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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29800
Experience:  Taxes, Immigration, Labor Relations
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Does a group with an ein purposes only that generates a

Customer Question

Does a group with an ein for banking purposes only that generates a profit have to file a tax return? No exempt status exists.
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
A "group" should have a classification for tax purposes.
I assume that it is classified as a partnership?
But if you provide additional information regarding the tax status - we would be able to determine filing responsibilities.
Customer: replied 2 years ago.
Just a casual group of people collecting more for lunches than the actual cost that generates a profit year after year.
Expert:  Lev replied 2 years ago.
When you applied for EIN - you identified the tax classification for the entity - as that is a separate legal entity?
There is no such classification as "group for casual lunches" - so the question - what did you select on that application?
I may only guess that you selected a partnership...
Customer: replied 2 years ago.
The SS-4 was completed we checked the box for banking purposes only.
Expert:  Lev replied 2 years ago.
The question is NOT about the purpose of your EIN application - but about HOW your entity is classified for tax purposes.
When EIN is assigned - it is assigned to specific entity - correct?
So that entity - which you characterized as a "group" - should have a specific tax classification.
On form SS4 - that is identified on line 9.
So - my question is - what type of entity did you select?
That will determine filing requirements and tax liability.
Customer: replied 2 years ago.
Other Specified: networking group
Customer: replied 2 years ago.
EIN established 2007. We have no copy of the SS-4.
Customer: replied 2 years ago.
There is no legal entity. no owners, no officers. We are a group of individuals who meet for lunch and pass businesses. There has to be an answer to the tax-ability question because we are not unique.
Expert:  Lev replied 2 years ago.
Indeed - there is a legal entity - and the EIN was assigned to THAT entity.
I understand that that entity was formed by a group of individuals - and these individuals own the entity.
Form SS$ was signed by someone - correct? So that person was acted as an officer in charge of the entity.
Someone is in charge of the bank account - and is authorized to sign checks - correct? So your group has an officer in charge authorized by all group members - correct?
So - the legal entity exists - officers are appointed - and we need to classify your entity for tax purposes.
Regardless what you select on SS4 - based on your information - I would classify your entity as a partnership.
So in this case - we need to verify filing requirements for the partnership.
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.
Now - regarding filing requirements
see instructions
page 3 - Who Must File
Domestic Partnerships. Except as provided below, every domestic partnership must file Form 1065, unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes.
That would be the determination...
Any questions?
Customer: replied 2 years ago.
We are not a partnership. There are no legal documents establishing an entity of any kind! Networking Group is not unique, there are thousands in the USA. I can guarantee they have no legal status with the IRS either. The person who signed the SS4 no longer participates in the group. It would seem that taxable profits should be reported otherwise it would be tax evasion. I need to know for a non-entity whether we have a liability.
Expert:  Lev replied 2 years ago.
Again - tax responsibility are based on HOW the entity is classified for tax purposes.
Based on your information - I would classify your entity as a partnership.
You might disagree - but in this case - you need to come up with different classification and reasoning.
You may request the IRS to issue an official classification for your entity - but that would require to apply for the PLR - Private Letter Ruling - and might be costly.
If the group has taxable income - and if it classified as a partnership - it must file form 1065.
However - if you insist that your group is NOT a partnership - I would expect you to provide different classification - and we may determine tax responsibility based on THAT determination.
But when you simply say - there is no legal entity and there is no officers - that is not correct interpretation.
Customer: replied 2 years ago.
There are thousands of these groups in the USA. You don't know what you're talking about. This is a waste of time. I'm not paying for this.
Expert:  Lev replied 2 years ago.
There are thousands of groups - and EACH has classification for tax purposes.
I am sorry to have you disappointed...
I am not demanding any pay if you are not satisfied.