Omar Bennett
Political organizations are required to obtain an Employer Identification Number (EIN), even if they do not have any employees. This nine-digit number, also known as a Federal Tax Identification Number, is used by the IRS to identify taxpayers that are required to file various tax forms. Political parties, campaign committees for candidates for federal, state, or local office, and political action committees are all considered political organizations and are subject to tax under IRC section 527. To obtain an EIN, these organizations must complete and file Form SS-4, which can be done online, by phone, or by submitting a paper form via fax or mail.
How do I get an EIN for a political campaign?
| Characteristics | Values |
|---|---|
| What is an EIN? | Employer Identification Number, also known as a Federal Tax Identification Number. |
| Who needs an EIN? | Political organizations, including political parties, campaign committees for candidates for federal, state, or local office, and political action committees. |
| When is an EIN needed? | When a political organization is formed and needs to file taxes, open a bank account, or apply for licenses and permits. |
| How to get an EIN? | File Form SS-4, Application for Employer Identification Number online, via mail, fax, or by calling the IRS support line. |
| Additional Information | An organization must file Form 8871 within 24 hours of its creation to be considered tax-exempt. |
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What You'll Learn
Political organisations and tax exemption
Political organisations are subject to tax under IRC section 527. This includes political parties, campaign committees for candidates for federal, state, or local office, and political action committees. These organisations are required to file periodic reports, usually electronically, and must obtain an Employer Identification Number (EIN), even if they have no employees.
To obtain an EIN, an organisation must complete an online Form SS-4, Application for Employer Identification Number, or by calling the IRS's toll-free Business & Specialty Tax Line. Alternatively, a paper Form SS-4 can be submitted via fax or mail. An EIN is required to open a bank account, and an organisation must have one in order to file Form 8871, which must be filed within 24 hours of its creation.
Some organisations are exempt from taxation under IRC section 527. Organisations with substantial political or lobbying objectives may be recognised as tax-exempt under Code Section 501(c)(4). 501(c)(4) organisations are permitted to engage in substantial lobbying as long as it is "germane" to the organisation's program and other limitations. Donations to 501(c)(4) organisations are not tax-deductible.
On the other hand, 501(c)(3) charitable nonprofits, foundations, or religious organisations are prohibited from engaging in "political campaign activity" to maintain their tax-exempt status. This includes any and all candidates for federal, state, and local elections. If a candidate for public office wishes to speak at a function, they must not discuss their campaign. They may only talk about the charitable nonprofit and topics related to its mission, and other candidates must also be invited.
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Applying for an EIN online
There are other ways to apply for an EIN as well. One can call the toll-free Business & Specialty Tax Line (800-829-4933) to obtain an EIN. One can also submit a paper Form SS-4 PDF via fax or mail to the address listed on "Where to File Your Taxes - Form SS-4". The quickest way to obtain an EIN is via the IRS website.
It is important to note that an EIN, or Employer Identification Number, is a nine-digit number issued by the IRS and used to identify a business entity within the United States. It is used for taxing and banking purposes and to register your business with the federal government. Most businesses need an EIN.
Additionally, many political organizations must electronically file their periodic reports. To do this, an organization needs the username and password issued to it after filing its initial notice.
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The difference between an EIN and FEC committee ID
To open a bank account, a committee requires an Employer Identification Number (EIN), also known as a Federal Tax Identification Number. This nine-digit number is used by the IRS to identify taxpayers that are required to file various tax forms. The quickest way to obtain an EIN is via the IRS website. However, it is important to note that an EIN is not the same as an FEC committee ID number. While the FEC assigns each committee an identification number, it does not issue EINs, and FEC staff cannot answer questions about the rules pertaining to them or other tax law requirements.
The FEC committee ID number is used for computer indexing and is not the taxpayer identification number required by the IRS. When filing with the FEC, both the Candidate ID and Committee ID will be alphanumeric and nine characters long. The Candidate ID will not change over time, as long as the candidate is running for the same office. For example, a Candidate ID for someone running for office in Iowa may look like H2IA03101 or S2IA00172, with "H" and "S" indicating House and Senate, respectively, followed by the state abbreviation. Committee IDs, on the other hand, always start with C00 and do not change once assigned. Examples of Committee IDs for candidates running for office in Iowa include C00784082 and C00791525.
To obtain an EIN, an organisation must complete and submit Form SS-4, Application for Employer Identification Number. This can be done online through the IRS website, or by calling the toll-free Business & Specialty Tax Line (800-829-4933). Alternatively, a paper Form SS-4 can be submitted via fax or mail. It is important to note that an organisation must have an EIN in order to file Form 8871, which must be filed within 24 hours of its creation to be considered tax-exempt.
