Nonprofit Law/Travel Team Checking Account
I coach a girls softball team and want to open a checking account to deposit fundraiser money. Also want to use the account to make purchases for uniforms, team equipment and tournament fees. What do I need to do in order to open a account at a bank? We have not filled anything with the IRS. Just need to know the steps to take to make this as easy as possible. We are non-profit, all money brought in will go toward team expenses.
Each bank has their own procedures, but, at a minimum your group would need to obtain from the IRS a EIN (Employer Identification Number - or Taxpayer Id number) with Form SS-4, which you can do online. Instructions for Form SS-4 are at http://www.irs.gov/pub/irs-pdf/iss4.pdf
and the IRS explains in the right column of page 5 that, when applying for the Employer Identification Number, the club may check a box for `Banking purpose' "if you are requesting an EIN for banking purposes only, and enter the banking purpose (for example, a bowling league for depositing dues or an investment club for
dividend and interest reporting)."
check the line for "banking purposes only" and gives the examples, "a bowling league for depositing dues or an investment club for dividend and interest reporting)." http://www.irs.gov/pub/irs-pdf/iss4.pdf
on page 5 in the right column under the heading "Banking purpose."
Donations will not be deductible, but the fund will not have taxable income if its only income is donations or fees and no profit goes to any insider and it conducts no sales activities to
the public. It would not need to file annual federal tax returns if it is an unincorporated association (while the c7 organizations need to file annually Form 990). The problem with most teams, like yours that has "fundraiser money" is that the word "fundraiser" means, at least, in part, sales activities and those would be taxable unless the team becomes qualified as a 501(c)(3) organization. If you want some details about that let me know.
Narcotics Anonymous World Services advises affiliates who have obtained an EIN for banking purposes only:
--- Start of Excerpt ---
Any NA group that acquires an EIN should consider that the IRS
could at some point in time contact them and request valid
financial activity information. This is one reason that NA groups
will want to maintain detailed records, including treasurer's
records, bank statements, receipts and any other documentation of
their financial activities. We suggest that NA groups maintain
accurate financial records by using the group record worksheets in
the Group Treasurer's Workbook. The worksheets and other above
mentioned records should be kept for at least five years. Care
should be taken when assigning responsibility for storage of the
records, so that they remain available to the group if needed.
---End of Excerpt---
Other examples are given by the IRS for "Banking Purposes"...
"In order to open a bank account to deposit funds from a
fundraising event, memorial fund, bowling league, or other non-
business purpose, the bank may request an EIN be assigned for
Attorney at Law
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.