Nonprofit Law/Youth Sports Team
Our youth sports team is starting fundraising efforts to help with items such as equipment, registration fees, scholarships for financial hardships, etc. I have been asked to head this up and would need to open a bank account to do so. The bank requires an EIN # for the sports team. This is just a team of 24 youth boys. There is no legal structure for this team. Do I need to file any other paperwork with IRS or be aware of any other tax implications to the team or myself? Is there a $$ amount that would trigger any kind of legal paperwork?
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)."
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.
Narcotics Anonymous World Services advises affiliates who have
obtained an EIN (Employer Identification Number, also known as the
taxpayer identification number) 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
If by "fundraising" you are referring to sales of goods or services and you don't want those profits to be taxable or if you want donors to be able to deduct donations you would need to establish a charitable trust, incorporate under a state's nonprofit corporation law, or set up an unincorporated nonprofit association. Your organizing document would need to state that it is organizing under Internal Revenue Code Section 501(c)(3) and have other required clauses. The IRS highly prefers that you would have at least 3 directors, with control of the board not in persons related by blood, marriage or
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.