Setting Up a Bank Account & Legal Structure

To get started with finances your group may want to consider: 1) understanding a non-profit 2) obtaining a tax ID/EIN number; 3) opening a group bank account; 4) learning about financial laws.

Non-Profit Organizations

  1. The purpose of a "Non-profit" organization is to do things other than making money
    1. Non-profit org is not expected to conduct its activities so that it does not have a "profit," (i.e. income that exceeds expenses) – excess income cannot individually benefit officers, directors or members.
    2. You may reimburse members for expenses incurred while conducting MTA business.
    3. Good idea to check with a legal and/or tax professional in your state for more info to determine if you need to make additional filings (if raising larger amounts of $)
    4. “Nonprofit” does to necessarily = “tax exempt.” Becoming exempt from taxes requires considerable work and approval of that status by state tax agencies and the federal IRS.
  2. Not same thing as being a federally recognized nonprofit org. That requires application to the IRS.

Obtaining a Tax ID/EIN Number

  1. Contact the IRS to request Form SS-4: “Application for Employer Identification Number.”
  2. You can order tax forms by phone at 1-800-TAX-FORM (1-800-829-3676).
  3. Or apply online:
  4. IRS does not require you to be incorporated to get a Tax ID Number/EIN.
  5. Fill in the application as a “nonprofit organization.”

Opening a Bank Account

In order for a group to open a bank account as a group entity – not under the name of the treasurer -- the bank will usually require at least four things:
  1. A minimum balance
  2. A copy of the group minutes of your business meeting that includes the name of your organization
  3. A list of all officers of the organization and anyone else who may be a cosigner on the account, including some form of ID such as driver’s license and Social Security Number on each person.
  4. A Tax ID Number/ Employer ID Number for the organization.
 Finances: Alternative to Getting a TIN/EIN for Bank Account
  1. You may use the social security number of a group member as the Tax ID for the group’s bank account.
  2. You may open a checking account (noninterest bearing) under the treasurer’s social security number with a Doing Business As (D/B/A) name on the account (such as “NAME of location- Move to Amend”).
  3. This could have tax implications for the treasurer – depends how much money is raised and spent.

Financial Legalities

Once you get your TIN/EIN, you are responsible for all legal and illegal use of the number. Following certain guidelines will help avoid problems:
  1. Number should not be "loaned" or otherwise used by any other group, or person.
  2. Maintain accurate records and paper trail. Examples may include minutes of business meetings, any changes in officers, and financial records including receipts.
  3. If you change your address after you receive your EIN you must notify the IRS of the new address -- use Form 8822, “Change of Address.”
  4. If the group should ever close, the group officers need to cancel their Tax ID Number/EIN with IRS by written notice when the bank account closes.

Tax Info

  1. MTA groups are "non profit" in their financial behavior but they are not automatically "tax exempt”.
  2. Tax exemption status is expensive/complicated process that involves legal obligations and ongoing responsibility. Can also limit your activities in terms of lobbying or electioneering.
  3. MTA national is our own 5013c and 501c4 status. We will keep our affiliates informed about what this means for you. In the meantime, we do not recommend seeking tax exempt status for individual affiliates.
  4. Once you raise or spend about $5,000 we suggest you consult with a tax professional concerning what state or federal tax requirements apply to your group. We can help you if you have questions.

State Sales Tax

  1. Sale of literature or other items may be trigger responsibility for paying sales tax on those items to your state.
  2. You can give away materials or accept voluntary donations to avoid triggering this requirement. (Offer T-Shirts or other similar materials to donors/members as a thank you gift.)
  3. If in doubt, we encourage you to ask other groups in your community or consult an attorney or tax professional.

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