501(c)3 corporation and W9 form.

Discussion in 'Tax' started by Ron, Oct 27, 2011.

  1. Ron

    Ron Guest

    I am trying to figure out what is the correct way to fill out a W9 form for
    a nonprofit, tax exempt, 501(c)3 corporation. Our organization was first
    incorporated as a nonprofit corporation under the nonprofit corporation
    statutes for the State of New Jersey, and then applied for exempt
    organization status through the IRS and was granted the exemption under
    501(c)3.

    The specific question is, "Do we check off 'C Corporation' on the W9 form,
    and also check "Other" and write in "nonprofit, tax exempt, 501(c)3
    corporation"?

    Or, do we NOT check off 'C Corporation' on the W9 form, and JUST check
    "Other" and write in "nonprofit, tax exempt, 501(c)3 corporation"?

    This came up because our nonprofit has a mutual fund investment account at
    Vanguard and they said that new regulations as of 01/01/2012 require that we
    do a W9 form to clarify whether we are a C corporation or an S corporation.

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    Ron, Oct 27, 2011
    #1
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  2. Ron

    John Levine Guest

    >Or, do we NOT check off 'C Corporation' on the W9 form, and JUST check
    >"Other" and write in "nonprofit, tax exempt, 501(c)3 corporation"?


    I would do that. As I recall, when I had an account for a 501(c)(6),
    that's what we did.

    >This came up because our nonprofit has a mutual fund investment account at
    >Vanguard and they said that new regulations as of 01/01/2012 require that we
    >do a W9 form to clarify whether we are a C corporation or an S corporation.


    In my experience, the people at Vanguard are generally quite on the
    ball. When you called them and asked what they'd prefer to see on the
    form, what did they say?

    R's,
    John

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    John Levine, Oct 28, 2011
    #2
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  3. Ron

    Ron Guest

    John Levine wrote:
    >> Or, do we NOT check off 'C Corporation' on the W9 form, and JUST
    >> check "Other" and write in "nonprofit, tax exempt, 501(c)3
    >> corporation"?

    >
    > I would do that. As I recall, when I had an account for a 501(c)(6),
    > that's what we did.
    >
    >> This came up because our nonprofit has a mutual fund investment
    >> account at Vanguard and they said that new regulations as of
    >> 01/01/2012 require that we do a W9 form to clarify whether we are a
    >> C corporation or an S corporation.

    >
    > In my experience, the people at Vanguard are generally quite on the
    > ball. When you called them and asked what they'd prefer to see on the
    > form, what did they say?


    I agree -- the Vanguard people always seem to be right on the ball whenever
    I call them, and I think that their overall customer service, website, and
    systems in general are the absolute best. If there are any awards that go
    out for these things, they should win first prize every year.

    When I did call Vanguard, as is always the case, I got someone on the line
    right away and he was very helpful. At first, he wasn't completely sure;
    then he did some more checking and put me on hold. After a while, got back
    on the line and he said that a nonprofit can in fact sometimes be a C-corp
    and an "Other" 501(c)3 nonprofit corporation. He said we should look at our
    Certificate of Incorporation to be sure, but that probably checking off both
    options would work in our case. Then I mentioned this to someone else at
    our 501(c)3 who it turns out had also called Vanguard before filling out the
    form for me to sign (which I didn't know earlier). She said they told her
    that just checking "Other" would be okay -- without checking the
    C-corporation option.

    That started me wondering exactly what is correct so I did some Google
    searching, and I tried looking at the IRS site and downloading and reading
    the IRS W9 form and instructions. I couldn't find a clear answer anywhere.
    Many of the examples from foundations etc. that came up in the online Google
    search showed the "Other" box checked and not the C-corporation option
    checked.

    But the main reason that Vanguard sent the form out was because they said
    that there is a new rule going into effect and that they need to know if a
    corporation account holder is "either a C-corp or an S-corp" -- and that if
    they can't determine that, the automatic default is to treat all
    corporations as a S-corp regarding backup withholding etc. We know, of
    course, that we are not an S-corp.

