We recommend requiring an EIN to open a partnership account, since the IRS requires partnerships to obtain an EIN for purposes of filing partnership tax returns. Whether you should require the partnership to present a partnership agreement or other documentation depends on your bank’s customer identification program (CIP), which should specify what documentation you need to open a partnership account.

Although partnerships do not pay income tax, the IRS requires partnerships to file an annual information return known as Form 1065, which must be filed under a partnership’s EIN. As a result, we recommend requiring an EIN to open an account in the name of a partnership.

As to partnership papers, the type of documentation required to form a partnership depends on the type of partnership formed. If this customer is a general partnership, we do not believe that it was required to file partnership papers or other documentation, nor was a written partnership agreement required. In Illinois, a general partnership entity is formed when two or more persons (which could be individuals and businesses) carry on a business for profit as co-owners, and the partnership agreement may be written, oral, or implied — no filing or documentation is required.

However, the partners in a general partnership may wish to limit their liability for the partnership’s debts by forming a “limited partnership” (LP), “limited liability partnership” (LLP) or “limited liability limited partnership” (LLLP). In Illinois, LPs, LLPs, and LLLPs must file a certificate of limited partnership or statement of qualification with the Secretary of State.

Your bank’s CIP must contain procedures for verifying a partnership’s identity and describe when your bank will use documents or non-documentary methods (or both) in the verification process. When relying on documentary evidence, the CIP rules indicate that for a partnership, you should review documents showing the existence of the entity, such as a partnership agreement. We believe that your bank could rely on documentary evidence other than a written partnership agreement, such as the partnership’s assumed name certificate or Form 1065 tax return. If relying on non-documentary evidence, the CIP rules indicate that a bank may independently verify the customer’s identity by using information from a consumer reporting agency, public database, or other source, among other options. Ultimately, whether to require a written partnership agreement to open a partnership account is a business decision for your bank that should be informed by your CIP procedures.

Additionally, you will need to verify the identities of the partnership’s beneficial owners. Under FinCEN’s Customer Due Diligence (CDD) Rule, you must obtain and verify beneficial ownership information at account opening for “legal entity customers,” which are defined to include partnerships (general and limited), ordinarily by obtaining a certification form from the customer listing its beneficial owners. However, the CDD rule does not require you to verify the status of persons identified by a customer as beneficial owners — rather, you “may rely on the information supplied by the legal entity customer regarding the identity of its beneficial owner or owners, provided that [you have] no knowledge of facts that would reasonably call into question the reliability of such information.” Consequently, we do not believe that the CDD rule would require you to obtain a partnership agreement or other documentation from the partnership, other than the required certification form.

Further, we do not believe a written partnership agreement is required for a partnership to register an assumed business name. Under the Assumed Business Name Act, a partnership wishing to conduct business under an assumed name must file a certificate in the office of the county clerk in the county where the partnership intends to conduct business. The certificate must include the assumed business name, the names and addresses of the business owners, and the address(es) where the business is conducted, and the certificate must be published in a local newspaper of general circulation for three consecutive weeks. However, we are not aware of an additional requirement to present a written partnership agreement.

For resources related to our guidance, please see:

• IRS, Tax Information for Partnerships (“A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it ‘passes through’ profits or losses to its partners. Each partner reports their share of the partnership's income or loss on their personal tax return.”)

• IRS.gov, Do You Need an EIN? (“You will need an EIN if you answer ‘Yes’ to any of the following questions. . . . Do you operate your business as a corporation or a partnership?”)

• IRS, Instructions for Form 1065, U.S. Return of Partnership Income (2021), Item D. Employer Identification Number (EIN) (“Show the correct EIN in item D. If the partnership doesn't have an EIN, it must apply for one in one of the following ways.

• Online—Go to IRS.gov/EIN. The EIN is issued immediately once the application information is validated.

• By mailing or faxing Form SS-4, Application for Employer Identification Number.”)

• Uniform Partnership Act, 806 ILCS 206/201(a) (“A partnership is an entity distinct from its partners.”)

• Uniform Partnership Act, 806 ILCS 206/202(a) (“Except as otherwise provided in subsection (b), the association of 2 or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.”)

• Uniform Partnership Act, 806 ILCS 206/101(g) (“‘Partnership agreement’ means the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement.”)

• Uniform Partnership Act, 806 ILCS 206/103(a) (“Except as otherwise provided in subsection (b), relations among the partners and between the partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, this Act governs relations among the partners and between the partners and the partnership.”)

• Uniform Limited Partnership Act, 805 ILCS 215/201(a) (“In order for a limited partnership to be formed, a certificate of limited partnership must be delivered to the Secretary of State for filing.”)

• Uniform Limited Partnership Act, 805 ILCS 215/102(13) (“‘Limited partnership’ . . . means an entity, having one or more general partners and one or more limited partners, which is formed under this Act by two or more persons or becomes subject to this Act under Article 11 or Section 1206(a) or (b). The term includes a limited liability limited partnership.”)

• Uniform Limited Partnership Act, 805 ILCS 215/102(11) (“‘Limited liability limited partnership’ . . . means a limited partnership whose certificate of limited partnership states that the limited partnership is a limited liability limited partnership.”)

