Penalties For Using Wrong Ein

[Paschal]

Mr. Mechanic,

What are the possible fines and penalties a non-profit may incur if it continues to knowingly use an EIN that does not belong to it?  What fines and penalties may it already face for using an incorrect EIN on it's past returns?

Thank you.

ANSWER: It depends whether tax evasion is the result as to the IRS.  As to the State law violations, that would depend upon the use of the false EIN, i.e. whether to fraudlently gain donations that otherwise would not come.

However, Congress has given the IRS extensive authority for going after persons involved in filing false returns. --start of excerpt  ---

shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution. --start of excerpt  ---http://tinyurl.com/67a8v5 Harvey Mechanic Attorney At Law [email protected]

---------- FOLLOW-UP ----------

Thank you Mr. Mechanic.

My original question was in regards to a high school booster club. I have no idea why the founding members of this organization failed to obtain a separate EIN, it may have been due to simple ignorance or perhaps someone thought it was acceptable to borrow another organization's EIN.  What I do know is that since 1976 this EIN has been used on all of the club's official tax forms and has been used to open the club's bank accounts.

In November 2007, the club president finally called the IRS to confirm whether or not this number belonged to the booster club; it does not.  The IRS would not tell him who the number does belong to.

Since last November, the board of directors has hired a CPA to look into this.

This is my follow-up question:

Is this the sort of issue a CPA is qualified to handle or should the club look into hiring a tax lawyer?

Based on what little I know of the club's filing records, our registration with the California Attorney General's Registry of Charitable Trusts is currently delinquent and the club may already be facing substantial monetary penalties for failing to comply with the mandatory filing requirements.  It is my belief that the club's officers from previous years did not keep abreast of the changes in California's non-profit laws and were thus unaware of the need to file this additional paperwork; however, the incorrect EIN is included in this registration. I have been trying to impress upon the club's officers the gravity of this situation so that the club can avoid incurring any additional penalties or worse.

Thank you again.  

[Marlan]

Many CPAs have little experience with 501(c)(3) organizations but some do and, therfore, it would depend upon the qualifications of the particular person.  After reviewing your situation I would recommend hiring me as you can see that I have extensive experience, especially with booster organizations and their special issues. I also wonder why it has taken one year and you are still not satisified with any progress in the matter. Allexperts.com does maintain for me a free forum for general questions but your questions require me to obtain more facts from you and the answers are not simple "yes" or "no" answers. In addition, I would need to analyze the fact after researching relevant IRS regulations and rulings.  If you want to work with me on a fee basis, please contact me directly at my email address below and I will quote you my fee for such. Harvey Mechanic Attorney At Law [email protected]

[Budington]

Mr. Mechanic,

What are the possible fines and penalties a non-profit may incur if it continues to knowingly use an EIN that does not belong to it?  What fines and penalties may it already face for using an incorrect EIN on it's past returns?

Thank you.

ANSWER: It depends whether tax evasion is the result as to the IRS.  As to the State law violations, that would depend upon the use of the false EIN, i.e. whether to fraudlently gain donations that otherwise would not come.

However, Congress has given the IRS extensive authority for going after persons involved in filing false returns. --start of excerpt  ---

shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution. --start of excerpt  ---http://tinyurl.com/67a8v5 Harvey Mechanic Attorney At Law [email protected]

---------- FOLLOW-UP ----------

Thank you Mr. Mechanic.

My original question was in regards to a high school booster club. I have no idea why the founding members of this organization failed to obtain a separate EIN, it may have been due to simple ignorance or perhaps someone thought it was acceptable to borrow another organization's EIN.  What I do know is that since 1976 this EIN has been used on all of the club's official tax forms and has been used to open the club's bank accounts.

In November 2007, the club president finally called the IRS to confirm whether or not this number belonged to the booster club; it does not.  The IRS would not tell him who the number does belong to.

Since last November, the board of directors has hired a CPA to look into this.

This is my follow-up question:

Is this the sort of issue a CPA is qualified to handle or should the club look into hiring a tax lawyer?

Based on what little I know of the club's filing records, our registration with the California Attorney General's Registry of Charitable Trusts is currently delinquent and the club may already be facing substantial monetary penalties for failing to comply with the mandatory filing requirements.  It is my belief that the club's officers from previous years did not keep abreast of the changes in California's non-profit laws and were thus unaware of the need to file this additional paperwork; however, the incorrect EIN is included in this registration. I have been trying to impress upon the club's officers the gravity of this situation so that the club can avoid incurring any additional penalties or worse.

Thank you again.