What Is a Nonprofit Tax ID Number & How Do You Get One?

An Employer Identification Number (EIN) is a unique identifier assigned to businesses and organizations by the Internal Revenue Service (IRS). Similar to a Social Security Number, an EIN distinguishes an entity for tax purposes. This nine-digit number is fundamental for financial and tax activities, establishing an organization’s identity within the federal tax system.

Understanding the EIN for Nonprofits

For nonprofit organizations, the Employer Identification Number (EIN) is central to their operational and tax functions. A nonprofit needs an EIN even if it does not currently have employees, as its utility extends far beyond payroll administration. This unique identifier is indispensable for establishing the organization’s legal and financial standing.

The EIN is a prerequisite for applying for tax-exempt status under sections like 501(c)(3) of the Internal Revenue Code, which grants eligibility for federal income tax exemption. Without an EIN, the IRS cannot process an application for tax-exempt recognition, such as Form 1023 or Form 1024. Financial institutions require an EIN to open a dedicated bank account in the nonprofit’s name, which is a necessary step for managing organizational funds separately from personal finances. This distinction helps maintain financial transparency and accountability.

Nonprofits use their EIN for filing various information returns with the IRS, including the annual Form 990 series (e.g., Form 990-EZ, Form 990-PF, or Form 990-N), which disclose financial activities and operational details. Should a nonprofit decide to hire employees, the EIN becomes essential for all payroll-related activities, including withholding taxes, reporting wages, and filing employment tax forms.

Applying for an EIN

Preparation

Before initiating the EIN application process, a nonprofit organization must gather specific information to ensure a smooth and accurate submission. This includes the organization’s complete legal name, its current mailing address, and the physical location if different from the mailing address. Identifying the correct type of entity is also necessary, such as selecting “church or religious organization” or “other nonprofit organization” from the available options.

The application also requires specifying the reason for applying, typically selecting “started a new business/organization” for newly formed nonprofits. A crucial piece of information is the name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the responsible party. This individual is the person who controls, manages, or directs the applicant entity and the disposition of its funds and assets. Having all this information readily available streamlines the application process.

Procedure

The primary method for obtaining an EIN is through the IRS website, which is generally the most efficient option. This online application allows for immediate receipt of the EIN upon successful completion, making it a preferred choice for many new organizations. During the online process, applicants navigate a series of questions, inputting the prepared information regarding the organization’s identity and the responsible party.

Alternatively, nonprofits can apply for an EIN by fax or mail using Form SS-4, “Application for Employer Identification Number.” This form requires the same detailed information as the online application, which must be accurately completed. Once filled out, the form can be faxed to the IRS, with the EIN typically provided within four business days, or mailed to the appropriate IRS address, which can take several weeks for processing and receipt of the EIN. The method chosen often depends on the urgency of obtaining the number and the preference for electronic versus paper submission.

Using Your EIN

Once a nonprofit organization has secured its Employer Identification Number, this unique identifier becomes integral to nearly all its formal operations. This number is a permanent identifier for the organization and should be securely maintained for all official and financial interactions.