Topic: Taxpayer Identification Numbers (TINs)
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The son of a deceased customer presented us with a will listing him as the executor of the customer’s estate along with a tax ID number for the estate. However, the will does not appear to have been filed with the court, and the son does not have letters of office appointing him as executor. We declined to open an estate account since we generally require letters of office or a small estate affidavit. The son (who is an existing customer) was very upset by our decision and said he does not want to spend money on an attorney. However, we are unsure what to make of the fact that he was able to obtain a tax ID number for the estate. Wouldn’t an estate have to be opened for a tax ID number to be issued to the estate?
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No, an estate would not necessarily need to be opened with the probate court for a tax ID number to be assigned. The IRS Employer Identification Number (EIN) application provides for persons administering an estate to obtain an EIN and does not require proof that they have opened an estate with a probate court. Although…
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We have a client that would like to open an account for a ballot initiative committee using the committee treasurer’s social security number (SSN). Are ballot initiative committees required to obtain EINs, or can we allow the client to set up the account using an individual’s SSN? The IRS website does not have specific guidance on whether ballot infinitive committees have tax exempt status or whether they must obtain an EIN.
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We believe an Illinois ballot initiative committee or “ballot measure committee” should obtain an employer identification number (EIN) to open a bank account and must do so to qualify for tax exempt status. The IRS has stated in a Continuing Professional Education Article that “a ballot measure committee cannot qualify to be treated under the…
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A community of Mennonite people moved to our area from another state. Select members of the community have driver’s licenses, but not all, and we are having difficulty verifying addresses — particularly for women who do not have driver’s licenses and are not listed on utility bills. What are the best CIP practices for this community?
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A bank’s Customer Identification Program (CIP) “must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable.” Consequently, we recommend reviewing your CIP to determine whether you could accept non-documentary methods of verifying the identities of customers who lack common forms of identification. At a minimum, your CIP must…
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We have a certificate of deposit (CD) held by a grantor trust (our bank is not serving as trustee). When the account was set up, we used the grantor/customer’s social security number. The trust recently was amended to replace the original trustee (the grantor/customer) with his daughter as trustee. The daughter wants us to retitle the account and does not want to obtain an EIN for the trust. Can we retitle a trust account without obtaining an EIN?
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Yes, we believe that your bank may retitle this trust account without requiring an employer identification number (EIN), provided that the trust will continue to file an individual tax return (Form 1040) using the grantor’s social security number (SSN). Generally, the IRS does not require a trust to obtain an EIN if it is a…
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One of our customers sold its business. The CPA advised the buyer (which is keeping the business account at our bank) to retain its EIN but change the corporate name. We have obtained amended articles of incorporation, letters sent to the IRS regarding the name change using the same EIN, and an Illinois Secretary of State filing for the amended business name. We don’t have confirmation from the IRS. Should we obtain any additional documents from the customer?
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We recommend treating the account as a new business account and documenting the business’ new ownership and name by collecting any documents prescribed by your policies and procedures when opening a new business account. This may include the business’ articles of incorporation, bylaws, a corporate resolution authorizing the organization to open an account, etc. The…
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For our Fannie Mae loans, we place property insurance claim proceeds being held for future repairs in custodial accounts under our bank’s TIN (to avoid issues with the accounts showing up under the borrower’s TIN for data match and subpoena searches). We recently discovered that the Fannie Mae Servicing Guide requires us to pay interest on these funds, so we will have to move them into interest-bearing accounts. How can we properly report the interest earned on these accounts without making the funds susceptible to a levy or garnishment?
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As you noted, the Fannie Mae Servicing Guide requires servicers to place insurance loss proceeds that have not been disbursed to the borrower (or a contractor) in interest-bearing custodial accounts. We agree that you should continue to use the bank’s TIN on these accounts, in order to indicate they are custodial accounts that are shielded…
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We have several questions about completing a “Notice to Buyer of Security Interest in Farm Products” form. Should we use a social security number or EIN as the taxpayer identification number, and should we enter most of that number as Xs? When describing the property, can we enter “all crops” or “all property”? Can the amount of the covered products be listed as “unlimited”? Should we refile this document annually?
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To ensure that the grain sale proceeds are made payable to your bank, you should follow the disclosure procedures in the Food Security Act and the Illinois UCC for this notice. Both federal and Illinois law requires lenders to provide a statutory notice to buyers of farm products in order to preserve their liens on…
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Some of our customers have a Matricula Consulate card issued by Mexico and an Individual Taxpayer Identification Number (ITIN) issued by the IRS. Should we have them sign the W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting) or W-9 (Request for Taxpayer Identification Number and Certification)? What about a customer who presents a Matricula Consulate card but does not have an ITIN?
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We recommend using the W-9 form for customers who are resident aliens and the W-8BEN form for nonresident aliens. The W-9 form itself states that it may be used by a U.S. citizen “or other U.S. person.” A “U.S. person” includes “an individual who is a U.S. citizen or U.S. resident alien.” On the other…
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We have a large business customer (ABC Group) that would like to open non-interest bearing escrow accounts for its clients without giving us the clients’ W-9 forms. Can we do that? If so, should we use the customer’s tax identification number (TIN) to open the accounts and title the accounts as ABC Group, agent for John Doe Client? Can the customer sign one master signature card for all the escrow accounts?
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Yes, we believe you may open the escrow accounts without requiring the TIN of your customer’s clients. The Customer Identification Program (CIP) rules require the customer’s TIN. Through interagency guidance, the federal banking regulators have clarified that the person establishing the escrow account is the customer for CIP purposes. Consequently, we believe it is appropriate…