How to Get a Nonprofit Tax ID Number: A Step-by-Step Guide
Securing a nonprofit tax ID number, officially known as an Employer Identification Number (EIN), is a crucial step in establishing your charitable organization’s legitimacy. It’s essentially the Social Security number for your nonprofit, allowing you to open bank accounts, apply for grants, and, most importantly, gain tax-exempt status. The process, while seemingly daunting, is quite straightforward when broken down. It primarily involves applying to the IRS, and this article is your compass through that journey.
The Core Process: Applying for Your EIN
The most direct answer to how to get a nonprofit tax ID number is this: you need to apply to the IRS. Luckily, the IRS offers a free and convenient online portal for doing so. Here’s a breakdown of the steps:
Determine Your Eligibility: Ensure your organization is indeed a nonprofit. This typically means it is organized and operated exclusively for exempt purposes referred to in section 501(c)(3) of the Internal Revenue Code. Examples include charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals.
Prepare Your Documentation: While not explicitly required during the online application, having your organizational documents readily available is highly recommended. This includes your articles of incorporation, bylaws, and a clear mission statement. These documents will be crucial when you eventually apply for 501(c)(3) status.
Access the IRS Online EIN Assistant: Navigate to the IRS website and search for “EIN Assistant.” This online tool will guide you through the application process. Make sure you are on the official IRS website to avoid scams.
Choose Your Entity Type: The EIN Assistant will ask you to specify your organization type. Select the appropriate option for a nonprofit. Common choices include “Church or Church-Controlled Organization,” “Nonprofit Organization (501(c)(3)),” or “Other Nonprofit Organization.” Choosing correctly is critical as it influences subsequent questions.
Complete the Application Form (Form SS-4): The online application is essentially a digital version of Form SS-4, Application for Employer Identification Number. Be prepared to provide information about your organization’s legal name, address, responsible party (the person who controls, manages, or directs the organization and its funds), and the reason for applying for an EIN. Answer all questions accurately and truthfully. Double-check your entries before submitting.
Submit Your Application: Once you’ve completed the form and reviewed all information, submit your application electronically. The IRS typically processes online EIN applications immediately.
Receive Your EIN: Upon successful submission, you will receive your EIN immediately. This is usually displayed on the screen, and you can download a PDF copy for your records. Save this document in a safe and accessible location.
Apply for 501(c)(3) Status (The Next Important Step): Obtaining an EIN is just the first step. To be recognized as tax-exempt under section 501(c)(3), you must file Form 1023 or Form 1023-EZ with the IRS. This application process is separate and more detailed than obtaining the EIN.
Frequently Asked Questions (FAQs)
Here are 12 common questions related to obtaining a nonprofit tax ID number, answered with clarity and expertise.
H3 1. What is the difference between an EIN and 501(c)(3) status?
An EIN is simply an identification number for your organization, similar to a Social Security number for an individual. It allows you to open a bank account, hire employees, and conduct other business activities. 501(c)(3) status, on the other hand, is a federal tax exemption that allows your organization to receive tax-deductible donations. Obtaining an EIN is a prerequisite for applying for 501(c)(3) status, but it does not automatically grant you tax-exempt status.
H3 2. How long does it take to get an EIN for a nonprofit?
Applying online, you should receive your EIN immediately. If you choose to apply by mail or fax (less common these days), it can take several weeks. The online method is by far the fastest and most efficient.
H3 3. Is there a fee to get an EIN?
No, the IRS does not charge a fee for obtaining an EIN. Be wary of third-party services that offer to obtain an EIN for a fee. You can easily do it yourself for free through the IRS website.
H3 4. Can I apply for an EIN before forming my nonprofit corporation?
It is generally recommended to form your nonprofit corporation first by filing articles of incorporation with your state. This ensures that your organization legally exists before you apply for an EIN. However, in some cases, you might need an EIN to open a bank account to receive initial funding. Check with your state’s regulations and your bank’s requirements.
H3 5. What information do I need to provide on Form SS-4?
Form SS-4 requires information about your organization’s name, address, type of organization, reason for applying, responsible party’s information, and estimated number of employees (if any). You’ll also need to provide a brief description of your organization’s activities. Be prepared to provide details about your organization’s structure and purpose.
H3 6. Who should be listed as the “responsible party” on Form SS-4?
The responsible party is the individual who controls, manages, or directs the organization and its funds. This is typically the president, treasurer, or another key officer of the nonprofit. This person is ultimately accountable to the IRS for the organization’s tax compliance.
H3 7. What if I make a mistake on my EIN application?
If you discover an error on your EIN application after you’ve received your EIN, you will need to notify the IRS. This can typically be done by contacting the IRS Business and Specialty Tax Line. They will guide you on the process for correcting the information.
H3 8. Can I use my EIN for multiple nonprofit organizations?
No, each nonprofit organization must have its own unique EIN. An EIN is specific to a particular entity and cannot be shared. Attempting to use the same EIN for multiple organizations is a serious violation and can have significant legal consequences.
H3 9. What if I lose my EIN?
If you lose your EIN, you can try to locate it on previous tax returns or other documents filed with the IRS. If you cannot find it, you can contact the IRS Business and Specialty Tax Line. Be prepared to provide information about your organization to verify your identity. They may be able to provide you with your EIN.
H3 10. What is Form 1023 and why is it important?
Form 1023 is the application form used to apply for 501(c)(3) status with the IRS. It’s a comprehensive document that requires detailed information about your organization’s purpose, activities, finances, and governance structure. Achieving 501(c)(3) status is crucial for nonprofits as it allows them to receive tax-deductible donations and apply for grants.
H3 11. What is Form 1023-EZ and who can use it?
Form 1023-EZ is a simplified version of Form 1023. Smaller nonprofits that meet certain eligibility requirements, such as having projected annual gross receipts of $50,000 or less and total assets of $250,000 or less, may be able to use this form. It’s a faster and less burdensome way to apply for 501(c)(3) status. However, it’s essential to carefully review the eligibility requirements before using Form 1023-EZ to ensure your organization qualifies.
H3 12. What happens after I receive 501(c)(3) status?
Once you receive 501(c)(3) status, you will need to comply with ongoing requirements, such as filing annual information returns (Form 990 series) with the IRS. You must also operate in accordance with the rules and regulations governing tax-exempt organizations. Failure to comply with these requirements can result in penalties or even revocation of your 501(c)(3) status.
Obtaining a nonprofit tax ID number is a foundational step in creating a successful and sustainable organization. By understanding the process and addressing potential questions, you can navigate this crucial stage with confidence and set your nonprofit up for long-term success. Remember to consult with legal and financial professionals for personalized advice tailored to your specific situation. The journey towards building a impactful nonprofit starts with these vital first steps.
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