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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3604
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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There is member on the board we asking to resign. There are

Customer Question

There is member on the board we asking to resign.
There are two things.
First he says that he has placed the 501 C Non Profit under his IRS Tax number. Is that legal? He has also placed monies taken in from fund raising and placed these funds in his own bank account. His lawyer thinks that is ok. Is she correct? I need the answers for New York State and Federal law.
Submitted: 1 year ago.
Category: Tax
Expert:  Mark Taylor replied 1 year ago.

Hi, my name is Mark. I would be happy to help you with your questions.

Expert:  Mark Taylor replied 1 year ago.

The 501C would have a separate Tax Identification Number.

Expert:  Mark Taylor replied 1 year ago.

I am not sure what he means by saying he placed the 501C under his Social Security number.

Expert:  Mark Taylor replied 1 year ago.

There is a potential penalty associated with excess benefits. How much did he place in his personal bank account. If the money is not returned I would be sure to prepare a 1099-Misc in this amount.

Expert:  Mark Taylor replied 1 year ago.

Did he have the right / power to be able to take the fund out. Did the other board members allow him to have this power.

Customer: replied 1 year ago.
I need further clarification with your response. I need a better answer. First of all, is he breaking New York State in placing monies earned by a non-profit in his own personal bank account. Monies the way I understand it, should be handled a by treasurer with two people involved. At present there is no appointed treasurer. That was not done. I do believe that he is totally violating the law.Somehow he is placing the organization under his IRS Tax number. No 990 has been filed. I need better answers to all these. I need to call IRS to find out.
Expert:  Mark Taylor replied 1 year ago.

I am trying to determine if embezzlement has happened. Ideally there should be two people that would sign authorizations of payment. How much funds are involved?

Expert:  Mark Taylor replied 1 year ago.

There is no way to place a non-profit organization under an individual's Social Security Number.

Customer: replied 1 year ago.
I far as I am concerned we have not given any to do anything. He has taken it upon himself to do it.
Customer: replied 1 year ago.
I need to address issues with RIS. Is there a number I can talk to that may involved fraud when using the organizations tax number? The organization at present does not have tax number.
Expert:  Mark Taylor replied 1 year ago.

What is your role with the 501C. The IRS is going to need your name as a officer of the 501C to be able to talk to you. Let me find a number for you.

Expert:  Mark Taylor replied 1 year ago.

Here is the number for tax exempt entities (IRS) (877)(###) ###-####/strong>

Expert:  Barbara replied 1 year ago.

Different expert here - my name is ***** ***** please allow me to provide clarifying information.

As to federal and NY state, the non-profit MUST have its own EIN. A personal social security cannot be used. Also, if the money was donated to or otherwise belongs to the nonprofit, a person CANNOT deposit the funds into his/her personal account. The funds need to be deposited to the nonprofit's checking account. Even if the person temporarily put funds into a personal account, this is unwise. It could very easily be considered stealing or commingling funds.

I hope this additional information is helpful.

Thank you and best regards,

Barb

Expert:  Barbara replied 1 year ago.

Just following up with you to see if you have any other questions. If so, please let me know, and I will be happy to assist you further.

Best regards,

Barb