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#528535 - 04/07/06 02:17 PM New Accounts
bls Offline
100 Club
Joined: Oct 2005
Posts: 138
Alabama
At a recent training seminar, our new accounts employees were told that whenever an unincorporated entity (other than a sole proprietorship) tries to open a deposit account, the Bank must obtain an EIN on the entity. If the entity does not have one, then the Bank needs to have a SS-4 completed for the entity. We were told that this goes for garden clubs, social clubs, class reunion accounts, etc.

My understanding was that for unincorporated entities that do not have an EIN, we could use the SSN of the main account user. Anybody have anything on point on this?

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Operations Compliance
#528536 - 04/07/06 04:13 PM Re: New Accounts
RBanker Offline
Power Poster
RBanker
Joined: Jul 2003
Posts: 2,675
Austin Texas
The biggest thing I can think of is the first line match - the name on the account must match the TIN - if it's a SSN, then the account is owned by the individual, if it's a club, org, etc it should have a TIN. That, at least, is our procedure at our bank.
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#528537 - 04/07/06 05:06 PM Re: New Accounts
doosmom Offline
Member
doosmom
Joined: Mar 2005
Posts: 96
The Delta
If the garden club doesn't have a TIN, we will use the SS# of the first signer on the account and title the account
Jane Doe
DBA Our Garden Club
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#528538 - 04/07/06 06:44 PM Re: New Accounts
tcgcompliance Offline
Junior Member
Joined: Mar 2006
Posts: 32
CA, USA
In order to provide correct protection to your clients the only appropriate advise would be to obtain an EIN.

Whilst I am sure the majority of gardening clubs are well run by well intentioned people just think of what might go wrong if the account were to get into the red for whatever reason.

If you followed the advise of the last post then Jane Doe would have total liability having signed as a sole trader.

We cannot just make up descriptions of entities based upon which is more expeditious, if the club is a partnership there must be a partnership agreement, if a non-profit appropriate supporting material etc.

To knowingly open an account in a title that you know is incorrect is tantamount to fraud; to open an account without having proven & documented the existence of any entity is to ask for both legal and regulatory trouble down the line.
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#528539 - 04/07/06 07:57 PM Re: New Accounts
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
You must simultaneously comply with the CIP regulations and the Internal Revenue Code.

For an organization that is not a legal entity, CIP regulations require that you obtain the name, SSN, DOB and physical address of the person opening the account. That is for identification and record retention purposes only.

For that same organization, the IRS wants you to obtain an employer identification number to use for any information reporting. The organization name/EIN will match with IRS records if any information returns are filed. Obviously, the SSN of the first or any subsequent treasurer will not match if it is used in connection with the organization's name.
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#528540 - 04/13/06 08:05 PM Re: New Accounts
doosmom Offline
Member
doosmom
Joined: Mar 2005
Posts: 96
The Delta
CAN O' WORMS! CAN O' WORMS!

good googly moogly. Now all these garden club women and choir directors are gonna be mad at me, too!

But thanks for the info!
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"I'm not sure I understand all I know about that..."

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#528541 - 04/19/06 05:28 PM Re: New Accounts
BBoyd Offline
Diamond Poster
BBoyd
Joined: Mar 2002
Posts: 2,494
MI
We, too, require an EIN for all unincorporated associations, and the W-9 itself is our guide. On page 4, which many of us don't even see (available from www.irs.gov), it provides a chart of what name and number to give the requestor of the TIN. Item #9 specifies that for these types of entities, the EIN of the organization is to be provided. The money belongs to the person/entity whose TIN is on the account. Money on deposit for the garden club doesn't belong to the Secretary, Mary Smith - it belongs to the garden club. If it's Mary's SSN and Mary has tax levies or garnishments, the garden club's account will be assessed.
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Opinions are mine and never to be taken as legal advice!

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#528542 - 04/20/06 07:58 PM Re: New Accounts
doosmom Offline
Member
doosmom
Joined: Mar 2005
Posts: 96
The Delta
so now we have new procedures on opening non-profit and unincorporated organizations...I love this Bankers Threads deal!
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"I'm not sure I understand all I know about that..."

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