Topic: Taxpayer Identification Numbers (TINs)
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We found online guidance stating that if an individual works for themself from home, they do not need to obtain an Employer Identification Number (EIN). Is this true of a self-employed individual who is the sole owner and employee of a corporation?
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No, the IRS requires corporations to obtain an EIN, and we are not aware of any exceptions for corporations owned by a sole employee who works from home. We would caution against relying on any guidance found on non-government websites, such as irs-ein-tax-id.com, which is not affiliated with IRS.gov. However, irs-ein-tax-id.com, does note that “[e]ven…
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A prospective customer wants to open an account for their corporation (an Inc.) using their social security number. The customer does not believe they are required to obtain an employer identification number (EIN) since they run the business out of their home and have no employees. Can we open a business account for a corporation using an individual’s social security number instead of an EIN?
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No, we do not recommend opening a business account for a corporation (which presumably will be filing an income tax return) using an individual’s social security number instead of an EIN. The IRS requires corporations to obtain an EIN and to file an income tax return — unless the corporation qualifies as a tax-exempt organization.…
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A customer with a trust account died, and the successor trustee has obtained an EIN and will be opening a new trust account. If the trustee has checks payable to the deceased customer’s estate, can they be deposited into the new trust account?
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Generally, a check made out to an estate should be deposited only into an estate account, and depositing the check into a trust account could result in a breach of the Uniform Commercial Code (UCC) warranties. We do not recommend accepting checks payable to the deceased customer’s estate for deposit into the new trust account,…
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Can an LLC that is 100% owned by a corporation, uses the same federal employer identification number as the corporation, and is considered a disregarded entity for tax purposes use the same demand deposit account as the controlling corporation? The account would be titled in the corporation’s name, with the LLC named as a “doing business as” on the account, and we would allow the customer to deposit items payable to either the LLC or the corporation into the account.
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We believe that a corporation and its wholly-owned subsidiary LLC could operate under the same bank account. However, we do not recommend designating the LLC as a “doing business as” name on the account — which we would view as inaccurate. Instead, we believe it would be accurate to title the account in both the…
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Can an incorporated business operate an account with a limited liability company (LLC) that is a separate entity with its own employer identification number (EIN) as a “doing business as”? The corporation and LLC are run by the same person.
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No, we would not recommend allowing an incorporated business (i.e., a corporation) to operate an account with an LLC that is a separate entity with its own EIN as a “doing business as” account. We believe this arrangement would risk the commingling of funds between separate business entities. Both corporations and LLCs may transact business…
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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…
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A customer with a campaign account under his name and social security number would like to change the account type from “individual” to “non-profit, political organization,” as he now has a non-profit entity with an employer identification number (EIN). The customer currently holds a political office and has a handful of employees, each of whom he would like to be issued a debit card for the account. Are there any Illinois guidelines we must follow for this type of account, and what type of FDIC insurance is available for this type of account?
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We recommend closing the campaign account under the customer’s name and social security number and opening a new account for the non-profit entity using its EIN. We also recommend following your Customer Identification Program (CIP) procedures for non-profit organizations, since your customer’s organization technically is a new customer for your bank. The Illinois Election Code…
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We do not currently provide a copy of a signature card to an account owner or business owner unless they request it. Should we be providing a copy of the signature card at account opening and when any changes are made? Our signature cards contain the information we collect as part of our Customer Identification Program (CIP), including tax identification numbers. Could there be any issues associated with providing this information to all authorized signers on an account?
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We recommend providing signature cards to customers at account opening and when changes are made to the signature card, but this decision does depend on whether your signature cards incorporate contractual language that your customer is agreeing to. We are not aware of any laws or regulations that would require you to provide copies of…
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How should we title a class reunion account? Should it be: “Class Reunion 19XX,” with a second line listing the name of the individual opening the account? Do we need an employer identification number (EIN) for the account?
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We believe that your customer’s class reunion account can be titled either in the name of the individual(s) who own the funds or in the name of an unincorporated association (that is, an organization formed for a noncommercial purpose with deposits separate from those of the members comprising the association). While deposit insurance may…