Note to Treasurers
Of all the club officer positions, the Treasurer could be considered the unsung hero. Treasurers often work behind the scenes to keep a club’s day-to-day, week-to-week, and term-to-term operations running. Much of it is that nitty-gritty, that number-crunching that few others think of. While splashy PR projects, speech contests, and new-member icebreakers drive excitement in a club, it is the financial side everyone relies on, but few see.
Treasurers, then, have unique challenges of their own. They must be organized and self-driven, able to evaluate the club’s financial resources and assess what can be spent and how much, and where the club can save a few bucks if needed. Each club has its own method of going about this.
One of the major challenges for the Treasurer is to collect dues using various payment services. With many platforms including Venmo and PayPal becoming the norm, it helps to be aware of how to deal with them.
Here are some tips and important information from one of D101’s veteran toastmasters, Marc Miller, on the changes to the existing platforms.
“Many clubs have opened accounts with services like PayPal, Venmo, Square, or Cash App (not a complete list, but hereafter abbreviated PayPal/Square) to allow them to accept electronic payments, particularly during the pandemic when payments needed to be collected online. Because it’s not so straightforward to create the accounts using the club’s Employer Identification Number (EIN), many clubs have created these accounts using a Social Security Number (SSN). After accepting the payment, the money then gets transferred to the club’s checking account. To simplify collecting dues, many clubs collect both TI and club dues through that PayPal/Square account, and then pay Toastmasters International their share of it.
Starting in Tax Year 2022 (January 1-December 31, 2022), direct payment services started reporting collected income to the IRS using a 1099-K form. They’re not required to do so unless there were over 200 transactions or more than $20,000 but those services can decide to do it at any threshold. For Tax Year 2023 (which started January 1, 2023), the limit will be lowered to $600.
My club received its 1099-K this morning from PayPal even though we had probably 20 transactions for the whole year, and far below $20,000.
I contacted Toastmasters International today, and they said since most clubs are not required to file taxes (outside of California, but even then, the California filing only confirms that the club didn’t make enough money to be taxed), a 1099-K has no impact on a non-profit club. My club’s PayPal account is registered to the club’s EIN, so we’re just fine.
However, if the IRS thinks that the account belongs to an individual, it may treat that as a sole proprietorship run by the person on the PayPal/Square account. Although it’s probably still not enough money to make a difference on your personal tax filing, IRS will treat the 1099-K as reported income belonging to the individual whose tax ID number is tied to the account. That means they won’t understand that the money coming in from PayPal belongs to a club, and not to the Treasurer personally.
For this reason I strongly recommend that anyone using an account tied to a personal SSN inquire about changing the PayPal/Square tax ID number to the club’s EIN (as listed in Club Central). Some services, like PayPal, will discount their credit card processing fees if they understand the EIN belongs to a non-profit organization, so there are other financial benefits to doing so. Square / Cash App has no such non-profit discounts.
Venmo has updated their website recently to explain that they do now offer services for charities with a linked non-profit PayPal account (Venmo is a division of PayPal). As with PayPal, just make sure your club Venmo account is not a personal account. Square’s Cash App is similar to Venmo and can be used for non-profit organizations.”
— Marc J. Miller, DTM
Key points from Marc:
- PayPal will be sending 1099-K forms if transactions are above $600/year starting 2023.
- If you have registered your club using SSN, it might get counted as your income.
- While using Venmo, ensure it is linked to a non-profit PayPal account.
Written by Marc Miller, edited by Valerie Bolstrom