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Any entity 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 groups will want to maintain detailed records, including treasurer's
records, bank statements, receipts and any other documentation of their financial activities. The records should be kept for at
least 3 years. Care should be taken when assigning responsibility for storage of the records, so that they remain available to the
group if needed. Certainly if the group takes in less than $5000 in a year the IRS would not be concerned, but if the annual
amount is much greater then the IRS would more likely become concerned, even if it registered with the IRS by obtaining a EIN
number "only for banking purposes".
www.irs.gov/pub/irs-pdf/p4221pc.pdf, page 24.
QUESTION: In regards to the above, could we go along without asking for the determination letter - and without incurring the fee - and just get an EIN for banking purposes? And just keep all the appropriate records and club documents?
Is there a downside to skipping the formal documentation from the IRS? All of our members understand that each member participates in any activities as an individual and that our responsibilities to them is limited to that year's dues.
Answer
Yes, you can avoid filing for the determination letter as long as you do not have any income other than from dues. The main downside to not having a "determination letter" is that potential members may think the organization is not set up correctly.
Reply provided by Harvey Mechanic
Attorney-at-Law
For more answers to nonprofit questions by Harvey Mechanic >>>>>Click Here
www.irs.gov/pub/irs-pdf/p4221pc.pdf, page 24.
QUESTION: In regards to the above, could we go along without asking for the determination letter - and without incurring the fee - and just get an EIN for banking purposes? And just keep all the appropriate records and club documents?
Is there a downside to skipping the formal documentation from the IRS? All of our members understand that each member participates in any activities as an individual and that our responsibilities to them is limited to that year's dues.
Answer
Yes, you can avoid filing for the determination letter as long as you do not have any income other than from dues. The main downside to not having a "determination letter" is that potential members may think the organization is not set up correctly.
Reply provided by Harvey Mechanic
Attorney-at-Law
For more answers to nonprofit questions by Harvey Mechanic >>>>>Click Here
