EIN Guide for an Alabama Nonprofit Corporation

An Employer Identification Number (EIN) is a nine-digit number the IRS assigns to identify your organization for federal tax purposes. Think of it as a Social Security number for the nonprofit — a permanent federal identity that stays with the organization for its entire life. It's sometimes called a Federal Tax Identification Number (FEIN), but it's the same thing.

Why a nonprofit specifically needs one

Even though a 501(c)(3) organization is tax-exempt, it still needs an EIN. Exempt doesn't mean invisible to the IRS — quite the opposite. Your nonprofit uses the EIN to:

• Open a bank account. Every bank requires an EIN to open an account in the organization's name. You cannot responsibly run a nonprofit through a personal account, so this is one of the first practical needs.
• Apply for 501(c)(3) status. The IRS exemption application (Form 1023 or 1023-EZ) requires the EIN. You can't apply for exemption without it.
• Hire employees and run payroll. If you ever have staff, the EIN identifies you for employment tax purposes.
• File the annual Form 990. Your annual information return is filed under the EIN.
• Apply for grants. Funders and grant portals identify your organization by its EIN.

An EIN is one of the earliest things a new Alabama nonprofit needs — right after the corporation is formed and before you can do much of anything else.

The order of operations matters. Get the sequence wrong and you'll create mismatches that cause headaches later.

Form the corporation first

Get your EIN after your Certificate of Formation is filed and the nonprofit corporation legally exists — not before. When you apply, the IRS asks for the legal name and formation details of the entity. Applying before the corporation exists means you'd be identifying an entity that isn't yet real, and the name might not match your final filed name.

Then EIN, then exemption

The clean sequence is: incorporate with Alabama → get the EIN → apply to the IRS for 501(c)(3) status → open the bank account. The EIN sits in the middle because both the exemption application and the bank account depend on it. Most founders get the EIN the same week the corporation is formed so nothing downstream is blocked.

Applying for an EIN is free and, for most organizations, fast. Never pay a third party a fee for the EIN itself — the IRS charges nothing.

The online method (fastest)

1. Go to the IRS EIN Assistant at IRS.gov and start a new application.
2. Select that you're applying for a nonprofit / other tax-exempt organization or corporation — not an individual or sole proprietorship.
3. Enter the nonprofit's exact legal name as it appears on your Certificate of Formation, along with the Alabama address and formation details.
4. Provide the responsible party — a real person (usually a principal officer or the board chair) with a valid U.S. Social Security number or ITIN. The IRS wants a human being who ultimately controls the organization, not another entity.
5. Submit. If everything validates, the EIN is issued immediately and you can download the confirmation letter (CP 575) right away.

The online application is available during IRS business hours and must be completed in one session. Keep the confirmation letter — banks and the IRS will reference it.

If you can't apply online

If your responsible party lacks an SSN or ITIN (common for organizations with a foreign principal), you apply using Form SS-4 by fax or mail. This takes longer — days to weeks — so plan ahead if the online path isn't available to you.

The IRS requires every EIN application to name a "responsible party": the individual who ultimately owns or controls the entity, or who exercises effective control over it. For a nonprofit that has no owners, this is a point of confusion worth clearing up.

Naming it for a nonprofit

Because a nonprofit has no owners, the responsible party is typically a principal officer — the president, board chair, or executive director — who has authority over the organization's funds and assets. It should be a real person with a valid taxpayer identification number, not the entity itself and not a nominee who has nothing to do with the organization.

Keep it current

If the responsible party changes — say the founding chair steps down — the IRS expects you to update the record using Form 8822-B. It's an easy step that keeps your federal record accurate and ensures IRS correspondence reaches the right person.

A handful of predictable errors cause real problems. Knowing them in advance saves you the cleanup.

Thinking the EIN makes you tax-exempt

This is the biggest misconception. Getting an EIN does not make your organization tax-exempt. The EIN just gives the entity a federal identity. Tax-exempt status comes only from a separate IRS application (Form 1023 or 1023-EZ) and the determination letter that follows. A nonprofit with an EIN but no determination letter is a taxable corporation in the IRS's eyes.

Name mismatches

Applying with a name that doesn't exactly match your filed Certificate of Formation creates a mismatch that causes friction at the bank and with the IRS later. Use the exact legal name.

Applying too early

Getting the EIN before the corporation is formed can lock in the wrong details. Form the corporation first, then apply.

Paying for it

The EIN is free from the IRS. Some services charge to "obtain" it as part of a package; the government fee is zero. Don't pay a standalone fee for the number itself.

Losing the confirmation

Store the CP 575 confirmation letter somewhere safe and put the EIN in your permanent corporate records. You'll need it for the bank, the exemption application, grant applications, and every future 990. It's tedious to retrieve a lost EIN, so keep it handy from day one.