I have EIN number now what?

[lynncc]

Thanks for the great links. The Sam Houston Area Council Site was most helpful. I used the link and applied for an EIN number. Our charter organization is hesitant and dragging their feet on making a decision to let us use theirs. So....Now that I have this number all of the sudden I got to thinking????dangerous after the fact....How do you handle filling taxes on this. I remember as a child having to file taxes cause of an inheritance but did not have to pay due to small amount of yearly income but still had to file.

 

Thanks

 

lynn

[Bob White]

Why would a scout unit need or want an EIN.

Here is the litmus test for needing an EIN. Unless you can answer Yes to one of these you do not need this.

 

 

Do you have employees? NO

 

Do you operate your business as a corporation or a partnership? NO

 

Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms? NO

 

Do you withhold taxes on income, other than wages, paid to a non-resident alien? NO

 

Do you have a Keogh plan? NO

 

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, NO

Estates NO

Real estate mortgage investment conduits NO

Non-profit organizations NO (you are not a non-profit organization, your unit is a club within the Charter organization. The BSA is a non profit organization, The Council is a non profit organiztion but your unit is not.

Farmers' cooperatives NO

Plan administrators NO

 

If on your application you misrepresented your unit as a non-profit organization you could place yourself in a real legal mess.

 

 

 

 

 

[SemperParatus]

Your tax filing responsibilities will be determined by the IRS based on the information you provided on your application. Here is the FEIN application form, which mirrors the information you provide on-line or via the phone.

 

http://www.irs.gov/pub/irs-pdf/fss4.pdf

 

 

Out of curiosity?

 

1. How did you complete line 1 - legal name of entity? Your unit is not a legal entity - it is not separately incorporated, organized or formed under the organization chartering statutes of your state.

 

2. How did you complete line 7a - Name of principal officer, general partner, grantor, owner or trustor? A scouting unit has none of these positions that are legally defined under the appropriate state statutes. Realize that whoever you listed would, in all likelihood, be considered by the IRS to be a responsible party that may have personal liability for tax, penalties, other obligations owing to the IRS.

 

3. How did you complete line 8a? Especially given the fact that your unit is not an entity, whose name appears on any state charter registration records.

 

4. How did you complete lines 9, 14 and 15?

 

What you have is an FEIN issued erroneously by the IRS. Assuming you have indicated that you are a 'nonprofit' under line 8a, you can expect that the IRS will be sending you a Form 990 in the mail for completion. Likewise, assuming the their computer system is not fouled up, the IRS may contact you asking where your exempt organization application (Form 1023 or 1024) is. When that happens, the jig will be up. You cannot file an exempt organization application for the unit because the unit is not a separate legal entity. Besides costing $600, the application requires that you attach the unit's articles of organization and corporate bylaws, which do not exist. If you are not an exempt organization (determined solely by the IRS based on the exemption application they receive), then you are a taxable organization.

 

I fear you have opened up a can of worms for yourself, that will result in some IRS notices that will need to be addressed. Assuming they are all handled in the correct manner, in the end, the IRS will merely revoke your FEIN and you will be back to the beginning, albeit somewhat wiser.

 

I am sure there are units out there that have received an erroneous FEIN and continue to believe that everything is just fine. Maybe the IRS just doesn't bother with chasing it down, or notices have been discarded because of changes in the names and addresses of the unit leadership over the years. Regardless, you have obtained a FEIN under false pretenses. It remains to be seen what the outcome of that may be.

 

If handled correctly, it shouldn't cost you any money, only unnecessary time.

[fgoodwin]

Many banks require an EIN in order for a Pack to open an account; and if the CO won't allow the use of their EIN, the Pack has to get their own.

[FScouter]

If the chartered organization won't let you use their number to open a bank account, ask them to open one for you. Or, hand over your income to the CO treasurer, along with your check requests. My guess it they will change their mind.

[lynncc]

okay here goes..

Bob...I love your posts. You are so passionate about things. I like that. I did not represent ourself as a not for profit organization and am not going to apply for a 501 © as of coursee the BSA on the national and council levels are but the packs, troops, etc are not, and cannot be.

 

Semper I used the link in the other thread on how to get a tax ID number to open and account....fgoodwin..had a link to the Sam Houston Area Councils website that has topics on finance...very helpful. ONe of the pages was dedicated to opening a checking account...#1 recommendation was to use your CO's number but if they are unwilling for whatever reason then the second way is to apply for your own EIN. They then give you step by step instructions as to what exactly to put on every line.

 

line #1 we put the CO's name-our pack and #

7a- you leave blank

8a-you mark what you CO is

9-reason for applying is to open checking account

14-check other and write Youth Program Character Development

15-write not applicable or repeat the youth program thing

 

 

So thats what I did. I followed the councils directions and filled out the form. Now what.

