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NOW Accounts For Subchapter S Corporations?

Answered by: 
John Burnett

Question: 
I know Corporations cannot have NOW accounts, but what about Subchapter S Corporations? We have a customer coming to us from another state where he was told first by a bank there that he could not, so he asked them contact the Federal Reserve. He contends that bank was told by the Federal Reserve that he could have an interest bearing account and his account was changed a NOW account. Was this right, and has the rule changed?
Answer: 

No, a chapter S corporation is not eligible for a NOW account any more than any other corporation. Either the customer is giving you bad information (can you spell prevarication?) or the bank in the other state gave him a bum steer.

It's possible that the customer had a different sort of interestbearing account at the other bank a savings account or MMDA, perhaps. But not a legal NOW account.

First published on BankersOnline.com 04/21/03

First published on 04/21/2003

Filed under: 
Compliance
Filed under compliance as: 
Federal Reserve
NOW Accounts

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