Styling An Account For A Class Reunion

Question:

What would be the best way to set up an account relationship if a customer wants to open an account for her Class Reunion but not has not applied for an EIN for the account and wants to use her social security number. Should this account be opened with as a personal account since we are using her social or as a business account for an unincorporated organization with no TIN?

Answer:

The customer needs to obtain an EIN in order to open the account. There are no costs involved and, by following the instructions on the EIN application, the number can be obtained by phone or fax.

When banks use nonconforming name/TIN combinations for information reporting they receive a form called a "B Notice" and potentially owe a $50 penalty. One of examples of a common error described in the B Notice is the use of a Social Security Number on a "club" account.

In short, using an SSN on an entity account is a common but obvious mistake that may cause your institution future problems. The customer's saying "It's OK," does not make it OK.

First published on BankersOnline.com 1/20/03