[Cz-L]Gary Rogovin CPA re: setting up of a Traian Popovichi Plaque fund

6-16-08

Dear Miriam and List members,

My name is Gary Rogovin. I am a list member and a CPA.

In repose to Miriam Taylor's 6/16/08 request for guidance, I would like to discuss the issues of the setting up of a Traian Popovici Fund bank account to receive contribution funds and disburse checks to pay for the expenses related to the design, construction and installation of the plaque.

Issues:
1) it makes no sense to set up a "business" or a "non-profit trust" account. There is too much paperwork and too many reporting (Federal, State, etc.) requirements for setting up and maintaining an entity. Even the mere setting up of a bank account using a name such as "TP Memorial Plaque Fund", would require the filing of a "DBA" and/or a "Fictitious Business Statement".
2) Miriam Taylor expressed her concerns regarding receipt of checks in foreign currency, the number of checks that might be received, the possibility that the IRS and the Department of Homeland Security (DHS) would respectively detect and track account activity for purposes of under-reporting of income (IRS) and fear of money laundering to support terrorist activity (DHS), the possibility that any individual who has control of the cash account could either become unable, due to accident, disabling injury or death, to perform their responsibilities with respect to the account or even abscond with the funds.
3) logistics: will the bronze or marble plaque be produced in the US or in Europe? if in Europe, who and how on behalf of the CZ group, would approve the final result which would serve as authorization to make payment to the Artist and the materials supplier(s)? or would we have to depend upon someone in Chernivtsi, to be our eyes and make the determination that the finished plaque meets all the approved specifications of design and material as put forth by those in the CZ Group who are designated as having responsibility for that function?

My recommendations are as follows:
Issue # 1 Bank account:
The account could be in the name of one individual. Appearing on the line directly under that person's name on the check could be the wording "Traian Popovichi Memorial Plaque Fund", so that the recipient of the check (artist, sculptor, materials supplier, government agency for issuing permits, etc.) would know the specified purpose of the payment.
There should be at least four authorized signatories, any two required simultaneously for the issuance of any check, with the others as backup in the event of illness, incapacity or death of either or both of the primary signatories. The two simultaneous required signatures on every check, serve as a protective mechanism for both the fund donors and the account holder, a system of checks and balances. The person who writes the check would forward the signed check, along with the documentation supporting the purpose of the check, to the second person for signature. This gives the second person the opportunity to review the appropriateness of the check for: payee name, amount and purpose of payment and in effect, serves as a second review and approval.

The main issue with the second required signature is one of geographic logistics. Because this fund will involve a small amount of money on a comparative commercial scale, it is extremely unlikely that any bank would provide "digital' signature service, wherein two or more persons in different geographic locations could "electronically" approve (sign) a withdrawal (check) written against the account in favor of a specific payee and transfer the funds electronically to the payee's account. Therefore the use of the mail would be necessary.

Example: "A" 1) prepares the check, 2) signs it, 3) prepares a pre-addressed (to the designated payee) postage paid envelope and 4) puts the check, the pre-addressed postage paid payee envelope and a copy of the documentation supporting the payment, in another envelope and mails it to "B" for the second signature. "B" reviews the documentation for appropriateness of purpose and payment amount, makes sure the name and address of the payee is correct (based on the documentation), then signs the check and mails it in the enclosed pre-addressed postage paid envelope, along with the copy of the documentation, to the payee.

Because there will be mail transit time between "A" and "B", as well as from "B" to the payee, this "mail transit time" has to be considered by "A" in determining the date that "A" needs to begin the mailing process so that the payee will receive timely payment.

Issue # 2
In my opinion, the deposit and check amounts, the account balances involved and the small number of individual transactions, would not trigger scrutiny by the IRS or Homeland Security. Banks are generally required to report a transaction of $10,000 or more, or cumulative transactions in a given day between the same parties totaling $10,000 or more. In any event, there is no illegal activity involved here and therefore no need to worry. Should for whatever reason there be a government inquiry, it can easily be explained and supported by proof (documentation).
The two signature check requirement addresses and puts in place a control over the possibility that any individual who has control of the cash account could either become unable, due to accident, disabling injury or death, to perform their responsibilities with respect to the account or even abscond with the funds.

Issue # 3
Once the approval for the final design (whatever it may be) and the location for it in CZ has made by the Chernivtsi government, I would personally prefer to have the plaque made in the USA, mainly for the purpose of better control over its production and cost. How that could be worked out while using an artist in CZ to do the renderings, I am not sure. If the CZ Artist/Sculptor would be involved in not only the making of the plaque, but also in trying to expedite the Chernivtsi government approval process of both the final design and the display location, the cost of the plaque would reflect his involvement in those processes. However, in all probability, it would still cost less in total then to make it in the USA. In adition, he might not be receptive to non-involvement beyond the design stage and thus someone else would have to carry the ball with the City government approval process, perhaps Maita Prout could do that if necessary as Marianne Hirsch touched upon in her 6/3/08 e
mail to the list. I think that this issue would be best left to a committee that could include Miriam Taylor, Marianne Hirsch, Florence Heyman, Leo Spitzer and Cornel Fleming, assuming all are willing and able to volunteer their time to this project. The latter four, having recently returned from CZ, have been to the mountain top, met the people and are the most informed on this issue.

Sincerely,
Gary Rogovin
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Received on 2008-06-16 22:12:17