IRS Changes the Procedure to Obtain an EIN Starting May 13

IRS Changes the Procedure to Obtain an EIN Starting May 13

IRS announced that starting May 13, 2019, only individuals with either Social Security Number (SSN) or individual taxpayer identification number (ITIN) may request a federal Employer Identification Number (EIN). (IR-2019-58). The new change will not allow entities to be listed as the “responsible party” and use their EIN to obtain other EINs. 

EIN is a nine-digit number assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities for tax filing and reporting. Form SS-4 is used to apply for an EIN. 

The responsible party for an entity is normally the person who owns or controls the entity or the one who has the power to exercise control over the entity (Instructions for Form SS-4). For example, if the entity is a corporation, the responsible party may be the principal officer and if the entity is a partnership, the general partner may be the responsible party. 

The new changes to obtaining EIN especially affects international entities who are applying for EIN to make an entity classification for U.S. tax purposes. Under the changes, a responsible party of an international entity that has no U.S. presence or U.S. officers, first would have to obtain TIN (File Form W-7) and then apply for EIN. 

There is an exemption for this responsible party requirement. It only applies to governmental entities (federal, state, local, and tribal) and includes the military. 

According to the IRS, these changes would provide greater security to the EIN process by requiring an individual as the responsible party.

 

Our international tax law attorneys are ready to work for you.

Get a confidential case evaluation.