State and local governments are recognized by the United States Constitution and individual state constitutions. State law, court decisions, as well as the examination of facts, can take a state and local government and make it a recognized government entity in the eyes of the Internal Revenue Service. State and local governments have powers in terms of civil authority, government structure, law enforcement, and more.
Federal employment taxes will apply to all 50 states in the United States. A state and or local government has the primary responsibility for many aspects of the government. This will include the services that involve the protection of lives, regulation of business, improvement of transportation, and more. It is all around the 10th Amendment to the United States Constitution. Local governments go a step deeper as a political subdivision within one of the states. The local government will define itself with a charter, impose its own taxes, and administer local programs with boundaries.
As a State and Local government, put the time in early to get your organization set up properly, and stay in good standing with the Internal Revenue Service. Obtaining the Tax ID (EIN) is a great first step down the path of running this Non-Profit the right way.