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Exempt Organizations Annual Reporting Requirements - Form 990, Part VI and Schedule L: Banking Transactions

One of our governing board members is the president of a bank in which our organization has an account. We earn interest on the deposits, and pay fees to the bank throughout the year. Should this transaction be reported in Part II and/or Part IV of Schedule L, Form 990?

The bank would be an interested person for which Schedule L, Part II reporting may be required only if it is a disqualified person as described in Code section 4958(f)(1). The IRS is considering whether placing funds on deposit with a bank constitutes a loan for purposes of Part II, and welcomes any comments you may have on this matter. In the meantime, this transaction need not be reported as a loan on Part II for tax years 2010-2011.

The bank is an interested person for purposes of Part IV because of the board member’s status as an officer of the bank.  Accordingly, the organization must report on Part IV any payments of fees and interest between the filing organization and the bank during the tax year if such payments with respect to the account exceeded the lesser of (1) $100,000, or (2) the greater of $10,000 or 1 percent of the organization’s total revenue for its tax year.  The IRS is considering whether deposits into and withdrawals from a bank account constitute payments or business transactions for purposes of Part IV, and welcomes any comments you may have on this matter.  In the meantime, deposits and withdrawals need not be counted as payments or reported as business transactions on Part IV for tax years 2010-2011.

Additional information

Schedule L instructions

Page Last Reviewed or Updated: 06-Mar-2014