 226.3(a)(1). During a recent internal review, the analysts used the current OCC Handbook as their guide and it included the following exception on page 2: <i>"Exemptions (24 CFR 3500.5(b)) Transactions exempt from RESPA include loans: For which the primary purpose is business, commercial, or agricultural (definition parallels Regulation Z, 12 CFR 226.3(a)(1)). However, a business purpose loan made to one or more persons, acting in an individual capacity (natural persons) to acquire, refinance, improve, or maintain a one-to-four family residential property used or to be used to rent or lease to other persons is a covered transaction. An action by a sole proprietorship is not considered to be conducted in an individual capacity."</i> What is the authority on which OCC makes this statement of exemption in their Exam Guidebook? The regulation was written by the Federal Reserve - not OCC.
According to the instructions for IRS Form 1099-MISC, payments to lawyers and law firms are required to be reported regardless of whether the lawyer or firm is classified a sole proprietorship, partnership or corporation. Here is the <a href="http://www.irs.gov/instructions/i1099msc/ix01.html">link</a>. In order to eliminate this reporting requirement, our bank does not write checks to attorneys at loan closings. Attorneys object to our practice and tell us that we are the only lender that does it this way. We checked with other lenders in the area and learned that they do, in fact, write checks payable to attorneys at loan closings and do not report those payments to the IRS. Are we missing something here?
I am trying to find a definitive answer regarding FCRA adverse action notice requirements on a commercial loan request to a sole proprietorship when the consumer credit bureau is used as part of the decision. Does an FCRA adverse letter need to be sent?
I have recently moved into the compliance area at our bank. The previous compliance officer revoked CTR reporting exemptions for sole proprietorships. Is there anything in the regulations that prohibits us from granting an exemption from CTR reporting requirements to a sole proprietor?
We may overdraw a commercial account as a courtesy to a commercial account customer. However, we don't promote our Overdraft Privilege program to our commercial accounts. Do we need to breakdown the overdraft fees on their statements with YTD and cycle to date? Some of our commercial accounts are sole proprietorships, would they fall under a consumer account?
In terms of extensions of credit, specifically overdrafts and the treatment thereof, I understand Reg O excludes related interests of directors. But one of my directors is the only owner of an LLC. The checking account of the LLC recently overdrew in excess of $1500 for 8 days. Do I have a probable Reg O violation or is the account excluded as a related interest?
If a consumer credit report is pulled on an owner of a business for credit card processing purposes, if turned down due to information on the credit report, is an adverse letter required?
If a sole proprietorship account is styled Jane Doe dba Jane's Jeans, we would use Jane Doe's SSN for the tax ID. If Jane's Jeans has its own EIN, should the account be styled the same? I always understood the first name on the legal title should match the tax ID number.
Generally, the definition of consumer is someone using an account for "personal, family or household purposes." However, Reg E simply defines a consumer as a "natural person" [205.2(e)]. When dealing with a sole proprietorship account (e.g., "Jane Doe d/b/a Jane's Flowers," or "Jane's Flowers, a Sole Proprietorship," does Reg E cover the account the account is for a business purpose, but considered to be owned by a natural person?