Question of the Week
Friday, June 8, 2018 8:10 AM

Question: I have a member that wishes to open an account for a “pure trust organization”. They refuse to provide an EIN or SSN for the trust, as they claim it is not subject to IRS rules or regulations. Can we open an account for this “trust”?

Answer: No. Under the IRS rules there is no special rule that permits for the creation of a “pure trust” that is not subject to taxation. For purposes of opening an account, both for IRS reporting and BSA purposes, an SSN or EIN/TIN must be provided for trust accounts. The IRS commented on this subject in a 1998 publication: www.irs.gov/pub/irs-sca/1998-006.pdf.

So what is a “pure trust”? They are largely fictional trust vehicles that persons believe can be used to avoid taxation. These do not exist as a legal entity and are often pushed by scammers on the internet as a way to protect assets. As with most scams, it’s always best to keep the credit union out of them. If a member wishes to open an account for one of these entities but refuses to produce necessary information that would allow the credit union to conduct business legally, simply refuse to open the account.