I have been listening to your podcasts. Our group is already a 501c3 registered charity with the IRS. Unfortunately, we registered with our state as an unincorporated association. We would like the limited liability of a non-profit corporation and have the funds to apply, but after listening to your podcast I have a few questions:
1) Do we need to set up a new bank account? Or just change the set up on our current accounts? We have a Paypal linked, Amazon Smile account, Cash for Our Cause through our bank.
2) Will this affect anything with our IRS account? We won’t have to re-apply for 501c3 status will we?
Thanks for your help!
Misty in Texas
I hope some of my podcasts were helpful! Thanks for listening.
Update: In 2018, the IRS changed their mind, for the better! Unincorporated Associations who were granted 501c3 tax exempt status, do NOT need to reapply when they become a nonprofit corporation.
IRS Revenue Ruling 2018-5 says, “A domestic, exempt nonprofit association (in good standing) that restructures into a nonprofit corporation does not have to reapply for 501 tax exempt status.”
In other words, what I wrote here in 2015 is no longer the case. So I struck it all out. Yeah!
Bad news: You need a new EIN and must reapply for tax exempt status If your organization now wishes to become a nonprofit corporation (and I highly recommend it), you will have to get a new Employer Identification Number (EIN) and re-apply for 501(c)(3) tax exempt status in the name of your new corporation with its new EIN. When you create a corporation, it is a new legal entity. So the IRS wants you to get a new EIN and makes you go through the 501(c)(3) application process again. Bummer. Here’s a recent blog post on that issue: https://homeschoolcpa.com/incorporated-in-your-state-time-for-a-new-ein/ The bank should make you open a new bank account with the new EIN. Paypal, Amazon Smile, etc. probably don’t care about your new corporate status, but you will need to re-connect them to your new bank account.
The bank will likely let you keep the same account, if your name is unchanged.
Carol Topp, CPA