Reasons A Church Controlled Organization Needs A Tax ID

If a business were about to hire you, you would do a Tax ID lookup to check EIN status.  What if you were about to start a new job working for a church, though?  Church controlled organizations have a lot in common with secular businesses when it comes to tax laws.  Even church organizations that operate on a volunteer basis instead of hiring paid employees still need a Tax ID number.

What Is an EIN, and Why Do Churches Need Them?

An EIN is an employer identification number.  It is what the IRS uses to identify taxpayers that are not individual people.  (Individuals have social security numbers instead of EINs.)  Every business has an EIN, regardless of its corporate structure.  For example, corporations, partnerships, and limited liability companies (LLC) all use EINs to file taxes.  Non-businesses such as churches, trusts, and estates also have EINs.

The basic reasoning behind issuing an EIN is that the entities that have them must file tax returns.  The IRS uses the tax returns of these businesses and other entities to keep track of their income and expenses.  In reality, many of these entities do not have to pay any taxes when they file their tax returns.  They just have to report their income to the IRS.

Is Your Church an Employer?

Sometimes it is clear that a church-run organization is an employer.  Religious schools pay their teachers.  At some churches, youth group leaders and choir directors earn a salary, although they are volunteers at other churches.  Every church has to fund its operations somehow, though, even if it is just from members’ donations.  The IRS still wants a record of how much money the church takes in and how it uses that money.

Therefore, churches and church-run organizations need an EIN so they can file tax returns.