No, a sales tax number is not the same as an EIN. An Employer Identification Number is a federal tax ID issued by the IRS to identify your business for income, payroll, and excise tax purposes. A sales tax number is issued by a state to authorize your business to collect sales tax from customers on that state’s behalf. Different government, different purpose, and most businesses that sell taxable goods or services end up needing both.
What the EIN Is
An EIN is a nine-digit number the IRS assigns to a business or other entity for tax filing and reporting.1Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN) It functions like a Social Security Number for the business. Every federal return the business files carries it.
You generally need an EIN if you hire employees, operate as a corporation or partnership, pay excise taxes on goods like alcohol, tobacco, or fuel, change your business structure or ownership, or administer a trust, estate, or retirement plan.2Internal Revenue Service. Get an Employer Identification Number A sole proprietor with no employees can use a personal Social Security Number for federal taxes instead, though many still get an EIN to keep business and personal finances separate. Banks typically require one to open a business checking account.
You apply using IRS Form SS-4. The online application at IRS.gov/EIN is free and issues the number immediately if your principal business is in the U.S. or a U.S. territory and you have a valid SSN, existing EIN, or ITIN.3Internal Revenue Service. Instructions for Form SS-4 The EIN is permanent and tied to the specific entity; the IRS does not reuse or transfer EINs.4Internal Revenue Service. When to Get a New EIN
What a Sales Tax Number Is
A sales tax number is a state-issued identifier that authorizes your business to collect sales tax from customers. Depending on where you register, you may hear it called a seller’s permit, a sales tax permit, or a sales and use tax registration number. The name varies; the function is the same.
Forty-five states plus the District of Columbia impose a statewide sales tax. The five without one are Alaska, Delaware, Montana, New Hampshire, and Oregon, though some local Alaskan jurisdictions levy their own. Rates, rules, and exemptions vary widely from state to state, so a single business selling nationwide may need separate registrations across many jurisdictions.
You register through the state’s department of revenue or equivalent agency, usually through an online portal. The application typically asks for your federal EIN, business address, the type of products or services you sell, and expected sales volume. Some states charge a small registration fee; many issue permits at no cost.
Having the sales tax number also lets you buy inventory for resale without paying sales tax at the point of purchase. You give the supplier a resale certificate instead, and the tax gets collected when you later sell to the end customer. Using a resale certificate to buy items for personal use is treated as fraud and carries percentage-based fines plus potential criminal charges.
Economic Nexus for Remote Sellers
Before 2018, a business generally needed a physical presence in a state (an office, warehouse, employee, or inventory) to trigger a sales tax collection obligation. The Supreme Court’s decision in South Dakota v. Wayfair changed that. States can now require you to collect based purely on sales volume into the state, even with no physical presence.
The most common threshold is $100,000 in annual sales into a state, though a few states set it higher. Some states also trigger registration at 200 transactions regardless of dollar amount. If you sell online and ship into multiple states, track sales by state and register once you cross a threshold.
For sellers facing registration in many states at once, the Streamlined Sales Tax Registration System consolidates sign-up across the 24 participating states through a single free online application.5Streamlined Sales Tax. State Detail Returns still get filed separately with each state.6Streamlined Sales Tax. Remote Sellers – Streamlined Sales Tax
How the Two Numbers Compare
The core distinction is simple: the EIN identifies your business to the federal government, and a sales tax number identifies it to a state government. Everything else follows from that.
- Issuing authority. The IRS issues EINs. State departments of revenue issue sales tax numbers.
- Scope. One EIN covers your entire federal tax identity nationwide. You may need a separate sales tax number for every state where you have nexus.
- Tax type. The EIN is tied to income tax, payroll tax, and excise tax, which fall on what your business earns or pays. The sales tax number is tied to consumption tax on what your customers buy.
- Whose money it is. Federal taxes linked to the EIN are the business’s own liability. Sales tax collected under a sales tax number is customer money the business holds temporarily and passes through to the state.
- Who needs one. Any corporation, partnership, or employer needs an EIN. A sales tax number is only needed by businesses selling taxable goods or services to end consumers in a jurisdiction where they have nexus.
The ownership distinction in that fourth point is the one most new business owners underestimate. Sales tax you collect isn’t revenue. It’s money held in trust for the state, and that status has consequences if you fall behind.
Why the Difference Matters: Personal Liability
Both numbers carry obligations that can reach past the business itself and attach to individuals.
On the federal side, the IRS can assess the Trust Fund Recovery Penalty against any individual who was responsible for collecting and paying over employment taxes and willfully failed to do so. The penalty equals the full amount of the unpaid tax.7Office of the Law Revision Counsel. 26 U.S. Code 6672 – Failure to Collect and Pay Over Tax, or Attempt to Evade or Defeat Tax “Responsible person” is defined broadly and can include officers, partners, employees with check-signing authority, or anyone else who controlled where the money went.8Internal Revenue Service. Trust Fund Recovery Penalty
On the state side, the logic mirrors the federal rule. Sales tax collected from customers is held in trust for the state. If the business doesn’t remit it, most states can pierce the business entity and hold individual owners or officers personally liable. The specifics vary, but the principle is nearly universal: collected sales tax is not your money, and in many jurisdictions the resulting debt survives bankruptcy.
Each number also carries its own filing calendar. Federal returns tied to the EIN run on IRS schedules; sales tax returns run on whatever frequency each state assigns (monthly, quarterly, or annually, usually based on collection volume), and most states require you to file a return for every period even if you had zero taxable sales. A skipped zero-dollar return is treated as a failure to file.
Do You Need Both?
If you sell taxable goods or services to end consumers, the answer is usually yes. You need the EIN for your federal tax identity (and, in practice, to open a business bank account and to complete most state sales tax applications, which ask for it). You need a sales tax number in every state where you have nexus, whether through physical presence or by crossing an economic nexus threshold.
If you don’t sell taxable goods or services (a consulting practice in a state that doesn’t tax services, for example), you may need only the EIN. If you’re a sole proprietor with no employees selling only non-taxable services, you may not strictly need either, though an EIN is still useful to avoid handing out your Social Security Number. The two registrations are independent decisions, and getting one does not satisfy the other.