    In short, there seems to be a slight ambiguity or vagueness in terms of what
    should be put on a W9 by a 501(c)3 tax exempt nonprofit corporation. I
    would have at least expected the IRS instructions to specifically address
    this question in the W9 form instructions, but they do not.

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    Ron, Oct 28, 2011
    #3
  4. 501(c)(3) corporations are incorporated as C corporations under the state
    laws for non-profits (the biggest difference at the state level is there are
    not "shareholders"). The IRS is the determining factor on whether the
    entity pays tax or not (tax exempt or taxable). If the entity loses it's
    IRS granted tax exempt status it's taxed as a C corporation.

    There would be no feasable way for a non-profit to be an "S" corporation,
    which is a tax status granted by (again) the IRS.




    --
    Paul Thomas, CPA
    www.paulthomascpa.com

    --
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    paulthomascpa, Oct 28, 2011
    #4
  5. Ron

    Alan Guest

    On 10/28/11 1:14 PM, paulthomascpa wrote:
    > 501(c)(3) corporations are incorporated as C corporations under the state
    > laws for non-profits (the biggest difference at the state level is there are
    > not "shareholders"). The IRS is the determining factor on whether the
    > entity pays tax or not (tax exempt or taxable). If the entity loses it's
    > IRS granted tax exempt status it's taxed as a C corporation.
    >
    > There would be no feasable way for a non-profit to be an "S" corporation,
    > which is a tax status granted by (again) the IRS.
    >



    I'm not sure this is correct. Under federal tax law, there are basically
    3 types of corporations. Those that are taxed are C Corps. and those
    that are not taxed are either S Corps. or Tax-Exempt Corps. Most states
    that I am familiar with have a statute and corresponding regulations for
    incorporating as a "C" corp. and a separate statute and regs for
    incorporating as a tax-exempt corporation (usually referred to as a
    Nonprofit Corp. in the regs). In the states I am familiar with, there is
    no way to incorporate as an S corp. However, upon obtaining Subchapter S
    status with the IRS, the state recognizes the organization as a passthru
    entity. E.g., here in New Mexico all profit corporations get organized
    as C Corporations under our Business Corporation Act. Those obtaining
    "S" status from the IRS become passthru entities in NM. There is no way
    to incorporate as an S Corp. Organizations that incorporate under our
    Nonprofit Corporation Act are tax-exempt organizations. When I was
    working with non-profits, we checked "Other" on the W-9, entered the
    name of the Corp. followed by "A 501(c)(3) Corporation".

    Personally, I don't think it matters to the receiving business entity
    whether you check "C" or "Other" on the W-9.
    --
    Alan
    http://taxtopics.net

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    Alan, Oct 28, 2011
    #5
  6. wrote:

    >501(c)(3) corporations are incorporated as C corporations under the state
    >laws for non-profits (the biggest difference at the state level is there are
    >not "shareholders").


    This is incorrect. Both S corps and C corps have owners; not-for-profit
    corporations do not.

    >The IRS is the determining factor on whether the entity pays tax or not
    >(tax exempt or taxable).


    Federal tax law doesn't determine ownership status. That's a matter of
    state incorporation law.

    >If the entity loses it's IRS granted tax exempt status it's taxed as a
    >C corporation.


    But that doesn't create a concept of ownership under state law.

    >There would be no feasable way for a non-profit to be an "S" corporation,
    >which is a tax status granted by (again) the IRS.


    They cannot be any kind of business corporation, period.

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    << nor can it used, for the purpose of avoiding penalties >>
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    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
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    << Copyright (2011) - All rights reserved. >>
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    Adam H. Kerman, Oct 31, 2011
    #6
  7. Ron

    Ron Guest

    Ron wrote:
    > Alan wrote:
    >> On 10/28/11 1:14 PM, paulthomascpa wrote:
    >>> 501(c)(3) corporations are incorporated as C corporations under the
    >>> state laws for non-profits (the biggest difference at the state
    >>> level is there are not "shareholders"). . . . .


