Why Does a Nonprofit Organization Need a Tax ID?

Back to FAQs

 

Nonprofit organizations are unlike other business entities in that the organization’s primary purpose is not turning a profit. Nonprofits are also recognized in the Internal Revenue Code (IRC) as tax-exempt, which means they do not pay federal income taxes on charitable contributions.

There are more than 25 types of organizations that are classified in the IRC as tax-exempt; among them are churches, church-controlled organizations, assemblies, special associations, and nonprofits to name but a few.

Under section 501(c)(3) of the IRC, tax-exempt status for nonprofits is granted to organizations that serve one or several of the following purposes:

charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals.

Nonprofits are unique in that they must benefit broad public interest, and not just that of their members. Further, all tax-exempt organizations should have a tax ID number, or what’s called an Employer Identification Number, or EIN for short.

Why You Need a Non-Profit EIN Application

An EIN is used to identify various types of business entitles and organizations, primarily for tax purposes. Although nonprofits are not concerned with turning a profit, and despite the fact that they do not pay federal income taxes, nonprofits do need to obtain EINs.

If you’re wondering how to obtain your nonprofit Employer Identification Number (EIN), you’ve come to the right place.

To qualify for tax-exempt status, you must apply for an EIN, a unique, nine-digit number that will be attached to the nonprofit in perpetuity. You need this number to qualify for tax-exempt status, and for all state and local reports.

EINs also allow nonprofits to obtain bank accounts in the name of the charity, apply for permits, and hire employees.

Select Your Entity Type to Apply for a Federal Tax ID Today