Unit Treasurer

[SeattlePioneer]

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Stosh

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A ticked off parent and a lawyer can always find something to complain about. I doubt if complaining about having an EIN is likely to be very high on that list.

 

As I noted, I don't see BSA guidance on this issue, about Scout Accounts or whatever.

 

If BSA adopt a clear rule about such stuff, I'd follow it. Until they do, I'm forging on ahead.

 

 

I have heard ever so many warnings to Scouters about such stuff, but never encountered a unit audited by the IRS over such an issue.

 

There are a universe of things you can worry about if you wish ---- help yourself.

[Stosh]

As oneself the simple question: "Who holds the tax-exempt status in a Boy Scout unit?"

 

"There are a universe of things you can worry about if you wish ---- help yourself." - Yep, I worry about following the scout Oath and Law. Like I said honesty is not mentioned in the Oath and Law, but somehow it gets traction in the BSA and is worth worrying about.

 

Stosh

[fred johnson]

Ya know ... BSA has started publishing more. It's consistent with what I've learned over the years. It's just relatively new that BSA is commenting more on the financial side.

 

Fiscal policies and procedures

http://www.scouting.org/filestore/mission/pdf/Fiscal_Policies_Procedures_BSA_Units.pdf

 

Scout accounts and fundraising

http://www.scouting.org/filestore/financeimpact/pdf/INDIVIDUAL_SCOUT_ACCOUNTS_AND_FUNDRAISING_BY_BSA_UNITS_20140226.pdf

 

Getting an EIN - Purpose - Tax reporting.

http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

 

I'm sure BSA does not provide more because every state is different. The charter org entity greatly affects the tax status. It's just not a simple topic and there is significant liability for doing it wrong.

[fred johnson]

Interesting IRS comment ...

 

Getting an EIN - Purpose - Tax reporting.

http://www.irs.gov/Businesses/Small-...r-(EIN)-Online

 

 

Filing for Tax Exempt Status?

 

It’s best to be sure your organization is formed legally before you apply for an EIN. Nearly all organizations are subject to automatic revocation of their tax-exempt status if they fail to file a required return or notice for three consecutive years. When you apply for an EIN, we presume you’re legally formed and the clock starts running on this three-year period.

[Stosh]

Is this one of those "teaching moments" we hear so much about? Or is it just one of those plain old "Oh $..t" moments?

 

And the really sad thing about it is, it is really easy to do it right. I have done it correctly for every unit I've formed and gee... I've never had a problem.

 

Stosh

[RememberSchiff]

Not all CO's (e.g. fraternal organizations) incorporate and hence have no EIN. Whether this is done legally is between the CO and the state and IRS. For example, as I understand if the fraternal organization had a fundraiser then it would loose its exemption and would be required to have an EIN. Anyway, that's my understanding another $0.02.

[fred johnson]

... thank goodness the IRS takes an understanding approach to smaller groups. ... or at least a hands off because the group is too small approach.

 

If you are not legally structured correctly, you owe taxes when you sell stuff. Popcorn. Wreaths.

[Stosh]

... thank goodness the IRS takes an understanding approach to smaller groups. ... or at least a hands off because the group is too small approach.

 

If you are legally structured correctly, you owe taxes when you sell stuff. Popcorn. Wreaths.

 

Depends on how one is set up as a business entity. For profit, non-profit, LLC, partnership, etc. The only one that can take income without income taxes is a non-profit. As far as sales taxes are concerned, that is an issue each state has set up, and you will need to check your local laws.

 

If not, you are personally liable for fraud, posing as a non-profit organization under a fraudulently acquired EIN.....

 

Just do it correctly and one doesn't need to worry about any of this.

 

Stosh

[fred johnson]

I dropped the "NOT". ... if you are not legally structured correctly ...

[SeattlePioneer]

<<~~If not, you are personally liable for fraud, posing as a non-profit organization under a fraudulently acquired EIN.....

>>

 

 

This sounds like a wild exaggeration. Out of thousands or tens of thousands of Scout units doing what you deplore, do you have an example of an outfit being treated this way?

 

Never heard of that myself, and I suspect the IRS has more important things to do than pick on Cub Scout packs.