    >> I'm not sure this is correct. Under federal tax law, there are
    >> basically 3 types of corporations. Those that are taxed are C Corps.
    >> and those that are not taxed are either S Corps. or Tax-Exempt Corps.
    >> Most states that I am familiar with have a statute and corresponding
    >> regulations for incorporating as a "C" corp. and a separate statute
    >> and regs for incorporating as a tax-exempt corporation (usually
    >> referred to as a Nonprofit Corp. in the regs). . . . . .


    > Thanks Alan, Paul, and John.
    >
    > We decided to submit the W9 form by just checking off "Other" and
    > writing in "Nonprofit tax exempt 501(c)3 corp". We decided to do
    > that because our nonprofit corporation does not have any shareholders.
    >
    > Our state (New Jersey) has 4 types of corporation laws:
    >
    > TITLE 14A CORPORATIONS, GENERAL
    > TITLE 15A CORPORATIONS, NONPROFIT
    > TITLE 16 CORPORATIONS AND ASSOCIATIONS, RELIGIOUS
    > TITLE 17 CORPORATIONS AND INSTITUTIONS FOR FINANCE AND INSURANCE
    >
    > We are incorporated under Title 14A Corporations, Nonprofit. In New
    > Jersey, nonprofit does not necessarily mean tax exempt. The tax
    > exemption status of a New Jersey nonprofit corporation is determined
    > by the IRS for federal tax purposes and I think by the state for
    > certain other taxes such as real estate taxes.


    CORRECTION: Oops, that last paragraph should say "We are incorporated under
    Title 15A (not 14A) ...."

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    Ron, Oct 31, 2011
    #7
  8. "Adam H. Kerman" <> wrote:
    > wrote:
    >
    >>501(c)(3) corporations are incorporated as C corporations under
    >>the state laws for non-profits (the biggest difference at the
    >>state level is there are not "shareholders").

    >
    > This is incorrect. Both S corps and C corps have owners;
    > not-for-profit corporations do not.


    Subchapter C talks about owners of a corporation, but it does not
    require the corporation to have owners.
    >
    >>If the entity loses it's IRS granted tax exempt status it's
    >>taxed as a C corporation.

    >
    > But that doesn't create a concept of ownership under state law.


    Whether or not a corporation has owners is irrelevant in this
    situation.

    >>There would be no feasable way for a non-profit to be an "S"
    >>corporation, which is a tax status granted by (again) the IRS.

    >
    > They cannot be any kind of business corporation, period.


    When someone wants to set up a nonprofit corporation, he may file
    articles of incorporation defining it as such. However it does not
    normally qualify as a nonprofit until approved by the IRS. If the
    IRS will not agree, the incorporator can amend the articles of
    incorporation so that it will be structured as a for-profit
    organization.

    In addition, even a qualified nonprofit that engages in business
    activities that are unrelated to its exempt purpose are tax as C-
    corporations. The law does not prohibit them from transacting
    unrelated business - they just pay tax if they do.

    ___
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
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    << Copyright (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Stuart A. Bronstein, Oct 31, 2011
    #8
  9. Ron

    Guest

    We are a 501 c 3 NFP. On form W-9, what do I enter under "exemptions"?

    --
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    << The foregoing was not intended or written to be used, >>
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    , Jun 6, 2014
    #9
  10. In article <>,
    <> wrote:
    >We are a 501 c 3 NFP. On form W-9, what do I enter under "exemptions"?


    By the Other box write 501(c)(3) and you can also write it by the
    exempt box.

    --

    ArtKamlet at a o l dot c o m Columbus OH K2PZH

    --
    << ------------------------------------------------------- >>
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    << nor can it used, for the purpose of avoiding penalties >>
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    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
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    Arthur Kamlet, Jun 6, 2014
    #10
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