discuss: EIN advantages (was" LDP can't get non-profit status ...)
Subject:
Re: [discuss] EIN advantages (was" LDP can't get non-profit status
...)
From:
Bradley Hook ####@####.####
Date:
19 Apr 2007 02:21:55 -0000
Message-Id: <4626D22A.8000304@kssb.net>
David Lawyer wrote:
>> Quoting David Lawyer ####@####.####
>>
>>> There are still a couple of options: 1. Incorporate or 2. Get an EIN
>>> no. to open an investment account and to perhaps: get members exempted
>>> from liability??
> On Tue, Apr 17, 2007 at 05:23:38PM -0700, Rick Moen wrote:
>> To the best of my current understanding, the latter simply doesn't work.
>> (You keep saying it's possible. If you can find some citations, I'd be
>> glad to discuss particulars.)
>
> You must mean an investment account. Awhile back I Googled and found
> 2 credit unions which advertise that they are welcoming accounts from
> unincorporated organizations. You need an EIN number however. I've
> got the application for an account with the low-cost mutual fund Co.,
> Vanguard. On their application for organizations there are
> categories: corporation, partnership, sole proprietorship,
> unincorporated enterprise, etc. I believer that we fit into the
> "unincorporated enterprise" category and could open an account with an
> EIN number plus they want a copy of a document evidencing that we
> exist (the Manifesto and the web site url).
If you are talking about what I think you are, then they are more
commonly called "investment clubs." My father has participated in more
than one, and I do not think it would be appropriate for TLDP. For a
little more info on investment clubs, here's a website:
http://www.sec.gov/investor/pubs/invclub.htm
> The protection of members from liability would likely be better if
> LDP were incorporated, since if it's not incorporated, the state laws
> like California's 18605 vary from state to state and the venue might
> be a state without such laws. In the future, more states are likely
> to adopt such laws so then incorporation to limit liability will not
> be important. Since LDP is an "international virtual unincorporated
> nonprofit association", what are the laws like in other countries to
> provide limitations on liability?
Just what kind of liabilities are you concerned about? The only
liability that I see in TLDP's future right now would be tax fraud, and
a corporation isn't going to protect you much from those charges.
On the EIN issue, I don't see why this is so complicated. On your form
SS-4, check "Other nonprofit organization (specify)" as item 8a and fill
in "Literary organization." This application would qualify as "Started
new business (specify type)" in section 9, and then fill in "production
and dissemination of literary works." The rest of the fields are fairly
self-explanatory and are well documented at
http://www.irs.gov/instructions/iss4/ch02.html
Also, note that many organizations will not readily donate to, or
perform other charitable functions for, non-profits that are not
specifically 501(c)(3). I have personally had to deal with this, as I
work at an organization that is tax-exempt and eligible to receive
tax-deductible contributions, but does not qualify under 501(c)(3).
However, after fighting with the IRS to get a letter of determination,
we have received grants and charitable contributions by carefully
explaining our situation and showing-off our pretty letter (actually,
it's a rather grainy facsimile).
~Bradley
