IBA Compliance Connection

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We have a customer who would like to open an account to fund donations for a relative that has recently passed away. How can such an account be opened under Illinois law? Additionally, what tax ID should the bank use and who should the checks be made payable to?

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We recommend that your bank request that the individual opening the account obtain a separate EIN for the account, rather than using the individual’s social security number. Using a separate EIN with the memorial or benefit fund’s name in your account records should help to avoid confusion for IRS reporting and other purposes. Additionally, checks can then be made payable to the memorial or benefit fund.

Obtaining an EIN is a simple and free process that can be done online. The IRS EIN application expressly states that “Memorial or Scholarship Funds” may obtain EINs among other types of community groups and clubs.

A customer opening a memorial or similar fund should also know that certain charitable activities may trigger requirements to register with the Illinois Attorney General. For example, if a group or individual will be holding more than $4,000 for a charitable purpose, it must register with the Attorney General Charitable Trust Bureau as a charitable trust.

In addition, groups that will be soliciting donations from others must register with the Attorney General Charitable Trust Bureau — but in this situation, an exception may apply. For example, registration is not required for persons requesting contributions “for the relief or benefit of any individual, specified by name at the time of the solicitation, if the contributions collected are turned over to the named beneficiary, first deducting reasonable expenses for costs of banquets, or social gatherings, if any, provided all fund raising functions are carried on by persons who are unpaid, directly or indirectly, for such services.”

For resources related to our guidance, please see:

  • IRS Online EIN Application Assistant (Permitting organizations to apply for EINs as Block/Tenant Associations, Community or Volunteer Groups, Memorial or Scholarship Funds, PTA/PTO or School Organizations, Social or Savings Clubs, Sports Teams and more, under “Additional Types.”)
  • Charitable Trust Act, 760 ILCS 55/6 (“Every trustee subject to this Act who has received property for charitable purposes shall file and register with the Attorney General, within 6 months after any part of the income or principal is received for application to the charitable purpose . . . .”)
  • Charitable Trust Act, 760 ILCS 55/2 (“This Act applies to any and all trustees, as defined in Section 3, holding property of a value in excess of $4,000.”)
  • Charitable Trust Act, 760 ILCS 55/3 (“‘Trustee’ means any person, individual, group of individuals, association, corporation, not-for-profit corporation, estate representative, or other legal entity holding property for or solicited for any charitable purpose. . . .”)
  • Attorney General Charitable Trust Rules, 14 Ill. Adm. Code 480.20(c) (Defining “charitable purposes” as including “without limitation any funds which are to be applied for the benefit of an indefinite number of people to provide them with: (1) Education, (2) The benefit of religion, (3) Relief from poverty, sickness or disease, (4) A means of establishing themselves in life, (5) Public building or recreational activities, or (6) Services which lessen the burden of government.”)
  • Solicitation for Charity Act, 225 ILCS 460/2(a) (“Every charitable organization, except as otherwise provided in Section 3 of this Act, which solicits or intends to solicit contributions from persons in this State or which is located in this State, by any means whatsoever shall, prior to any solicitation, file with the Attorney General upon forms prescribed by him, a registration statement, accompanied by a registration fee of $15, which statement shall include the following certified information: . . . .”)
  • Solicitation for Charity Act, 225 ILCS 460/3(b)(3) (Exception from registration requirement for “persons requesting any contributions for the relief or benefit of any individual, specified by name at the time of the solicitation, if the contributions collected are turned over to the named beneficiary, first deducting reasonable expenses for costs of banquets, or social gatherings, if any, provided all fund raising functions are carried on by persons who are unpaid, directly or indirectly, for such services.”)