Party Bank Accounts
You should have a bank account for your local party to use for party activities. This account is how to keep track of funds you raise or expend on party events, activities, etc. This is where donor money goes and is spent from.
You are required by law to open a SECOND bank account where you deposit filing fees and the state money that will be sent to you to pay for the Democratic Primary expenses. This account will need to be open before the period for candidates to file an application for a place on the ballot.
You'll need an Employee ID Number (EIN) to open a bank account. For new chairs, you should first ask any former chair if they have a bank account still open, and simply get your name put onto that account (and remove the old Chair). If the account is closed from 2016, see if anything you have in the records will give you the EIN number! If not, info is at the end of this email on how to get an EIN.
General IRS Rules:
Local Democratic Party organizations are defined as IRS 527 non-profits by law. The IRS does not issue "tax exempt letters" as they do for groups who incorporate as a non-profit which must apply and prove to the IRS that they are non-profit. You are exempt from filing income tax returns. This does not exempt the party from paying other taxes such as employment taxes or FICA related to wages you pay to any employees or your election judges and workers. You ARE required to pay sales taxes on party expenses from the Party Account. You do not have to pay sales taxes on expenses from the Primary Account. However, you must fill out a sales tax exemption form for these purchases.
What bank to use? You will have much better luck at a local or state bank, and NOT at a national bank like Wells Fargo, Bank of America, etc. Those big banks need you to fit the kinds of accounts they do, and they don’t regularly do campaign or political accounts. They’ll ask if you are a business (no), are you non-profit (yes), but you can’t produce a non-profit letter from IRS, so (no), etc.
You will need two bank accounts typically: A County Democratic Party - PRIMARY ACCOUNT and a County Democratic Party - PARTY ACCOUNT
Your County Democratic Party - PRIMARY ACCOUNT
You MUST open a bank account exclusively for running the Primary. Name this bank account something like: __________County Democratic Party - PRIMARY ACCOUNT.
This account gets deposits of:
· All filing fees from local candidates
· Direct deposit of your county's share of the filing fees for district and state wide races (state funds) from the Secretary of State for conduct of the primary.
Out of this account you will pay ONLY for direct costs of running the Primary. If you contract with the Clerk or Election Administrator, you’ll pay them from this account. In the best case scenario, you will have contracted for all Primary stuff with them, so paying their invoice(s) will be simple. This is somewhat different if you choose to run the primary yourself as opposed to contracting with the Clerk or Elections Administrator.
Banks require an Employee Identification Number (EIN) for any entity that opens a bank account. When applying for such EIN you will state that you are a "political organization" and the reason for applying for the EIN is "banking purposes".
Your County Democratic Party - PARTY ACCOUNT
You can open a bank account for all other party affairs. Name this bank account something like __________ County Democratic Party - PARTY ACCOUNT. This is the account for political and party operational funds.
This account gets deposits of all donations, party contributions, sustaining memberships, etc. From this account you can pay for party expenses, event expenses, political contributions to candidates, political activities such as direct mail, robo calls, rallies, parties, etc.
Applying for EIN Online https://sa.www4.irs.gov/modiein/individual/index.jsp Click on “Begin Application” in middle of page at bottom Click on the last bullet: View Additional Types….
Click on “Political Organization” (second column, half way down) Click “Continue”
Click “Banking Purposes” Click on “Individual”
Fill in your name and Social Security Number
Click on “I am a responsible and duly authorized officer or a board member having knowledge of this organization's affairs.”
Fill in the address of the Party (This may be your home mailing address). Fill in mailing address if you have a different one (such as a Party PO Box)
Legal name of Political Organization - ___________County Democratic Party
If the system says “there is a organization with that name” restate it as “ Democratic Party of ___________County” or anything similar.
Political Organization start date Use current date
Closing month of accounting year Use December