Securing an Employer Identification Number (EIN) for Non-Profit Organizations: A Comprehensive Guide

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number (FTIN), is a unique nine-digit number assigned to businesses and organizations by the Internal Revenue Service (IRS). Non-profit organizations, regardless of size or structure, are required to obtain an EIN to conduct various essential activities, including:

• Opening bank accounts

• Hiring employees

• Applying for tax-exempt status

• Receiving tax-deductible donations

• Filing tax returns

• Obtaining certain licenses and permits

The EIN serves as a vital identifier for non-profits, enabling the IRS to track their financial activities and ensuring compliance with tax regulations. It also facilitates interactions with other government agencies and financial institutions.

Eligibility for an EIN

All non-profit organizations, regardless of their legal structure (corporation, trust, association, or partnership) are eligible to obtain an EIN. There is no minimum or maximum size requirement for non-profits to apply for an EIN.

Obtaining an EIN: Step-by-Step Process

The IRS offers three primary methods for obtaining an EIN:

1. Online Application: The IRS's online EIN application system is the most convenient and efficient method for non-profits. The online application process is straightforward and can be completed within minutes.

2. Fax Application: Organizations can also apply for an EIN by faxing Form SS-4, Application for Employer Identification Number, to the IRS. The completed form must be faxed to the designated fax number provided in the instructions.

3. Mail Application: Non-profits can also apply for an EIN by mailing Form SS-4 to the IRS. The completed form must be mailed to the designated mailing address provided in the instructions.

Required Information

Regardless of the application method chosen, non-profit organizations must provide specific information to obtain an EIN, including:

• Legal name of the organization

• Mailing address of the organization

• Telephone number of the organization

• Date the organization was established

• Type of legal entity (corporation, trust, association, or partnership)

• Number of employees

• Reason for applying for an EIN

Processing Time

Once an application is submitted, the IRS typically processes EIN applications within a few days. Online applications are processed immediately, and applicants receive their EIN instantly. Faxed and mailed applications may take a few days to process, and applicants receive their EIN via mail.

Maintaining an EIN

An EIN is a permanent identifier for a non-profit organization and remains valid even if the organization's legal name, address, or structure changes. Organizations are not required to renew or apply for a new EIN unless it has been lost or stolen.

Importance of an EIN for Non-Profits

Obtaining an EIN is a crucial step for non-profit organizations to establish their legitimacy, manage their finances effectively, and comply with tax regulations. It opens doors to essential financial services, enables participation in government programs, and enhances credibility among donors and partners.

Additional Considerations

• Appointing a Responsible Party: Each non-profit organization must designate a responsible party, typically a board member or officer, who is authorized to obtain and manage the EIN on behalf of the organization.

• Protecting the EIN: Organizations should safeguard their EIN from unauthorized access and use. Treat the EIN with the same level of care and confidentiality as other critical financial information.

• Updating EIN Information: In the event of any changes to the organization's legal name, address, or structure, it is important to notify the IRS to update the EIN records.

Conclusion

Securing an Employer Identification Number (EIN) is an essential step for all non-profit organizations, regardless of their size or activities. By obtaining an EIN, non-profits can effectively manage their finances, comply with tax regulations, and access essential financial services. The EIN serves as a crucial identifier that enhances the organization's legitimacy and credibility, enabling it to operate effectively and fulfill its mission.