By Marc Guerra, AMA Chief Financial Officer | amacfo@modelaircraft.org
There continue to be good financial management improvements at AMA Headquarters. We completed a successful independent financial audit where we received an unqualified opinion for our 2023 financial statements. All good audits include recommendations for improving internal accounting controls. As we reviewed these recommendations with our audit team, I was reminded of similar circumstances and conditions that I observed and managed as treasurer of several local clubs.
I’d like to share some fundamental financial management practices for all clubs to employ. I’ll cover the steps of obtaining a nonprofit tax ID number. In future updates, I’ll cover the general steps of completing a W-9 request for a tax ID number and obtaining an IRS nonprofit determination letter.
While conducting financial management and oversight for your club, you might be requested to provide an Employer Identification Number (EIN), also known as a Federal Tax Identification Number (TIN). I have encountered this request several times while opening a club checking account and applying for local government and industry sponsorship. The advantage to using your club’s TIN is that you don’t have to put your own information on the line, which reduces personal liability. When the bank uses your club’s nonprofit TIN to open an account, you can track your club’s list of expenses and funds.
Although your club is not a traditional business, it might also need a local business license and local permits for road grading, sign posting, and other club construction projects. Not having your club’s nonprofit TIN in hand will probably result in hitting roadblocks when dealing with local authorities and utility services.
Obtaining a nonprofit TIN is straightforward and no more difficult than assembling your airplane upon arriving at the flying field. You can utilize the IRS EIN Assistant to formally request a nonprofit tax ID number.
A nonprofit TIN is a federal nine-digit tax ID number that the IRS assigns to nonprofits (and other organizations) and is in the following format: XX-XXXXXXX.
Step 1: Review the resources provided on the IRS Employer ID Numbers website at www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers. Select the “Apply on-line” link.
Step 2: Utilize the IRS EIN Assistant to formally request a nonprofit tax ID number. I recommend that a club officer (e.g., treasurer) complete this simple application process. You will need to provide basic information about your club, including its leadership and contact information.
Following are additional recommended steps for using the simple IRS EIN Assistant:
• In the “Identify” step, select “View Additional Types, including Tax-Exempt.”
• Select “Other Non-Profit/Tax Exempt Organizations,” confirm, and continue.
• Select “Started a new business” or “Banking purposes.” (Either selection will suffice.)
• In the “Authenticate” step, provide your “Responsible Party” information and select continue. (This authentication step ensures that you are not a “bot.”)
• In the “Address” step provide the physical and mailing address, and verify.
• Under “Details,” provide your club name and other requested details and continue. Further select the “yes/no” required information, and continue.
• Under “What does your business or organization do?,” select “Other,” enter “model aviation,” and continue.
• In the “EIN Confirmation” step, select the option for receiving your nonprofit TIN confirmation letter and continue.
• Review the “Summary of your information” and click “Submit” to send your request and receive your nonprofit EIN.
Final Thoughts
Your club now has a nonprofit TIN that is registered with the IRS. You will receive a copy of your nonprofit tax ID directly in PDF format. Keep this document in your club’s permanent file along with other documents, such as bylaws and property use/lease agreements.
Apply directly through the appropriate section of the IRS website. There are many scams and unsecured sites that wish to take advantage of you in order to steal secure information or charge you for their service. The process for acquiring a nonprofit TIN is free and simple. You don’t need the help of any other service or organization in order to successfully acquire a nonprofit TIN for your club.