 

Our Charter organization for whatever reason...do not want us using THEIR number but is okay to use their association with them to open an account...go figure...but anyway there you have it.

 

so again to anyone who has a pack account with your own EIN number how do you handle this.

 

thanks

lynn

[SemperParatus]

What you are doing is creating a second FEIN for your chartered organization. Do they approve of that? If you are using their address, then they will know about this very shortly as the EIN notice is received in the mail.

[fgoodwin]

Bob & SemperParatus:

 

If the CO won't allow the Cub Pack to use its EIN or bank account, and if the bank requires an EIN in order to open an account for the Pack, what do you suggest they do?

[SemperParatus]

I can think of no good reason for a CO to withhold its FEIN to an extension of itself. The lack of cooperation by the CO is an indication that the CO is not supportive of the program that it has agreed to sponsor.

 

What to do?

 

1. Educate the CO.

 

2. Speak with a CO representative that would understand this to be the nonissue that it is. A secretary or clerk may be tasked with a simple no answer. Make sure you have discussed with the head of the CO.

 

3. Get approval from the CO to file for a second FEIN in their name solely for the unit's use.

 

4. Find a CO that is supportive of your unit and BSA program.

 

 

[fgoodwin]

SemperParatus:

 

As the SHAC website says, if your CO is a school, PTA or business, you'll have to get your own EIN anyway. What do you suggest such units do? Get another CO?

 

While we're talking about educating COs, its worth remembering that COs have only three responsibilities to their units:

 

(1) Provide a place to meet

(2) Appoint & approve leadership

(3) Follow BSA policies

 

I've never read anything that says the CO must share its EIN or bank account with the Cub Scout Pack it sponsors.

 

That may explain why schools, PTAs and businesses are treated differently on the SHAC website when discussing how units can open their own bank accounts.(This message has been edited by fgoodwin)

[SemperParatus]

BTW,

 

You may find your CO's EIN on this website:

 

http://www.guidestar.org/

 

There are several commercial concerns that can tell you EINs too - like EIN Finder.

 

A nonprofit organization must make its 990 filing open for public inspection to anyone that requests it. The EIN is prominantly displayed on the front page of this filing.

 

In other words, it is not a big secret.

 

Withholding this information (from itself) is ridiculous.

 

 

[SemperParatus]

fred,

 

I have no idea why the Sam Houston Council has a different rule for a school/school board, PTA or business. They all have EINs too.

 

If you follow the Sam Houston Plan B option - you are getting a second EIN in the name of the Chartered Organization. I would think the proper thing to do is to get approval from your CO to do that, rather than file something in its name without their approval. If they don't want to release their EIN, or forbid a unit from filing for a second EIN in its name, then there is something wrong with the CO/unit relationship in spite of what the minimum requirements may be.

[fgoodwin]

I agree that if a CO won't allow a unit to use its EIN and won't allow the unit to get its own EIN, then its time to look for another CO. But just because a CO's EIN is public information is no reason that a unit should assume it can use the CO's EIN.

 

We all know that many COs don't consider a unit to "part of itself". That may be true of LDS units, but I doubt if that's how most other COs look at Scout units.

 

Let's face it, a Cub Scout Pack chartered by a (non LDS) church does not have the same relationship to the church as the Sunday School has, for example. And a Pack sponsored by a public school doesn't have the same relationship to the school as the Student Council has.

 

There are far too many COs that take a strictly "hands-off" approach to their units. So if a CO doesn't want the unit to use its EIN, it has every right to take that position.

 

I think as much as we'd like it to be the different, wishing it were doesn't make it so; we might as well stop pretending otherwise.

[dancinfox]

Regarding filing of form 990, the IRS instructions state that if your organization makes less that $25,000.00 per year and has assets under a certain amount, then you do not need to file one. Even in the case of the IRS requiring one to be filed, there is a check box that indicates income is under $25,000.00 and no other information but name, address, and EIN is provided. I agree that a unit shouldn't apply for a EIN. I know in my area, banks don't pay interest on checking accounts, so the CO shouldn't have a problem with supplying the EIN for that purpose. Some units tend to place extra monies in savings accounts, I know of one troop that sells platt books every year, and makes 15 to 20 thousand dollars on them. They keep about $20,000.00 back to produce them each year. I think the leaders care more about making the money and not using it for program, which is wrong.

Dancin

[ljnrsu]

As long as you only use the EIN for a bank account you should be ok. As a Tax Accountant I concurr with dancinfox you should not need to file form 990 since you did not file Form 1023 for exempt status under 501©(3).

Some CO's may not want to give out their EIN's for Sales Tax exemption reasons.

IRS Pub 78 Cumulative list of Organizations does list over 100 Packs and Troops that are exempt.