A federal tax ID number, also known as an Employer Identification Number (EIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses and other legal entities. It is similar to a Social Security number for individuals, and is used to identify taxpayers for the purposes of taxation and reporting.
Obtaining an EIN is crucial for businesses and organizations, as it enables them to open business bank accounts, file taxes, and hire employees. The introduction of the EIN in 1954 streamlined the tax system and improved compliance, making it an essential tool for businesses and the IRS alike.