 

 

If you want to nitpick all the laws out there, you'd eliminate 95% of Scout units. How many units get food handler permits for adults and Cub Scouts and health department permits before serving up snacks at den meetings?

 

Keep an even strain.

[Stosh]

People can justify away their wrong doings all the time. However if one is going to lead by example remember, one is not leading the IRS, they are leading developing young men. The last thing I want to teach my boys is how to cut corners and get by when someone isn't looking. As a matter of fact that is the definition of character. That which you do when no one is watching. I guess there are varying degrees of how seriously the Law and Oath are taken. None of us are at one end or the other, but there's a pretty wide continuum to pick from.

 

Stosh

[SeattlePioneer]

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Stosh>>

 

 

 

Very piously put.

 

So, do all the Scouts and adults who handle food have food handler permits in your unit and do your obtain health department permits before serving food? Just for openers.

 

Most local health departments have extensive rules so that they can point to violations should any ordinary activity go bad.

 

 

And that applies to the extensive roster of other government organizations as well.

 

<>

 

 

And I again suggest that your comment above is a WILD exageration. You are fear mongering, and that is not acting in a Scout like manner.

 

 

Are you a Certified Public Accountant or have other professional tax accounting experience that justifies you making the claims and assertions you make, or are you simply a layman like I am, expressing your own inexpert opinions?

 

 

Self righteousness is one of the risks of Scouters and you see it rather often on these boards.

 

[Stosh]

<

 

Stosh>>

 

 

 

Very piously put.

 

Nothing wrong with promoting the ideals of Scouting, it's kinda why I'm doing what I'm doing.

 

So, do all the Scouts and adults who handle food have food handler permits in your unit and do your obtain health department permits before serving food? Just for openers.

 

What's this got to do with setting a good example for our boys when it comes to teaching the boys to honor the laws of our country whether we agree with them or not.

 

Most local health departments have extensive rules so that they can point to violations should any ordinary activity go bad.

 

And as long as nothing is offered for sale, one can have all the potlucks they wish without any governmental interference, but If one were to look closely at the health laws most don't apply to these kinds of setting so the food police aren't going to show up at your Blue Gold and haul the CC off in cuffs. A number of years back they tried to step in and regulate church potlucks and such. There was such an uproar the rescinded that effort before it even got off the ground. Never mess with the church ladies.

 

 

And that applies to the extensive roster of other government organizations as well.

 

<>

 

 

And I again suggest that your comment above is a WILD exageration. You are fear mongering, and that is not acting in a Scout like manner.

 

Lying isn't acting in a Scout like manner and setting up a BSA unit with an EIN number has a number of misleading assumptions going on that aren't disclosed to the IRS. Fear mongering? Only if one is in a position to actually feel guilty. Those doing it correctly have nothing to fear no matter what I say.

 

Are you a Certified Public Accountant or have other professional tax accounting experience that justifies you making the claims and assertions you make, or are you simply a layman like I am, expressing your own inexpert opinions?

 

Nope, I read the IRS sections on what to do and what to avoid. By following the IRS directives I didn't need a CPA or other professional tax accounting expert to tell me what the IRS says. Kind of a "from the horse's mouth" thingy.

 

Self righteousness is one of the risks of Scouters and you see it rather often on these boards.

 

Since when is informing people of the correct procedures classified as self righteous? Kinda makes one wonder what the real agenda is here. I don't see it very often but then I don't go looking for it either.

 

Stosh

[CalicoPenn]

Even with the info Fred posted there still seems to be some confusion regarding EIN's and tax exempt status, etc.

 

First, the EIN is NOT evidence of tax exempt status. It is merely an identification number within the IRS of your pack, troop, crew, business, organization, etc. It does not affect your actual tax status, nor does it impose any requirements of reporting. Individuals have a form if EINs as well - we call the Social Security Numbers. SSNs are now issued to infants (I got mine when I was 11 as part of a school project). We don't make infants, or 11 year olds, file taxes because they have SSNs. Banks pretty much require an EIN or SSN in order to open an account.

