Non Profit Tax ID Number: Everything You Need to Know
A nonprofit tax ID number is the same as an Employer Identification Number (EIN). 4 min read
2. What Is the EIN, If it Is Not Proof of Exemption?
3. Applying for an EIN
4. Ways to Obtain Your EIN
5. Don't Fall for a Scam
6. When to File For 501(c)(3) Status
7. Form 1023: The Federal Tax Exemption Application
8. Filing Requirements for Exempt Status
9. Filing Returns
10. Change of Structure/Ownership
What Is a Nonprofit Tax ID Number?
A nonprofit tax ID number is the same as an Employer Identification Number (EIN). All businesses need an Employer Identification Number (EIN) regardless of taxable status. A company cannot pay employees, file taxes, or open bank and credit accounts otherwise.
What Is the EIN, If it Is Not Proof of Exemption?
The Employer Identification Number is like a Social Security number (SSN) for businesses. It looks like this: XX-XXXXXXX. In some states, an EIN may be required before applying for tax-exemption.
Applying for an EIN
All applicants for an Employer Identification Number must be a duly authorized, responsible member or officer of an organization. The authorized agent or incorporator of an organization can also file for the Employer Identification Number on behalf of the organization.
The person applying for an Employer Identification Number uses their SSN for the application. After receiving the EIN, no SSN is required. Besides his or her social security number, the entity's legal name, a physical address for the organization, and a mailing address are also required. You must file an Application for Recognition of Exemption. Use IRS Form 1023 to apply for exemption status.,
Ways to Obtain Your EIN
The IRS estimates that you'll receive your EIN in four to five weeks if you apply by mail. You'll receive your EIN immediately if you submit the online application.
Don't Fall for a Scam
Organizations can easily work directly with the IRS for no charge.
When to File For 501(c)(3) Status
If an organization files before 27 months, the tax exemption is effective on the date the incorporation is filed and all donations received from that point are deductible. Otherwise, it starts on the postmarked date of the IRS Form 1023 Application.
Form 1023: The Federal Tax Exemption Application
501(c)(3) tax-exempt status gives benefits like income and property tax exemptions, tax-deductibility of donations, access to grant money, and more. The smallest non-profits can use the Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code is downloadable Form 1023-EZ, which is available online,
There is an Eligibility Worksheet to determine if your non-profit is eligible to use the streamlined form. Company's need an EIN to apply for 501(c)(3) tax exemption. If you will hire people, check the IRS withholding tables and estimate the amount of payroll taxes because you may not be exempt from these.
Apply at www.irs.gov. Click "Apply for an EIN Online" under "Tools" section on the home page. Using the online assistant is the easiest way to apply.
On the application, it is imperative to select "nonprofit" as the entity type, and be sure to download the proof of EIN as a PDF. Print several copies.
Applying by Fax/Mail
From the IRS site, download Form SS-4. Choose "nonprofit organization" for business entity type. Answer the required questions about your organization's business activity.
Mail your Form SS-4 to the IRS per the form's instructions or fax your SS-4 for a faster reply. Each state has a different fax number. You can find the appropriate number on the instructions.
Applying by Phone
Applying by phone is easy. Call the IRS at (800) 829-493 between 7:00 a.m. and 10:00 p.m. EST.
Filing Requirements for Exempt Status
According to section 501(c)(3) of the federal tax code, IRS exempts non-profit organizations serving specific purposes, including religious, educational, scientific, literary, public safety testing, national or international amateur sports competition, and the prevention of child abuse and animal cruelty.
To gain an exemption, an organization must provide an EIN and file an application (either Form 1023 or Form 1024) with the IRS.
An EIN is required on all correspondence, returns, and payments with the IRS. The IRS requires tax-exempt organizations to file Form 990 for informational returns. Form 990-N can be used if gross receipts are less than $50,000. If gross receipts are less than $200,000, and assets less than $500,000, 990-EZ is used. If receipts and assets are higher, the IRS requires Form 990.
Change of Structure/Ownership
A new EIN is required if a non-profit organization is going through an ownership/structure change.
If you need help with your non-profit Tax ID number or changing structure/ownership, you can post your legal need on UpCounsel's marketplace. Lawyers on UpCounsel are leaders in the legal industry. UpCounsel only allows the top 5 percent of lawyers service customers through the site. They come from law schools like Harvard, Rice, Princeton, and Yale Law and average more than 14 years of legal experience, working with companies like Google, Menlo Ventures, and Airbnb.