What is a Government, State/Local? | IRS Definition of a Government, State/Local
In the United States, an individual or a business can fall under multiple government jurisdictions. This includes the federal government, state government, and local government, which may be comprised of a county or a borough. The government operates multiple government entities, such as departments of taxation. But at its simplest, the government itself is a system that is designed to manage a community.
For the purposes of taxation, government entities are public, rather than private, entities. These are entities that get their money from public funding and that operate to the benefit of the people. Government entities are treated like other non-profit organizations such as churches by the IRS; they don’t need to be taxed, because they are already operating on post-tax dollars.
Because of the way that states and federal government agencies operate, one agency may at times supersede the other. State, local, and federal government entities frequently need to work together and cooperate to create systems that operate well, an example being an identification system. A business might be represented by an EIN to the federal government, a state tax ID to the state government, and a local tax ID to the local government.