A tax-exempt number is an important identification number for certain businesses in the state of Illinois or any state for that matter. A tax-exempt number, or sales tax-exempt number, is a number issued by the State that allows approved entities or organizations to forgo the payment of sales taxes.
This tax-exempt number is often confused with an employer identification number (EIN), but they are two completely different identifiers. For starters, one is assigned by the federal government while the other is assigned by the state.
An EIN number is a federal tax identification number issued by the Internal Revenue Service (IRS) used to identify entities operating in the United States. Generally, an EIN number is used to file business tax returns, open business bank accounts and obtain business licenses. In the end, an EIN is like a social security number for a business or organization.
On the other hand, a tax-exempt number is a number assigned by a state agency to identify the entity or organization as exempt from state sales taxes. Tax-exempt organizations are typically nonprofit organizations, including churches, public charities, private foundations, social welfare groups, trade associations, social clubs, fraternities, employee benefit funds, veteran and political organizations, etc.
All businesses – except for sole proprietors – must have an EIN, while only nonprofit organizations will use a tax-exempt number.
How do I Get a Tax-Exempt Number?
There are several steps that an organization will need to take to request a tax-exempt number from the state. To apply for a tax-exempt number through the State of Illinois, you will need the following documentation:
- the articles of incorporation, if incorporated; the organization’s constitution, if unincorporated;
- company-related bylaws;
- the IRS letter, reflecting federal tax-exempt status, if your organization has one;
- the most recent financial statement (religious organizations do not need to submit a financial statement with the initial request);
- a brief narrative that explains the purposes, functions, and activities of your organization;
- brochures or other printed material explaining the purposes, functions, and activities of your organization; and
- any other information that describes the purposes, functions, and activities of your organization.
For further help with the process, or if you and your organization need help obtaining the above documentation, contact James C. Provenza & Associates today. James and his legal team have plenty of experience working with nonprofit organizations and would be happy to assist you and your team. Contact James today at (847) 729-3939. We look forward to hearing from you!