I am trying to set up a PayPal acct. for an Animal Rescue (background info here). The lady at the bank said she thought a non-profit, tax deductible organization cannot receive automatic deposits.
Isn’t that how PayPal works?
Embarrassingly, I am over my head with anything bank related and I have never used PayPal.
Well, I know lots of animal shelters who have a Paypal link right on their Web page. I can’t believe they are all doing something impossible and/or illegal.
I have found, in the past 5 years, after dealing with numerous bank employees, that most of them don’t know what the hell they are talking about. If I were you, I wouldn’t trust what this woman “thinks.” Tell her you know that other shelters do this so you’d like to have someone confirm in writing the law that she is saying prevents such methods of contributions.
I can’t imagine why that would be a problem. As a matter of fact, I was treasurer of a 501 ©(3) nonprofit and we used Paypal to accept our membership dues.
And why would the bank care? They’re not liable for any money deposited – you are.
What does the bank have to do with setting up a Paypal account anyway? I never had to talk to anyone at my bank to set my PP account up. Is it different because this is a business account?
It’s because it’s not a buy and sell account.
It’s for deposits to a 501 3c account.
Her: “Can’t do it.”
You: “I’d like to speak to your supervisor, please.”
Repeat your line as needed, until somebody says “Sure!” or cites a law.
That approach usually works for me.
I believe she may be referring to the 501 c 3 tax issue. If you are a certified 501 c 3 you do not have to pay taxes on your donations…
Blink
Say what? The non-profit, tax-deductible organization (a university) I work for accepts PayPal, EFT, or payroll deduction. I can’t see how any automatic deposits would have to be refused by a 501©(3).
Phlosphr, regarding the tax issue: if the donation is through payroll deduction, it’s up to that employee’s HR or payroll department to handle the tax deductions. If it’s PayPal or EFT (or any other payment for that matter), we send the donor an official gift receipt which must be filed with the IRS for the donor to receive a tax credit. Either way, the 501©(3) must have an identification number which either appears on the receipt or is filed by the HR or payroll department. The bank need not be involved in the tax issues, though it’s probably a good idea for them to have said ID number.
Sure, but that’s not the bank’s concern. Banks don’t report deposits to the IRS – only interest. And once you receive any interest statement, you include it when you fill out your tax forms. You would also report any income. But as a 501 c 3, you do not have to pay any taxes on the income or interest.
As a side issue, you may want to look into www.networkforgood.org–they provide low-cost donation setups for nonprofits, and are what we use.
Daniel
I have been at a job that places me in contact with bankers on a daily basis for 3 years now.
Any person at a bank who helps you open up an account is ignorant of most law as it relates to banking.
Bank tellers are trained to perform maybe 9 basic functions by rote.
Customer service desk folks, maybe 20.
Bank manager, maybe 30. Again, all by rote at a larger bank.
The only people at most banks who really understand the law are likely to be in middle management, compliance, or operations. All of these people are likely to be located at Big Bank HQ, and unlikely to ever even see the bank branch you were physically in when you had this discussion.
This particular bank MAY have a policy that 501©3 organizations can’t have direct deposits into their account, but I’d wager against it.
rjk has probably provided the handiest advice so far in this thread.
This is the email I received yesterday from their ‘computer lady’.
“Thank you so much for your kind efforts, but I must ask that you not get a
paypal account for East Texas Paws. We are a corporation and that is something
that will have to be brought up with the board. Now, if you would like to get
the information about paypal, that would be nice. This can be then discussed at
the board meeting. Things have to be done in a certain way, when using the name
East Texas Paws. I know that you are trying to help out and it is much
appreciated, but once again I have to ask that you NOT open an account with the
name East Texas Paws, that could actually get you in trouble and I would not
want that to happen.
Please do keep in touch with us about the status of the puppies. I would be glad
to put them on Petfinder for you.
Thank you again.”
Other than just the rules of PayPal what information would be good to gather for them?