 

Fred points out an interesting note from the IRS - it should not be read to mean that you have to start filing tax returns within 3 years of receiving an EIN. What it says is if you are thinking of applying for tax-exempt status, it is advantageous to apply for the EIN after receiving the tax-exempt status. If you haven't and file for tax exempt status 2 years later, you now have to start reporting in one year instead of 3. If you file for tax exempt status 6 years after receiving the EIN, you could be required to file for 3 years of past due tax returns, with penalties and all. For most units with an EIN, you will not have to file any forms, provided your receipts are under $50,000 per year. You will only have to file if you also have tax exempt status of your own.

 

Note also the "insubstantial/substantial" language - the IRS has defined 30% as substantial for individual benefit - if you do fundraising shares, that means that if you credit a Scout with $30, it is a substantial amount; and they've defined 2% as insubstantial so if you credit them with $2, it's insubstantial. Does that mean it's ok to credit them $2? No - its still illegal. What the language sets is the thresholds for IRS enforcement. The IRS has determined that 2% of individual benefit is just not worth their enforcement time but that 30% is. The amounts in between? Still to be determined - don't think for a second that they won't enforce at 20% sometime down the road.

 

As for Scout Accounts from scout savings - yes, you can do it - it's been a time-honored tradition of the BSA almost from the beginning - is it a good idea? Are you a bank? Let's remember, life was "simpler" 50 years ago - now, there are a lot more regulations meant to protect consumers in banking transactions. Think about this for a minute or two - if you do happen to run into someone who controls your checking account who is dishonest and is siphoning off troop funds and you should have $5,000 in your account, including $2,000 in Scout Account savings, and you suddenly discover you have $50 and the check writer has "disappeared" (even if you know where to send the police, it still needs to be prosecuted) you have a moral, if not legal, obligation to return the missing "scout account" money to the Scouts. That's why we suggest that the Scouts open their own acount with their bank - their deposits are protected by insurance, and it will earn interest (even if it's just a dime).

[Stosh]

"An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online. This is a free service offered by the Internal Revenue Service and you can get your EIN immediately. You must check with your state to make sure you need a state number or charter." "Filing for Tax Exempt Status?

 

It’s best to be sure your organization is formed legally before you apply for an EIN. Nearly all organizations are subject to automatic revocation of their tax-exempt status if they fail to file a required return or notice for three consecutive years. When you apply for an EIN, we presume you’re legally formed and the clock starts running on this three-year period."

 

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"Taxpayer Identification Numbers (TIN)

 

A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.

 

Taxpayer Identification Numbers

• Social Security Number "SSN"
  
• Employer Identification Number "EIN"
  
• Individual Taxpayer Identification Number "ITIN"
  
• Taxpayer Identification Number for Pending U.S. Adoptions "ATIN"
  
• Preparer Taxpayer Identification Number "PTIN"
  

Note: The temporary IRS Numbers previously assigned are no longer valid."

Not to be too pious or overly arrogant, I just copied the information right off the www.irs.gov site for everyone to use as reference to their own situation.

 

EIN is the legal entity tax identification number, kinda like a Social Security Number for businesses. This is what one is applying for when they apply for an EIN. Well, unless specified they are tax exempt it is just for a regular business that would pay income and sales taxes per the law. On the other hand they can legally form as a not for-profit business. However, I would best that most BSA units have NOT formed as any legal entity and secondly of all NOT formed as a tax-exempt business (not for-profit).

 

So if this be the case, a BSA unit that has applied and gotten an EIN number of their own most likely have done so fraudulently.

 

If parents form a BSA unit because they couldn't find a CO, they had better incorporate a not for-profit organization with the state and pay the appropriate fees and annual fees to maintain that in order to keep their not for-profit status valid. If one does not file the appropriate required return for a not for-profit organization for three years their tax exempt status will be revoked automatically.

 

Yes, churches file an annual form with the IRS to maintain their tax-exempt status. They also file an annual report with the state to maintain their legal entity status as well.

 

And now one knows why I use my CO's EIN when setting up my new Troop's bank account. Not only is it the correct way to do it, it is the easiest!

 

Stosh

 

BTW, I wonder what corporate tax bracket a Cub Pack falls into with $10,000 worth of federal and state taxable income from popcorn sales, less any sales tax due the state? I guess I'll wonder forever on that one because I don't want to be anywhere around if someone comes asking....