115-Year-Old Club Bumps Up Against Modern America

The Winona Literary Club was formed in 1903 and has met continuously since then. The checking account being used was at least 20 years old. The checks even had the original name of the bank rather than the current name when two banks merged. For the small amount of checks written each year to meet expenses out of the dues, it worked fine. Then the bank decided an account with a low balance should pay $7 a month as a fee. Considering the club only had around $600-$700 total after the dues were collected, and that money was disbursed on a regular basis, $70 or more a year in fees was a sizeable expense.

The change to another bank should have been researched before closing the account. However, the newly-elected treasurer took it upon herself to have the former treasurer close the account. No discussion in the club or among the officers. She had asked at her personal bank and found an option with no fees. She thought she was doing a good thing. I have to admit I had no idea how complicated the process of setting up a checking account for an organization would be.

Last Friday around noon I (the president) received a frantic phone call from the new treasurer. When she went to deposit the check and set up a new checking account, she was asked for all kinds of documents. A certificate of good standing, a certificate of legal existence, etc. The club has no such documents. She made an appointment for the afternoon so I could go with her. I found out that besides those documents, the federal government required the bank to ask for an EIN (Employer Identification Number). Between the phone call and the appointment, I started researching what was needed to set up a club checking account. I saw the EIN mentioned and explained, so I can't say I was surprised when it came up.

I had also started finding via the internet other banks that set up checking for community organizations and clubs. Yesterday I visited two banks. Neither required certificates but they did require the EIN. No way around that unless we had an individual willing to use their personal account for club business. Establishing the EIN had the benefit of removing liability for lawsuits or court claims from the individual officers and members. We certainly didn't want to put any of our members at financial risk.

This morning the treasurer and I went to a bank that required no certificates. Yesterday online at the IRS I had set up an EIN. The automated process does have a category for non-businesses such as religious or community clubs. The catch was that a "responsible person" (me) had to provide personal information including SSN. I wasn't very comfortable with that, but it had to be done. We now live in a post-2001 United States that requires even a piddly club of senior-aged women to jump through hoops if they want checking. We have to be vetted that we aren't laundering money or pushing drugs or supporting terrorist groups. 

 Part of the online form asked for the date of founding. When I typed in 1903, I immediately got a pop-up message telling me the date could not be earlier than 25 years from the current date. The other option was to type in the date when I "acquired" the business/organization. I didn't acquire anything other than the position of president, but I typed in May 2018. Everything was sympatico. I was pretty sure that by applying for this EIN, I or the club was going to have to file paperwork every year. I had no idea!

The last part of the application process after submitting the information was the appearance of a letter from the IRS to print and to give to the bank. Several paragraphs in that letter informed me of IRS form this, and IRS form that, to be filed next year. If I wanted to be tax-exempt, I needed to apply with the IRS. We as a club have a tax-exempt number that hasn't been used in a decade. The number was handed down year after year, but if there ever was supporting documentation, nobody knows where it is. The Indiana DOR states that this kind of number never expires. We are out of compliance probably since it too required registering or filing something regularly with the state. Also, in the olden days, the state issued the number; now an entity has to apply and register with the 
IRS which issues a number that one subsequently registers with the state. There is a hotline to call about tax-exempt questions on the Indiana DOR, but at this point I am worn out. Maybe I will explore later.

I haven't read the instructions for 990-EZ, so it is possible with our only revenue being dues and a donation collection for the Salvation Army, and small fund amount, that we do not have to file.

The other option to explore is that though an EIN never expires, the ability to use it expires with 3 years of non-compliance in filing. We could let it expire and then later "renew" it if we needed to change banks again. 

It would have been easiest to pay the $7 per month. Too late to go back. A Pandora's box has been opened. I definitely will need to do more research before next spring. It hasn't been a restful summer even though the club is on hiatus June, July, and August.