Memorial Fund Account Tax Issues

Answered by:

Question:

I am setting up a Memorial fund account. I am using the primary signer’s tax ID number, since the Memorial does not have its own tax ID. If the Memorial Fund is an interest bearing account, how will this affect the primary signer at tax time?

Answer:

It could cause the primary signer -- and your bank -- a lot of aggravation. You should never use an individual's SSN as the TIN for accounts that are not in the signer's own name, with the exception of certain single-member LLCs and grantor trusts. Even in those few cases, you have to make sure that the name sent to the IRS matches the SSN at year-end if any 1099s are generated. Using the signer's SSN for CIP purposes is appropriate, since the memorial fund isn't a legal entity itself, but the bank should insist that a TIN be applied for so that year-end reporting can go smoothly.

First published on BankersOnline.com 4/03/06