EIN vs. IRS Determination Letter

An IRS EIN (Employer Identification Number) shouldn't be confused with the IRS 501(c)(3) Determination Letter. You may think an organization is considered a tax-exempt non-profit because it has an EIN, but that isn't the case. It's the IRS Determination Letter that proves an organization is tax-exempt, not an EIN. If your organization receives a Determination Letter, keep it safe so you can share it with anyone who needs to verify it. Funders, including government agencies, may request a copy of your Determination Letter before providing requested grants, so it's important to have it handy.

This isn't to say that non-profits don't misplace their Determination Letters. It's actually quite common, especially for small organizations. Losing a Determination Letter makes it difficult for donors who need to ensure their donations are tax-exempt. Some charities that have misplaced their Determination Letters may try to use their EIN to prove tax-exempt status instead, but this doesn't work. You're better off requesting a new Determination Letter from the IRS. To do so, complete the form using your EIN.

If the EIN is Not Proof of Tax Exemption, What is It?

All businesses have an Employer Identification Number, even non-profits. This number works like a Social Security Number in that it identifies an entity. EINs are formatted as: 12-3456789. The EIN also goes by other names, including the Federal Tax Identification Number (TIN) and Federal Employer Identification Number (FEIN).

The IRS is responsible for issuing EINs. Once you have an EIN, you can use it for all your organization's legal activities, including hiring employees, opening bank accounts, filing tax forms, and applying for business licenses. This helps to avoid using your own Social Security Number when performing business-related activities. In some cases, you may need to apply for an EIN before filing for business incorporation or tax-exempt status.

Just like it's essential to protect your Social Security Number, you should guard your EIN carefully.

Who Needs an EIN?

The IRS specifies that organizations need an EIN if they:

  • Have employees
  • Operate as partnerships or corporations
  • Withhold taxes on income besides nonresident wages
  • Have a Keogh Plan
  • Are involved with specific organizations outlined by the IRS

In addition to needing an EIN to file taxes, you may also need it to:

  • Open a business bank account
  • Apply for a business credit card
  • Apply for permits
  • Provide 1099 forms to independent contractors

Many people choose to obtain an EIN simply for added privacy. For instance, if you are a freelancer who works with numerous clients, you may not want to disclose your Social Security Number to everyone you work with. Using the EIN instead prevents someone from stealing your identity or accessing your personal information.

How to Apply for an EIN

To apply for an EIN, you must be the responsible party for the exempt organization. You will need to use your Social Security Number to apply for the EIN, but once you have the EIN, you no longer need to use your SSN. Besides your Social Security Number, you must also include your organization's legal name, physical address, and mailing address on the form.

There are three main ways to get an EIN:

  • Call the toll-free number 1-800-829-4933
  • Download the IRS Form SS-4 and mail or fax it to the IRS
  • Complete the form directly on the IRS website

How to Get a Copy of Your EIN W-9 From the IRS

To obtain a copy of your EIN W-9 Form, go to the IRS website and navigate to the EIN application section. Fill out the Form SS-4 online, which is also called the “Application for Employer Identification Number.” The system will assign your EIN immediately after you submit the required information. You will receive the official EIN assignment letter via PDF. Save a copy of this letter to your computer before exiting the window.

When you complete the request online, the PDF version is the only form of the letter you will receive from the IRS, so it's crucial to save it. You should also print a copy for your business records. If you lose your EIN or the assignment letter, you will need to contact the IRS to request a replacement.

Next, download the IRS Form W-9 from the website. You can complete the W-9 directly on the website using the IRS template.

How to Cancel an EIN

Canceling your EIN is the same as “Closing a Business Account” to the IRS. You must first pay all owed taxes and fill out the Cancellation Letter.

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