Why Does a Church Controlled Organization Need a Tax ID?

If you are like most people, you probably do not think of a church as a business. In many ways, you’re right. Churches don’t typically sell products or services that make profits. However, the IRS does consider a church controlled organization a business for legal purposes. For this reason, they must apply for EIN.

How the IRS Defines a Church

According to the IRS, any organization that focuses on religion is a church. While this naturally includes houses of worship, the term also covers groups of individual places of worship (denominations), religious schools or church-run charities. These entities must also define themselves as a 501(c)(3) if they wish to accept tax-deductible contributions for their organizations.

Qualifying for Tax-Exempt Status

Qualifying for a church tax ID number is not as simple as claiming to be a religious organization. The IRS requires these organizations to meet several other requirements. To obtain an EIN for church, the applicant must be exclusively for religious services, religion-based education or a religious charity. Additionally, it cannot make a profit for any individual or stakeholder. Church entities may not partake in anything political, including campaigning, naming support for a specific candidate or working to influence legislation in any way. Finally, any organization found to be operating illegally will lose its tax-exempt status.

Benefits of Applying for an EIN

A church organization that applies for an EIN sees several benefits. In addition to proving to potential members, employees or donors that it is a legitimate organization, the EIN allows the church to open bank accounts in its name, hire employees and submit 1099 and W-2 forms. Additionally, the tax ID number lets the church accept tax-deductible donations.

If you own or operate a church or another religious-based organization, filing for an EIN number is essential. Allow GovDocFiling to help you start the process. All it takes is a single click to being filling out the church controlled organization application.