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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28093
Experience:  Taxes, Immigration, Labor Relations
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my quilting group is non profit (not registered with the state

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my quilting group is non profit (not registered with the state or fed. govt) yet we have been notified that we have a CD in the amount of $16,000. What do we need to do to stay "legal" with the govt.s tax wise?

LEV :

Hi and welcome to Just Answer!
If the group is not registered - which name and tax ID are used for that CD account?

Customer:

Cd is now being held in the name of a registered, not for profit society to which we are loosely affiliated.

LEV :

If CD is in the name of a physical person - the interets credited on that CD will be reported to the IRS for that person (and his/her SSN) and that person will need to include that income into his/her tax return.
That person should receive the form 1099-INT reporting the interest income.

Customer:

The entity is a registered non-profit corporation. What would my quilting group have to do to transfer the funds in that CD into our group name without tax consequences to our group? My group is not incorporated and is not tax exempt?

LEV :

If your group is not incorporated - what is a legal definition of your group? If that a partnership?
Your wrote "our group name" - how the group name is registered?
Also I am still not completely clear who owns that CD?

Customer:

Legler quilters is a group of old ladies who quilt for individuals. Not a partnership or anything registered. The CD is in the name of a local historical society. The quilters quilt in a building owned by the historical society and are a "living exhibit" there. The society is a not-for-profit organization and they are holding the cd on behalf of the quilting group.

LEV :

If a group of individuals act jointly - the group is treated as a partnership regardless if it has any official registration or not.
A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
The local historical society may not hold funds fro another organization and earn interest on these funds. That will be a violation of their By Laws and may jeopardize their non-for-profit status.
Funds that belongs to the local historical society may bay be used only according to its documents and generally may not be transferred to third party.
A charitable organization must make available for public inspection its approved application for recognition of exemption with all supporting documents and its last three annual information returns. The organization must provide copies of these documents upon request without charge (other than a reasonable fee for reproduction and copying costs). Penalties are provided for failure to comply with these requirements.

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