EIN Assistance - bank account needs

[AnnArborSD]

Hi.  I am the new treasurer of a BSA Scout Troop in Ann Arbor, Michigan (hi everyone!) and looking for some advice on obtaining an EIN for bank account purposes.  It's proved challenging and am hoping someone has pointers for me especially if someone has gone thru this type of situation before.  My goals are: a). to obtain an EIN, and b). avoid having to do annual tax paperwork (we've never done it) but willing to if it's easy and required, and c) above all, follow the law and BSA guidance appropriately. 

Here's my story...

• Our Troop has had their checking account since 1998.  We don't keep much money in the account; a few thousand $ at most and it's also in a non-interest bearing account.
• Recently, when we added my name to the bank account, the bank advised us we needed an EIN (Employee Identification Number) for the bank account and showed surprise that our account has existed at all without an EIN due to the Patriot Act.  I've confirmed from BSA from the "FISCAL POLICIES AND PROCEDURES FOR BSA UNITS" document (dated August 2013) that indeed each Troop/Pack/Unit should have an EIN. 
• Our Troop is chartered by "Friends of... so-and-so" and NOT a non-profit nor does our C.O. have their own EIN.  This I confirmed.  So I cannot use the Tax ID or EIN for our C.O. 
• I then go the route of getting my own EIN for the Troop by applying online for SS-4 at https://sa.www4.irs.gov/modiein/individual/index.jsp but I keep getting rejected with a reference code of 101 online.  For reference, I selected type as 'Community or Volunteer Group' since "these groups generally need an EIN for banking purposes" for "fundraising event, memorial fund, bowling league, or other non-business purpose".  But I keep getting the online rejection of reference code 101.
• Now I call IRS at 800-829-4933 about the reference code 101.  I connect with an agent who advises me she doesn't know why I'm receiving the rejection code 101, but advises I should complete the SS-4 Form manually and send via fax.  I do this.
• About 3 weeks later I receive a letter from IRS advising me I have an EIN.  Yay!  But they tell me in my letter, "When you submitted your application for an EIN, you checked the box indicating you were non-profit organization" and then goes on to tell me about non-profit forms 990, 990-EZ, etc.  I verify my application and I most certainly did not check any box indicating I am a non-profit organization.  I clearly advise "Community or Volunteer Group" only and is needed only for banking purposes.
• So I call IRS again and am told that Boy Scouts of America is non-profit so I should be all set and I should be happy.  I was literally told this!  I argue that the downstream units (my Troop) are not covered under the BSA charter nor Group Exemption and I stress again that all I need is an EIN for our bank account and that I'm NOT non-profit.  To be clear, we're not for-profit, but we certainly aren't recognized as non-profit via 501(c)(3) formalities.  I am told again that Boy Scouts of America is non-profit so I should be all set.  I press again and am advised I should write IRS a letter explaining my situation.

Before I write a letter to IRS, I figured I would check here on the forum...  Any ideas or suggestions?  Has anyone else successfully received an EIN for a Troop/Pack/Unit from the IRS?  Any clue what you may have entered in your fields to successfully get your EIN and not have IRS think you were non-profit?  Any ideas I can tell IRS if I call them again to let me keep my EIN (or give me a new one) by reclassify me NOT as non-profit?  I was thinking that since I received the EIN from IRS maybe I should just run with what I have, but the fact that they think I am non-profit and I don't really plan to do Form 990, etc, that seems misleading and a very bad idea.

Any guidance or help greatly appreciated! 

Edited December 3, 2018 by AnnArborSD
fix typo

[RememberSchiff]

@AnnArborSD welcome to scouter.com

[WonderBoy]

I wish I had an answer to help you, but my Pack has run into a similar problem.

We wanted to sign-up to accept cedit cards for popcorn sales and Pack registration fees. Well... you need a EIN for that. OK, we're sponsored by a local PTO group so we use their's right? But the PTO never registered as a 501(c)3... They just use the school district's number when they need one. Which would be inappropriate and wrong for our Pack to use. So what's the PTO's actual EIN? We haven't been able to dig it up and any paperwork from the last decade only has the last four numbers for security. So I check with our banking institution. What number was used to set up our account? Well our account predates our Chartered Organization's current account by at least eight years and was probably set up using someone's personal Social Security Number. (WAY before the post 9/11 banking changes.)

We want to get things straightened out, but it's not really on our C.O.'s front burner, so to speak, as they have no pressing need to do anything about it. Until then... "Cash or check only, please."

Edited December 3, 2018 by WonderBoy

[Jahaza]

It sounds like your chartered organization needs to sort out their legal status before you can sort out yours. 

[AnnArborSD]

3 minutes ago, Jahaza said:

It sounds like your chartered organization needs to sort out their legal status before you can sort out yours. 

Thanks for the note!  But nothing will change on that front.  Our C.O. as I understand it is a bunch of long ago (but still active) parents who joined together to support and charter the Troop back when schools stopped being direct charting organizations.  I've talked to our C.O.R. (Chartering Organization Representative) about this and they have no intention of getting their own EIN.  They have no bank account nor have they any financial activity whatsoever.

