Discharged Member
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Discharged Member Due to an irresponsible treasurer, we were unable to establish our online broker account in a timely manner; therefore, it cost the group about $980 in lost earnings had we traded and purchased a particular stock. Needless to say, there are a couple of perturbed members, and the group has voted not to refund ANY of his money. The treasurer had missed dues, and the group has decided to deduct his missed dues, fees occurred for sending the online application fed ex, late fees, etc. It is stated in our Bylaws and/or Partnership Agreement that any fees occurred could be deducted. I know that Bivio does an excellent job at calculating everything for deleted members. However, I would like to know, as President, if there are any further experiences as such, and any help you can provide. Does it make sense to deduct missed dues, late fees, etc? Is it common practice? Phyliss, Usually the bivio team tries to let others answer posts on club_cafe, but since you made the same inquiry to trez_talk, a forum we try to answer very promptly, I am answering you here. I hope that others will chime in on this very interesting and important topic. Unfortunately, I can't give you a definitive answer without learning a bit more. You say.... << The treasurer had missed dues, and the group has decided to deduct his missed dues, fees occurred for sending the online application fed ex, late fees, etc. >> Deduct his 'missed dues' from what? If he has never paid the dues, he was never awarded units for the missed payments. Under those circumstances, I don't see how you can deduct his missing dues. If your agreement calls for it, you could probably make a case for charging a late penalty fee for the missed dues. Now, the matter of charging him for the fees incurred for sending the application in late is slightly more troublesome. In the first place, there really weren't any fees incurred, were there? Rather it was a matter of 'missed opportunity'. Does your agreement cover that? I realize that your members must be very upset about the situation. I am not trying to downplay that. What I am trying to do is to make sure that you proceed in accordance with your agreement. There is no sense in making a very bad situation even worse by leaving yourself open to a lawsuit. I'm going to take a bit more of a chance right in the face of what I am sure is a very distressed group of members. Treasurers are human. They make mistakes. It is hard enough to get people to take on the treasurer's job. It will become almost impossible if they are afraid that their mistakes [either of omission or commission] will end up costing them fines. And finally, doesn't the rest of the membership have to take some responsibility? Who was it that elected this person treasurer? Did the president or any other officer ever inquire how the application was coming? And how would I feel, if this happened in my club? I would be very, very angry and probably sending off emails to others to see what recourse I might have. I'm sorry that I don't have the answers that you probably want to hear. I will be interested in the opinions of others. Thanks for using bivio. Rip West Ridgway, CO trez_talk@bivio.com Disclaimer: the statements above are opinions of the author and are not official statements from either bivio or the IRS. These statements are not intended to replace professional tax or accounting advice. When in doubt, follow the advice of your local tax advisor or accountant who is familiar with your particular circumstances. Phyllis... The treasurer is guilty of not performing his duties, but this is not a paid position and while your partners may be angry, IMHO, they really can't hold the treasurer financially liable for failing to act. We are all in this together and as treasurers, we do our work voluntarily. All partners must share in the responsibility, and sometimes people let others down. Your club lost out on an opportunity, and I can understand the partners being angry. But consider what standing your club has not to return his contributions before it acts. You can't hold the treasurer to a higher standard and treat him differently for failing to open a broker's account timely. As to the fees for sending the application by express mail, that was a club decision and all partners should bear the expense. You may be entitled to late fees, but you need to review your partnership agreement and/or by-laws before taking any actions. The fees generally referred to in those documents are those necessary to liquidate or transfer sufficuent assets to pay off a departing partner. The expenses you describe, while related to your partner's failure to perform, are not directly related to a return of his capital investment, and in myy opinion, should not be charged to him. What fees you may charge your departing partner should be explicitly spelled out in your PA or B-L and you need to be careful to be fair here. John Munn Treasurer, Cross Country Investment Club Treasurer, Capitol Investor's Investment Club |
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