We have a client that would like to open an account for a ballot initiative committee using the committee treasurer’s social security number (SSN). Are ballot initiative committees required to obtain EINs, or can we allow the client to set up the account using an individual’s SSN? The IRS website does not have specific guidance on whether ballot infinitive committees have tax exempt status or whether they must obtain an EIN.

We believe an Illinois ballot initiative committee or “ballot measure committee” should obtain an employer identification number (EIN) to open a bank account and must do so to qualify for tax exempt status.

The IRS has stated in a Continuing Professional Education Article that “a ballot measure committee cannot qualify to be treated under the provisions of either IRC 527 [for political organizations] or IRC 501(c)(3) [for charitable organizations], but may, in the appropriate case, qualify for tax exempt status under other subparagraphs of IRC 501(c), for example, IRC 501(c)(4), (5), or (6).” The article also provides that 501(c) organizations must file an annual information return using IRS Form 990 (Return of Organization Exempt From Income Tax). Form 990 requires tax exempt organizations to list their EIN, and to apply for tax exempt status, an organization must first obtain an EIN.

Additionally, the Illinois Election Code provides that a ballot initiative committee “may accept contributions in any amount from any source” — provided certain conditions are met — and must segregate funds from any personal funds of officers, members, or associates of the committee.

Consequently, we believe a ballot initiative committee should obtain an EIN instead of using the SSN of one of its officers.

For resources related to our guidance, please see:

IRS Continuing Professional Education for Fiscal Year 1993, Election Year Issues, pages 449–450 (“What is the proper tax status for a ballot measure committee (an organization formed specifically to support or oppose an initiative or referendum measure)? Expenditures to support or oppose initiatives, referenda, etc., generally are considered to be lobbying expenditures rather than political campaign activity. An IRC 501(c) organization may engage in lobbying activity, although there are limits on the amount of lobbying that an IRC 501(c)(3) organization may do. Consequently, a ballot measure committee cannot qualify to be treated under the provisions of either IRC 527 or IRC 501(c)(3), but may, in the appropriate case, qualify for tax exempt status under other subparagraphs of IRC 501(c), for example, IRC 501(c)(4), (5), or (6). Besides otherwise meeting the requirements of the relevant subparagraph of IRC 501(c), the organization must file an annual information return (Form 990).”)

Internal Revenue Code, 26 USC 501(c) (“List of exempt organizations. The following organizations are referred to in subsection (a):

* * * * *

(4)(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. (B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.

(5) Labor, agricultural, or horticultural organizations.

(6) Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.”)

IRS.gov, Frequently Asked Questions About Applying for Tax Exemption (“Do I need a tax-exempt number for my organization? No. Unlike some states that issue numbers to organizations to indicate that these organizations are exempt from state sales taxes, the IRS does not issue numbers specifically for exempt organizations. While the IRS does issue Employer Identification Numbers (EINs), these are merely a unique identifier, similar to a Social Security number for an individual. Applying for and receiving an EIN says nothing about the organization's tax status; however, your organization needs an EIN to apply for tax exemption.”)

IRS Form 990 Return of Organization Exempt From Income Tax

IRS Form 990 Instructions (“Item D. Employer identification number (EIN). Each organization (including a subordinate of a central organization) must have its own EIN. Use the EIN provided to the organization for filing its Form 990 and federal tax returns. An organization should never use the EIN issued to another organization, even if the organizations are related. The organization must have only one EIN.”)

Illinois Election Code, 10 ILCS 5/9-8.5(e) (“A ballot initiative committee may accept contributions in any amount from any source, provided that the committee files the document required by Section 9-3 of this Article and files the disclosure reports required by the provisions of this Article.”)

Illinois Election Code, 10 ILCs 5/9-6(c) (“All funds of a political committee shall be segregated from, and may not be commingled with, any personal funds of officers, members, or associates of such committee.”)

Illinois Election Code, 10 ILCS 5/9-1.8(a) (“‘Political committee’ includes a candidate political committee, a political party committee, a political action committee, a ballot initiative committee, and an independent expenditure committee.”)