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Do Churches Have Tax ID Numbers? A Deep Dive into EINs and Church Finances

Yes, churches can and often do have Tax ID Numbers, more formally known as Employer Identification Numbers (EINs). However, the necessity of obtaining one depends on various factors, including the church’s structure, activities, and relationship with the Internal Revenue Service (IRS). Let’s delve into the complexities surrounding churches and EINs, offering a comprehensive guide for clergy, administrators, and anyone interested in church finances.

Understanding the Basics: What is an EIN?

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to identify business entities operating in the United States. Think of it as a Social Security number for your organization. It’s used to track an entity’s tax obligations and is essential for various activities, such as:

Opening a bank account
Hiring employees
Filing business tax returns
Applying for licenses and permits

While many immediately associate EINs with traditional for-profit businesses, they also play a significant role in the operations of non-profit organizations, including churches.

Churches and Tax-Exempt Status: Section 501(c)(3)

Churches, like other religious organizations, are generally considered tax-exempt under Section 501(c)(3) of the Internal Revenue Code. This means that they are exempt from federal income tax, and donations made to them are tax-deductible for donors.

However, simply being a church doesn’t automatically guarantee 501(c)(3) status. While churches are generally presumed to be 501(c)(3) organizations, some choose to apply for formal recognition from the IRS. This formal recognition offers several benefits, including:

Clear confirmation of tax-exempt status
Increased credibility with donors and grant-making organizations
Protection against potential IRS challenges

Whether or not a church seeks formal 501(c)(3) recognition can influence its need for an EIN.

When Does a Church Need an EIN?

Here’s where things get specific. While not all churches must have an EIN, it’s generally advisable and often practically necessary. A church absolutely needs an EIN in the following circumstances:

It has employees: If the church hires any employees, even part-time staff, it’s legally required to have an EIN for payroll tax purposes.
It operates as a corporation or trust: If the church is legally structured as a corporation or trust, it must have an EIN, regardless of whether it has employees.
It operates under a name other than the individual church’s name: If the church uses a “doing business as” (DBA) name, it generally needs an EIN.
It files certain types of tax returns: While churches are typically exempt from filing Form 990 (the standard non-profit information return), they may need to file other returns, such as unrelated business income tax (UBIT) returns, which require an EIN.
Its bank requires it: Most banks require an EIN to open a bank account for a church, even if the church doesn’t technically need one otherwise.

Even if none of these situations apply, obtaining an EIN can still be beneficial for administrative purposes, such as establishing credit and streamlining financial transactions.

Obtaining an EIN: A Simple Process

The good news is that applying for an EIN is relatively straightforward and free. The IRS offers an online application process that can be completed in minutes. Here’s a quick overview:

Visit the IRS website: Navigate to the IRS website and search for “Apply for an EIN Online.”
Complete the application: The online application will ask for information about the church, including its name, address, responsible party (e.g., pastor or treasurer), and the reason for applying.
Receive your EIN immediately: Once the application is submitted, the IRS typically issues the EIN immediately online.

You’ll then receive an official confirmation notice (Form CP 575) from the IRS, which serves as proof of your church’s EIN.

FAQs: Churches and Tax ID Numbers

Here are some frequently asked questions about churches and tax ID numbers:

1. Does a church automatically receive an EIN when it is founded?

No. A church must apply for an EIN with the IRS. It is not automatically assigned upon formation.

2. What if our church doesn’t have any employees? Do we still need an EIN?

While not legally required in all cases, it’s often advisable to obtain an EIN even without employees. Banks typically require it to open accounts, and it simplifies other administrative tasks.

3. Our church is part of a larger denomination. Can we use the denomination’s EIN?

Generally, each individual church should have its own EIN. While a denomination may have its own EIN, it shouldn’t be used for the individual financial activities of a local church. There may be exceptions to this with smaller church plants that do not have separate legal status.

4. Is it possible to look up a church’s EIN online?

Generally, no. EINs are considered confidential information and are not publicly searchable. However, in some instances, an EIN may be publicly available if it’s included on publicly accessible documents filed by the organization.

5. What happens if a church doesn’t have an EIN when it should?

Failure to obtain an EIN when required can result in penalties and difficulties with banking, payroll, and other financial activities. It’s best to proactively obtain one if there’s any doubt.

6. Can a church revoke its EIN if it no longer needs it?

An EIN remains with the entity permanently, even if it’s no longer actively used. Instead of revoking it, simply ensure that the IRS is notified of any changes to the church’s information. If you have ceased operations as a church, you should write to the IRS to notify them of this fact.

7. How does a church report changes to its name or address to the IRS?

Churches can report changes to their name or address by filing Form 8822-B, Change of Address or Responsible Party – Business.

8. Does applying for an EIN automatically grant a church 501(c)(3) status?

No. Applying for an EIN is separate from applying for 501(c)(3) status. While most churches are presumed to be 501(c)(3) organizations, some choose to apply for formal recognition, which requires a separate application process (Form 1023).

9. Can a church lose its EIN?

No, a church cannot permanently lose its EIN. However, the IRS can deactivate an EIN if it determines that the organization no longer exists or is no longer operating legally.

10. What if our church has UBIT (Unrelated Business Income Tax)? How does the EIN relate?

If a church engages in activities that generate unrelated business income, it must file Form 990-T, Exempt Organization Business Income Tax Return (UBIT). This return requires the church’s EIN.

11. Our church is small and all-volunteer. Does the EIN requirement still apply?

Even an all-volunteer church may need an EIN for banking purposes or if it is incorporated. It’s best to check with your bank and other relevant organizations.

12. What is Form 1023 and when should a church file it?

Form 1023 is the application that a church files to officially be recognized by the IRS as a 501(c)(3) organization. It is filed by churches that want to apply for this official recognition, providing proof of their tax-exempt status to donors and other organizations.

Conclusion: Navigating Church Finances with Confidence

Understanding the complexities of church finances, including the role of EINs, is crucial for effective stewardship and legal compliance. While the rules may seem daunting at first, they are designed to ensure transparency and accountability within religious organizations. By proactively addressing EIN requirements and seeking professional guidance when needed, churches can navigate the financial landscape with confidence and focus on their core mission. So, while churches often have tax ID numbers, understanding the specifics and the reasons why they have them is the most important consideration.