• Uniform Partnership Act, 806 ILCS 206/101(e) (“‘Limited liability partnership’ means a partnership that has filed a statement of qualification under Section 1001 and does not have a similar statement in effect in any other jurisdiction.”)

• CIP Rules, 31 CFR 1020.220(a)(2)(ii) (“Customer verification. The CIP must contain procedures for verifying the identity of the customer, using information obtained in accordance with paragraph (a)(2)(i) of this section, within a reasonable time after the account is opened. The procedures must describe when the bank will use documents, non-documentary methods, or a combination of both methods as described in this paragraph (a)(2)(ii).”)

• CIP Rules, 31 CFR 1020.220(a)(2)(ii)(A)(2) (“For a bank relying on documents, the CIP must contain procedures that set forth the documents that the bank will use. These documents may include: . . . (2) For a person other than an individual (such as a corporation, partnership, or trust), documents showing the existence of the entity, such as certified articles of incorporation, a government-issued business license, a partnership agreement, or trust instrument.”)

• CIP Rules, 31 CFR 1020.220(a)(2)(ii)(B) (“For a bank relying on non-documentary methods, the CIP must contain procedures that describe the non-documentary methods the bank will use.

(1) These methods may include contacting a customer; independently verifying the customer's identity through the comparison of information provided by the customer with information obtained from a consumer reporting agency, public database, or other source; checking references with other financial institutions; and obtaining a financial statement.

(2) The bank’s non-documentary procedures must address situations where an individual is unable to present an unexpired government-issued identification document that bears a photograph or similar safeguard; the bank is not familiar with the documents presented; the account is opened without obtaining documents; the customer opens the account without appearing in person at the bank; and where the bank is otherwise presented with circumstances that increase the risk that the bank will be unable to verify the true identity of a customer through documents.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(b) (“With respect to legal entity customers, the covered financial institution’s customer due diligence procedures shall enable the institution to:

(1) Identify the beneficial owner(s) of each legal entity customer at the time a new account is opened, unless the customer is otherwise excluded pursuant to paragraph (e) of this section or the account is exempted pursuant to paragraph (h) of this section. . . . and

(2) Verify the identity of each beneficial owner identified to the covered financial institution, according to risk-based procedures to the extent reasonable and practicable. At a minimum, these procedures must contain the elements required for verifying the identity of customers that are individuals under § 1020.220(a)(2) of this chapter (for banks) . . . provided, that in the case of documentary verification, the financial institution may use photocopies or other reproductions of the documents listed in paragraph (a)(2)(ii)(A)(1) of § 1020.220 of this chapter (for banks) . . . A covered financial institution may rely on the information supplied by the legal entity customer regarding the identity of its beneficial owner or owners, provided that it has no knowledge of facts that would reasonably call into question the reliability of such information.”)

• FinCEN Customer Due Diligence Rule, 31 CFR 1010.230(e)(1) (“Legal entity customer means a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction that opens an account.”)

• FinCEN Final Rule, Customer Due Diligence Requirements for Financial Institutions, 81 Fed. Reg. 29397, 29412 (May 11, 2016) (“Thus, for the purposes of the final rule, we state that a legal entity customer means a corporation, limited liability company, or other entity that is created by the filing of a public document with a Secretary of State or similar office, a general partnership, and any similar entity formed under the laws of a foreign jurisdiction, that opens an account. This means that ‘legal entity customer’ would include, in addition to corporations and limited liability companies, limited partnerships, business trusts that are created by a filing with a state office, any other entity created in this manner, and general partnerships.”)

• Assumed Business Name Act, 805 ILCS 405/1 (“No person or persons shall conduct or transact business in this State under an assumed name, or under any designation, name or style, corporate or otherwise, other than the real name or names of the individual or individuals conducting or transacting such business, unless such person or persons shall file in the office of the County Clerk of the County in which such person or persons conduct or transact or intend to conduct or transact such business, a certificate setting forth the name under which the business is, or is to be, conducted or transacted, and the true or real full name or names of the person or persons owning, conducting or transacting the same, with the post office address or addresses of such person or persons and every address where such business is, or is to be, conducted or transacted in the county. The certificate shall be executed and duly acknowledged by the person or persons so conducting or intending to conduct the business.

    Notice of the filing of such certificate shall be published in a newspaper of general circulation
    published within the county in which the certificate is filed. Such notice shall be published
    once a week for 3 consecutive weeks. The first publication shall be within 15 days after the
    certificate is filed in the office of the County Clerk. Proof of publication shall be filed with the
    County Clerk within 50 days from the date of filing the certificate.”)

• Assumed Business Name Act, 805 ILCS 405/4 (“This Act shall in no way affect or apply to any corporation, limited liability company, limited partnership, or limited liability partnership duly organized under the laws of this State, or any corporation, limited liability company, limited partnership, or limited liability partnership organized under the laws of any other State and lawfully doing business in this State, nor shall this Act be deemed or construed to prevent the lawful use of a partnership name or designation, provided that such partnership shall include the true, real name of such person or persons transacting said business or partnership nor shall it be construed as in any way affecting subdivision (a)(8) or subsection (c) of Section 17-2 of the Criminal Code of 2012.”)