We require IRS determination letters or an acceptable substitute (such as research on www.melissadata.com) before opening a NOW account for a non-profit organization. Is this common practice?

We also require a list of beneficiaries before opening a NOW account for a trust or estate account. Is this common practice?

If it is not common - it should be. It should be just a normal function of your customer due diligence.

Well, Poohie, you piqued my interest. I had never heard of melissadata.com, so even joined to see what they offer.

NOW accounts are not restricted to non-profit organizations, but are restricted to non-profit organizations under certain Internal Revenue Code sections [i.e. 501(c)(3) through 501(c)(13), etc.], but not all sections. Veterans groups [Organizations of Past or Present Members of the Armed Forces] organized under §501(c)(23) are not eligible. I'm not sure whether that means the Veterans of Foreign Wars, or not.

Melissadata.com may identify non-profit organizations, but not eligible organizations.


Al

Well Al, after re-reading this post, I guess I should have actually looked at Melissadata.com before I answered. I have really never heard of it before. My point was that the bank should be gathering some sort of proof of their IRS status. I in no way was endorsing the use of the specific website for that purpose.

Also, some types of non-profits (i.e. churches) don't need a determination letter - they're automatically accorded IRS nonprofit status (subject to revocation if IRS determines they really don't qualify).

For those organizations, you should be able to verify by looking at Articles of Incorporation, bylaws, etc.

So I should be okay not requiring an IRS determination letter for churches?

Are you saying that I do not need an IRS determination letter for churches with NOW accounts? Please help.

You don't "need" an IRS determination from anyone. It depends on your bank's policy regarding what you would require from specific customer types. An IRS determination letter is a good source for this information on most customers - but as Rainman pointed out - they may not be available in the case of some churches.