At the June 1, 2014 assembly, Stephen S., Area Chair, Panel 63 (2013-14), presented on the topic “Opening a Checking Account.”
Opening a checking account in the name of a group, district or standing committee is no longer a straight forward process. Federal regulations now require groups to supply an “ID number” before they can open a checking account. Area 53’s DCM Committee has expressed confusion and frustration over how to obtain an acceptable number, and requested that an Information Session on the subject be presented at an Area Assembly. Because there has been a range of group experiences trying to open checking accounts, we decided to add a Sharing Session once the information has been presented.
What is Not Necessary
One factor that confuses the issue is the belief that a group needs tax-exempt status before it can get a checking account. Tax-exempt status is neither necessary nor desirable. First, an AA group is not a legal organization, it is “a group of alcoholics gathered together for sobriety” that has no other affiliation. A group has no by-laws, board, or officers – all of which are addressed in the non-profit application. Second, obtaining tax-exempt status is a costly and time-consuming process. When Area 53 obtained its “501(c)3” status, it cost $850, took nearly a year, and required the efforts of both a lawyer and a CPA, who donated their time. Third, organizations with tax-exempt status have tax-filing and other legal obligations which few groups could comply with.
What is Not a Solution
Both GSO and Area 53 General Service have tax-exempt status. Here’s GSO’s answer to the question of whether a group can use their ID number: “No local AA organization can use the tax-exempt status or identification number of the General Service Board of Alcoholics Anonymous, Inc., since each entity is autonomous in financial matters, as in all other ways.” (“AA Guidelines on Finance”). This statement applies to Area 53 as well.
What is Necessary
Each group or district must obtain its own federal identification number. Here’s how the “AA Guidelines on Finance” answers the question about how to obtain a tax number. “There is a relatively simple way – the first step is to obtain a ‘Federal ID Number.’ Each group must obtain its number by filing form SS-4, ‘Application for Employer Identification Number.’ To obtain the form, call your local IRS office listed in the phone book. You can access the IRS Web site and download the form at www.irs.gov.”
The IRS publication on “How to Apply for an EIN” states: “The Internet EIN application is the preferred method for customers to apply for and obtain an EIN. Once the application is completed, the information is validated during the online session, and an EIN is issued immediately.”
Some considerations for filing out the form:
• Items 2, 3, 6, and 11-17 do not have to be filled out, as long as you are only obtaining an EIN for banking purposes only.
• Item 1: The name you use will be the name that the bank uses. It is the name that is going to appear on the checks. Keep in mind the issue of anonymity.
• Items 4-5: You must have a mailing address for the group. You can use a group member’s address or the group may want to obtain a PO Box.
• Item 7: The IRS publication describes the “responsible party” as: “the individual or entity that controls, manages, or directs the entity and the disposition of the entity’s funds and assets.” Someone’s name and SSN have to be listed.
• Item 8a: The answer is “no.”
• Item 9a: The answer is “Other.” Some groups have simply specified the other as “Alcoholic Anonymous group.” Others have used descriptions like “recovery fellowship.”
• Item 10: The answer is “Banking purposes.” You have to specify a purpose for the bank account. It should be consistent with your answer to Item 9a.
• Item 18: The answer should be “no.” If the group previously received an EIN, you should be using it.
A Few Considerations to Keep in Mind
If you ask to open a “business account,” the bank is going to ask you for an Ohio business license issued by the Secretary of State. This costs $125 and involves certain legal obligations to the State of Ohio. And business accounts almost always have fees attached to them.
Again, an AA group is not a business or a non-profit legal entity. Most banks have a category of personal checking accounts that one bank described as an “unincorporated non-business association account,” that are used for groups like the Boy Scouts and the Girl Scouts. They have minimal or no fees.
You might have to shop banks to find one that will “keep it simple.” Some banks are better organized to handle our kind of account. If you seem to run into a roadblock, try another bank. It won’t take long to find one that will cooperate.
Another point: even with an EIN, individual names and SSNs of the signatories are going to be required. Background checks will be run to determine if the signatories owe other banks or have a record of bank fraud.
Finally, some banks may still ask for a charter or by-laws to recognize your group as a qualifying organization. The short-form of the traditions been used by some groups in the past.
So, in theory, that’s it. Obtain an EIN and go to a bank to open a personal account in the name of the organization that is listed on the EIN. Good luck!