more banking questions

[Beavah]

I am sure an attorney would know the issues. It just sounds funny having a non-profit entity that is part of another non-profit charter organization. 

 

Yah, what do yeh think BSA councils are, eh?

[Krampus]

Yah, what do yeh think BSA councils are, eh?

 

A bit different I think @@Beavah. As a 501 ©(3) association, BSA is the parent association to which councils belong. They too are non-profits, much like the AMA is the head medical association to which all their state associations belong...each being also a non-profit.

 

HOWEVER -- and this is where my knowledge gets foggy -- AMA does not "charter" sub-organizations to belong to their state organizations, like units are part of BSA. That's where things get funky I think.

[Beavah]

Yah, hmmm....   I reckon this is what folks are talkin' about when they complain about too much regulation, eh?   The money-launderin' and other rules are muckin' up a lot of industries at the moment.

 

Seems like what you're stickin' on is the bank's requirement that da federal EIN name match a state registry name of some sort.

 

Many states allow yeh to register unincorporated NFP associations with da Secretary of State for that state. This is typically free or very low-cost, and usually not as involved as incorporating.  Then yeh get the EIN for the Association, but yeh still list the parish on the EIN as described.  I reckon this would be the easiest way to get yeh around the last hurdle.

 

Thanks for bringin' this to our attention, eh?  Most existin' units aren't runnin' into it, but now I'm curious about how this is playin' out.  Yeh might also try a different (smaller, more local) bank, too.  Sometimes da big corporate banks have idiot global "rules" that don't take into account all da nuances.

 

Anyone have contacts with da National Catholic Committee on Scoutin' who can raise the issue with them?   Might be easier for folks if there were some guidance local parishes could use.

 

Beavah

Edited May 13, 2016 by Beavah

[Beavah]

A bit different I think @@Beavah. As a 501 ©(3) association, BSA is the parent association to which councils belong. They too are non-profits, much like the AMA is the head medical association to which all their state associations belong...each being also a non-profit.

 

HOWEVER -- and this is where my knowledge gets foggy -- AMA does not "charter" sub-organizations to belong to their state organizations, like units are part of BSA. That's where things get funky I think.

 

Nah, no different, eh?   Local council corporations are incorporated in their own state, and also have IRS 501©(3) determinations.   Da BSA charters councils to service local scouting programs the same way councils charter organizations to run local units.  A chartered organization can authorize another corporation to administer its scoutin' program, too.   Just not sure why that makes any sense when all yeh want is a bank account.     What's more common is to have a separate corporation hold major assets to protect 'em from greedy COs and Councils.

 

In da case of Associations like da AMA, yeh see all different kinds of permutations, eh?  Includin' just not bein' incorporated at all and remainin' an unincorporated association.  Like da ABA.  

[T2Eagle]

So the Friends Of org is not associated with the church or Scouting? It's it's own entity with bylaws and charter? So they control the funds and gear of a troop and loan it to them to use? The troop, chartered by the church, essentially has no assets? They borrow from the Friends Of org?

Yes, although usually the "Friends of" corp only owns one asset, or more accurately one physical asset and some cash.  The one I'm familiar with, not my unit, owns a bus because they wanted a bus but their CO didn't want to own a bus.  Other than that the troop works just like every other troop, they have tents , gear, a bank account, etc., all of which would still be considered owned by the CO.

 

Beav mentioned a Sea Scout unit owning a boat.  I can see wanting to keep ownership of that out of the CO/BSA control so that it doesn't become either the council's yacht or the way to plug this year's budget hole.

[seldon]

If your situation is the same as blw I think it's important to remember what it is you're trying to achieve.  All you want is a bank account.  It's been a while since I had to do this so I'm not completely familiar with all the ins and outs today.  But likely a bank needs to have an EIN, (an employer identification number) or some other tax ID number, for every account it has.  You don't need to be a legal corporation to get an EIN, you do need to disclose "the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,†controls, manages, or directs the applicant entity and the disposition of its funds and assets."

 

​The Byzantium that Beav describes is that someone from the troop applies for an EIN listing the parish or higher EIN as the responsible party.  This works because then any reports that might be generated, like a 1099 INT for interest earned, will be reported on the troop EIN and not the parish's so there are no surprises for the parish.  None of this changes the legal relationship between the unit and the CO, nor does it have anything to do with determining the non profit or tax status of either the unit or CO.  It really is only about an ID number.

 

The most important thing to remember is not to trust free advice from anyone on the internet about anything.

 

The fact that it has been a while since you have opened a business account is where the confusion is coming from. It used to be that you could walk into a bank and get an account in the name of your club. Now we can't even get in the door without an EIN and my first born as collateral. Also, the IRS is after community groups, not just for money laundering or tax evasion, but for political activities that they don't like.

 

If you can use your CO's EIN either to open an account or to list as the responsible party on the SS-4, that's fantastic. But what if you can't get it, or have it and don't have permission to use it? Do you fold the troop? That seems excessive, considering that the charter agreement doesn't mandate that the CO handle unit finances.

 

My tip about 501c4 status is information that you can verify by reading IRS instructions, not advice to pursue it.

[seldon]

well I'm certainly no lawyer, CPA, or financial guru

I'm an engineer, so only looking at what makes sense logically, and trying to wade through this....

Even though it's all non-official internet advice, i really appreciate the help in thinking it all through!

this is what I was thinking it was..... that I would only only be getting a number, and EIN.....not getting a non-profit status or a corporation of any kind.  That's teh way it seems to read.  Am I wrong?

 

It seems a relatively easy process to change the address or administrator's name on this EIN down the road once I move along....

right?

 

This is what they get for putting an engineer in charge of the finances, right? That's what I tell the committee. So far no one has volunteered to take over.

 

My understanding is that when you use the EIN to open a bank account you are declaring that some entity is responsible for it and any reporting that is required. That entity can either be a person, a partnership, or a corporation. If it is a person or partnership then everyone with their name on it may have to add a few extra pages to their 1040s.

[blw2]

applogies if there is some bad typing here.... just had lasik eye surgery done today, and computimng with sunglasses on  

.....wow, lots of great help here.  Thanks to everyone!

guess I probably need to consult a tax lawayer... ugh, just seems like this is an area that the local BSA council should be able to help with though, instead of my reinvining teh wheel...

 

Seldon, seem like your situation has been different.  Are you also a catholic ahrter?  What stage of this game are you at?  od you have an account yet?

[seldon]

applogies if there is some bad typing here.... just had lasik eye surgery done today, and computimng with sunglasses on

.....wow, lots of great help here.  Thanks to everyone!

guess I probably need to consult a tax lawayer... ugh, just seems like this is an area that the local BSA council should be able to help with though, instead of my reinvining teh wheel...

 

Seldon, seem like your situation has been different.  Are you also a catholic ahrter?  What stage of this game are you at?  od you have an account yet?

 

We are chartered by a secular service organization.

 

We do not yet have an account. Spent some time exploring all the options. Now we're crossing the t's and getting professional advice where we can.