Topic: Taxpayer Identification Numbers (TINs)
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When we open memorial/benefit accounts, we ask that an individual open the account in his or her name. We have an engagement letter that our lawyer drafted several years ago stating that the bank has no duties, responsibilities or obligations other than to accept the deposits and requiring the individual to hold the bank harmless for the consequences of any action or inaction that the bank takes in regard to the account. Is that the correct way to handle these accounts?
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When opening memorial and benefit accounts, we believe it is a best practice to ask the individuals establishing the accounts to obtain separate EINs to avoid a number of potential problems. For example, using a separate EIN with the memorial fund’s name in your account records should help to avoid confusion for IRS reporting and…
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We have some Amish accounts. Our CIP/BSA policy requires that we obtain a copy of the customer’s birth certificate, as well as a letter from the customer’s church bishop. In addition, because the Amish do not have social security numbers, we search OFAC by name. Do you see anything here that will be an issue for the bank?
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Yes, we believe that your current policy presents a compliance issue for your bank. FinCEN customer identification program (CIP) regulations require banks to obtain a tax identification number (TIN) for each U.S. customer before opening an account. The rule includes an exception for customers who have applied for but not yet received a TIN. However,…
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A customer is one of two organizers of an out of state LLC. The papers she provided to us do not contain an employer identification number (EIN). Can she open a business account for the LLC using her own name and social security number, and use a “doing business as” (d/b/a) to include the name of the LLC?
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No, we do not recommend opening a business account for the LLC using the customer’s individual social security number instead of an EIN. The IRS requires an LLC that has employees or that has elected to act as a corporation or partnership to obtain an EIN. In this case, your customer has not indicated that…
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An existing customer wants to open an account for a fundraiser, which will be raising funds for her daughter’s medical treatment. Do we need to her to obtain an EIN for the account?
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No, we are not aware of a requirement to obtain a separate EIN for an informal fundraising account. We do note that it is possible for fundraising accounts to obtain separate EINs, even when the account holder is not incorporated as a not-for-profit corporation. The IRS’ online EIN application expressly states that various informal groups…
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One of our customers would like to open a deposit account for a Miller Trust. How should we set up this account? What should we be tracking?
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When opening any type of deposit account, you should follow your standard deposit account opening procedures, which, in the case of a trust, should include obtaining certain information about the trust and its trustees (and, in some high risk circumstances, also about the trust’s beneficiaries). The IRS requires the taxpayer identification number (TIN) used for…
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A 501(c)(5) organization applied to open a checking account with us. They provided an EIN but did not provide any other documentation for the organization. They apparently are affiliated with a separate 501(c)(3) organization and offered to provide that organization’s articles of incorporation and bylaws. What documentation should we obtain from the 501(c)(5) before opening the account?
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We recommend collecting your customary account opening documentation from the 501(c)(5) organization. We do not recommend accepting documentation from the 501(c)(3) organization. Your bank should collect any documents prescribed by its policies and procedures when opening a non-profit entity account, which may include the 501(c)(5) organization’s articles of incorporation, bylaws, a corporate resolution authorizing the…
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How should we set up ‘benefit’ accounts that are established for the benefit of someone else (such as raising money for a friend’s medical bills)? Should we require that these customers have trusts? What happens if the customer dies and there is a dispute over the account ownership?
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We recommend requesting that the individuals or groups opening these accounts obtain separate EINs for the accounts, rather than using an individual’s social security number. For example, the IRS EIN application expressly states that the following types of groups or organizations may obtain EINs, in addition to trusts: Block/Tenant Associations, Community or Volunteer Groups, Memorial…
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Because a few of our customers have identical TINs (00-0000000) in our online banking system, about two customers were able to view other customers’ online banking accounts, including their names and account numbers. Do we need to notify those customers?
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Yes, both Illinois law and federal guidelines on data breach notifications require you to notify the affected customers. The specifics on the notification requirements are described below (note that nothing in either the Illinois law or federal guidelines prevents you from providing one notice that meets both laws’ requirements). State Law Requirements The situation…
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We have a customer that is a single-member LLC. The only member is a revocable living trust. Can we use the trust EIN for the customer’s account, or does the customer need to obtain a separate EIN for the LLC entity?
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We believe that you should use the trust’s employer identification number (EIN) for the LLC account. The IRS’s Single Member Limited Liability Companies webpage states that a single-member LLC should use the owner’s social security number “for all information returns and reporting related to income tax.” (Note that if the LLC has to file employment…
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In setting up an estate account for a customer who wants to deposit a check payable to a family member’s estate, do we need to obtain an EIN for the estate?
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We believe that your customer would need to obtain an employer identification number, also known as a taxpayer identification number (EIN or TIN), for the estate, even if an estate qualifies as a small estate under Illinois law. Under federal law, the IRS requires that every estate obtain an EIN, no matter the size of…