[Jahaza]

Here are instructions on how to explain things to the IRS from the Sam Houston Council that look like they cover (through Plan B) your situation: 

http://www.samhoustonbsa.org/checking-account-instructions

[T2Eagle]

You need to go back to your Chartered Organization and COR and tell them this is their problem as much or more than it's yours.  If BSA doesn't care that you're not a formal corporation that's fine and is up to them, there is no law that compels them to make that a condition of being a Chartered Org.  But there is a law that the owner of a bank account has to have an EIN.  Again, I don't believe you have to be a state sanctioned corporation to get an EIN, but it really needs to be your Chatrtered Org whose EIN you use or else you, the individual, are seen as the owner of that bank account.  They've flown under the radar so far and maybe they can continue to do so by just not changing anything at the bank.  But it's a terrible idea for you personally to be the owner/holder of the EIN.  And it's a dereliction of their responsibilities to not provide the troop with a functioning bank account. 

My advice is to tell them to straighten out their bank account or limit your responsibilities to bookkeeping and have whoever is currently on the account to keep signing the checks.

It's possible your Council could help you with this, but best guess is they'll either give you the same advice or suggest something either more cumbersome like becoming a formal corporation. 

ETA: Jahaza posted while I was typing.  Follow that link it has great instructions, but stand by the idea this is the Chartered Org's EIN not yours.

 

Edited December 3, 2018 by T2Eagle

[MattR]

You should be using your Chartered Organization's EIN number, as your troop is likely not it's own entity. It is also not part of the BSA. It is part of the CO and that's why you use their number. If you create your own EIN number then you'll have to fill out taxes every year as well. And get your own insurance....

[scotteg83]

Everyone keeps saying its up to the charter, but they must have missed the part that says "Our Troop is chartered by "Friends of... so-and-so" and NOT a non-profit nor does our C.O. have their own EIN.  This I confirmed.  So I cannot use the Tax ID or EIN for our C.O."

 

The biggest issue with having a charter being a "friends of ..... group" is exactly this, EIN numbers. 

 

Wish I could help more,  I know our old cubmaster managed to get a EIN number hassle free when, or so she said, but I'm not sure what steps she took, and now we are under a different charter anyway.

[DuctTape]

When you apply, your organization is "Friends of troop xxx". Do NOT reference BSA in the application.

[AnnArborSD]

Thanks to everyone for your comments and assistance.  Wow, what a great community!  So, a follow-up for anybody following along at home or to help someone else searching forums in the future looking for help... 

I called IRS again today, 12/04/2018 (at 800-829-4933) as I wanted to try another tactic.  My goal was to communicate that I did not check "non-profit" organization on my EIN application and I did choose 'Community or Volunteer Group' category and have my EIN Record changed.  @DuctTape had a great point...I think the main problem here is that I put "Boy Scouts of America...." on my application.  I should have just put our "Friends of ..." C.O. there. 

Anyway, the IRS person agreed that "Community or Volunteer Group" is the right category but here's the a-ha moment: she advised me that anytime ‘Community or Volunteer Group’ is used, it is always categorized as non-profit on the EIN.  The ‘Community or Volunteer Group’ is defined as:

And Banking Purposes is defined as:

I asked if someone who has a bank account for a bowling league (for example) and needs an EIN would IRS agree that the bowling league coordinator most certainly is not filing 501(c)(3) nor likely doing anything with Form 990 for tax purposes, etc.  So would there be any penalty or problem if I just ignore all things related to Form 990, non-profit, etc?  IRS agreed!  In fact, they advised that my EIN looks fine as it doesn't show any filing requirement on record.  But, the IRS person did advise I call back in June or July 2019 to again verify that the EIN doesn't have any filing requirement still on record.

So, I think I'm good. Thanks again for all your help!

[AnnArborSD]

17 hours ago, MattR said:

You should be using your Chartered Organization's EIN number, as your troop is likely not it's own entity. It is also not part of the BSA. It is part of the CO and that's why you use their number. If you create your own EIN number then you'll have to fill out taxes every year as well. And get your own insurance....

I just learned (see my post above) that this is not true -if- when someone requests their EIN, they choose the "Community or Volunteer Group" designation, a person/entity does not necessarily have to fill out taxes every year.  Or, at least, that's what the nice IRS Operator advised me (IRS Operator ID #1000270440) when I called today.  Thanks!

[MattR]

Could be that you don't have to fill out taxes but the rest of it's correct.

Who is your CO? Assuming it's a church and that church has a kids group, would you expect them to have their own EIN number? That's the exact situation your troop is in. Unless you don't have a CO, use the CO's EIN number.

[AnnArborSD]

2 minutes ago, MattR said:

Could be that you don't have to fill out taxes but the rest of it's correct.

Who is your CO? Assuming it's a church and that church has a kids group, would you expect them to have their own EIN number? That's the exact situation your troop is in. Unless you don't have a CO, use the CO's EIN number.

Our Troop is chartered by "Friends of... so-and-so" and NOT a non-profit nor does our C.O. have their own EIN.  This I confirmed.  So I cannot use the Tax ID or EIN for our C.O. 

[T2Eagle]

So to be clear, is the EIN in your name, "Troop xx" or "friends of Troop xx"? 

When you say the CO isn't a non profit, all that means is that they're not incorporated.  I understand that they don't have an EIN, but they should.  Either they, whoever "they" are who signs the charter agreement with BSA each year, should be getting this EIN, or you should be putting the EIN in their name.  It may be that there's some confusion in your organization about what a CO is and does.  They own everything the troop owns, including the money in the bank, whether they understand that or like it is irrelevant, that's the way it is.

If this EIN is either yours or belongs to some new thing called Troop xx, you may have solved the practical matter of how to have a checking account.  But it's a bit unkosher and doesn't represent the actual relationship between the troop and the CO, which in your case is that they are one and the same and your business dealings should reflect that.