A church-controlled organization entity type is a religious organization or similarly qualified organization that is exempt from paying Federal Insurance Contributions Act taxes. Social security tax, Medicare tax and other taxes related to employee wages are among some of the exempt. Despite not needing to pay taxes, church-controlled organizations must still apply for a tax ID.
What Qualifies as a Church?
To be considered a church-controlled organization, the entity must meet at least five requirements.
- Operation cannot be illegal
- Operation cannot partake in political campaigns
- Activities may not influence laws
- Private individuals or stakeholders cannot benefit from net income
- Must operate exclusively for a charitable, educational, religious or scientific purpose
Additionally, the organization cannot receive more than 25 percent of its support from selling merchandise or from government sources. It also cannot sell goods or services for more than they are worth
Why Is a Tax ID Important for a Church?
Despite not needing to pay taxes, it is still important for religious organizations to secure a federal tax ID number. Doing so allows the organization to open a bank account as well as to create W2 and 1099 tax returns for employees and independent contractors. Finally, the organization can use the number if it needs to list as a subordinate in a group ruling.
What Is a Tax ID?
A federal tax ID, which is sometimes referred to as an employer identification number or an EIN, is a unique nine-digit number assigned to an organization. The organization keeps the number for as long as it has a tax-exempt status. IRS EIN Tax ID Filing Service takes pride in providing a quick and easy way for you to sign up for your EIN number in NC. The company even provides an IRS EIN lookup service for its customers. Learn more by contacting their experts or beginning the application process on IRS-EIN-Tax-ID today.