While the FEC requires all committees to have an EIN, the process of obtaining an FEC committee ID number is separate. After a committee has filed a registration statement, the FEC assigns an identification number, which must then be included on all subsequent statements and reports. For new committees, this field is left blank on the initial Statement of Organization, and the FEC ID is added once it has been assigned.
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Requirements for tax exemption
To obtain an Employer Identification Number (EIN) for a political campaign, you must first ensure that your organisation meets the requirements for tax exemption. The IRS outlines specific criteria that political organisations must adhere to in order to be considered tax-exempt. Here are the detailed requirements:
- Organisational Purpose: According to the IRS, a political organisation must be "organised and operated for the primary purpose of carrying on exempt function activities." In other words, the majority of its activities must be focused on exempt functions. While a political organisation may engage in non-exempt activities, these cannot be its primary focus.
- Timely Notification: To be recognised as tax-exempt, a political organisation must file a timely notice with the IRS, expressing its intention to be treated as such. This is a crucial step in obtaining tax-exempt status.
- Non-Partisan Activities: Charitable nonprofits (501(c)(3) organisations) are prohibited from participating or intervening in any political campaign supporting or opposing a candidate for public office. This includes publishing statements or providing assets as campaign contributions. Engaging in partisan campaign activities will result in the loss of tax-exempt status.
- Voter Engagement and Education: Nonprofits are permitted to engage in nonpartisan voter registration, voter engagement, and civic engagement activities. These activities are not considered partisan and allow nonprofits to educate the public about community issues.
- Lobbying Restrictions: Charitable nonprofits are expected to refrain from "political campaign activity" to maintain their tax-exempt status. However, organisations with substantial political or lobbying objectives, such as 501(c)(4) tax-exempt organisations, may engage in lobbying as long as it is "germane" to their program and adheres to specific limitations.
- Compliance and Reporting: Tax-exempt political organisations are generally required to file periodic reports electronically. These reports must be filed using the username and password issued to the organisation after filing its initial notice.
Once you have confirmed that your political organisation meets the requirements for tax exemption, you can proceed to obtain an EIN by completing and submitting Form SS-4, Application for Employer Identification Number. This can be done online through the IRS website, over the phone, or by submitting a paper form via fax or mail. Remember that an EIN is necessary even if your organisation does not have any employees.
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Using an EIN for bank accounts and credit
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit identity code assigned to a business by the IRS. While an EIN is not the only requirement for opening a business bank account, it is an important step in the process.
Firstly, an EIN is not mandatory for all businesses. For example, a single-member LLC or a sole proprietorship without employees may not be legally required to obtain an EIN. However, having an EIN provides several benefits when opening a business bank account. It helps separate your personal finances from your business finances, which is advantageous for record-keeping, tax purposes, and protecting your personal assets in the event of legal issues involving your business. Additionally, having your business name and branding on your bank account can enhance your professional image.
Secondly, while an EIN is important, it is typically not sufficient on its own to open a business bank account. In addition to your EIN, banks will usually request personal and business identification documents to verify your identity and the legitimacy of your business. This may include a valid passport or driver's license for personal identification and business formation documents, such as a business license. It is important to note that different banks may have varying requirements, so it is recommended to consult directly with your prospective bank to understand their specific requirements for opening a business account.
Lastly, when it comes to credit, having an EIN can be beneficial but may not be the sole factor in accessing credit options. Building business credit often involves a combination of factors, including applying for a small business loan, responsible spending, and timely repayment of debts. While an EIN may not be the only criterion considered by lenders, it can indicate the legitimacy of your business and provide a foundation for establishing your business's creditworthiness.
In summary, while an EIN is not the only requirement for opening a business bank account or accessing credit, it is an important step that offers several benefits. These include improved record-keeping, protection of personal assets, enhanced professional image, and a foundation for building business credit. By obtaining an EIN and providing the necessary identification and business formation documents, you can set up your business bank account and begin establishing your business's financial credibility.
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Frequently asked questions
EIN stands for Employer Identification Number, also known as a Federal Tax Identification Number.
Political organizations are required to file tax forms and will need an EIN to do so. An EIN is also needed to open bank accounts and lines of credit.
You can apply for an EIN by completing an online Form SS-4, Application for Employer Identification Number, or by calling the toll-free Business & Specialty Tax Line (800-829-4933). You can also submit a paper Form SS-4 via fax or mail.
Political organizations should get an EIN as soon as they are organized.
