Federal tax IDs are nine-digit numbers that employers receive upon application to the Internal Revenue Service. The federal tax ID is also called an Employer ID Number or EIN. Even though many non-profit groups are tax-exempt organizations, an EIN has a variety of purposes other than identifying those organizations that pay tax to the IRS. Accordingly, the vast majority of organizations are required to obtain an EIN from the IRS.
Purposes of Federal Tax ID
The IRS uses EINs to identify employers and their related tax accounts. Like a Social Security number for an individual, the EIN allows the IRS to verify payments and transfers between taxpayers. If a non-profit group has employees, the group will be
required to withhold payroll taxes like Social Security, Medicare and federal unemployment taxes. These payroll taxes must be collected and reported to the IRS and the EIN allows the IRS to track these amounts.
How to Apply
A non-profit group can apply for an EIN in one of four ways: online, by phone, fax or mail. Your selection should be based on how soon you need to have your EIN, but the IRS has stated it prefers online applications, which also have the quickest turnaround. Since the information provided in the application is verified simultaneously, the EIN is assigned as soon as the application has been submitted online. The application form is IRS Form SS-4.
Information for Application