federal tax

What in the World is a Federal Tax Identification Number?


An Employer Identification Number (or EIN, a.k.a. Federal Tax Identification Number) is used for the IRS to identify a business entity. All corporations, partnerships, and limited liability companies that have incorporated must have an EIN, but sole proprietorships may use their Social Security number instead.

You can apply for an EIN here.

 

When Do I Need An EIN? 

You will need an EIN if your business:

  • • Has employees
  • • Operate your business as a corporation or partnership
  • • File any of the following returns: Employment, Excise, or Alcohol, Tobacco and Firearms
  • • Withholds taxes on income, other than wages, paid to a non-resident alient
  • • Have a Keogh plan
  • • Any of the following types of organizations: Trusts, IRA’s, Real estate mortgage investment conduits, non-profit organizations, Farmers’ cooperatives, Plan administrators, or Estates

 

How Long Will It Take For Me To Get My EIN?

You can receive an EIN immediately if you apply online. If you apply by mail, it will take at least four to five weeks before you receive your number. If you don’t have your EIN by the time your tax return is due, write “applied for” and the date you applied for in the space shown for the number (DO NOT use your social security number). If you don’t have your EIN by the time a deposit to the IRS is du, send your payment to the service center for your state, and include your address, name, kind of tax, period covered, and date you applied for your EIN.

 

I’ve Lost My EIN, What Do I Do?

You may try any of the following to locate your missing number:

  • • Find the computer-generated notice that was provided by the IRS when you applied for your EIN. This will be on the ‘receipt’ of your EIN.
  • • If you used your EIN to open a bank account or apply for any state or local license, you should be able to contact the bank or agency to receive your EIN.
  • • If you have any previously filed tax returns for your entity, your previously filed returns will have the EIN on them.
  • • If you call the IRS’s Business and Specialty Tax Line (800) 829-4933 (hours of operation are 7:00am-7:00pm Monday through Friday), an assitor will be able to help you find your EIN by simply answering some identifying questions.

 

How Do I Cancel My EIN?

The IRS cannot cancel your EIN. Once an EIN has been assigned to an entity, it becomes the permanent federal taxpayer identification number for that entity. Even if the EIN is never used to file federal tax returns again, the EIN will not be reused or reassigned to another business entity. If you receive an EIN but later decided you don’t need the number (for instance, you decide to close down the business before starting it), the IRS can close your business account. To close your business account, send a letter including the legal name of the entity, the EIN, the business address, and reason you want to close your account to:

Internal Revenue Service

Cincinnati, Ohio, 45999

 

I’m Changing The Structure Of My Business; Do I Need A New EIN?

Sole Proprietors:

Will need a new EIN if:

  • • You are subject to a bankruptcy proceeding
  • • You incorporate
  • • You take in partners and operate as a partnership
  • • You purchase or inherit an existing business that you operate as a sole proprietorship.

Will not need a new EIN if:

  • • You change the name of your business
  • • You change the location and/or add other locations
  • • You operate multiple businesses.

 

Corporations:

Will need a new EIN if:

  • • A corporation receives  new charter from the secretary of state
  • • You are a subsidiary of a corporation using the parent’s EIN or you become a subsidiary of a corporation
  • • You change to a partnership or a sole proprietorship
  • • A new corporation is created after a statutory merger.

Will not need a new EIN if:

  • • You are a division of a corporation
  • • The surviving corporation uses the existing EIN after a corporate merger
  • • A corporation declares bankruptcy
  • • The corporate name or location changes
  • • A corporation chooses to be taxed as an S corporation
  • • Reorganization of a corporation changes on the identity of place
  • • Conversion at the state level with business structure remaining unchanged.

 

Partnerships:

Will need a new EIN if:

  • • You incorporate
  • • Your partnership is taken over by one of the partners and is operated as a sole proprietorship
  • • You end an old partnership and begin a new one

Will not need a new EIN if:

  • • The partnership declares bankruptcy
  • • The partnership name changes
  • • You change the location of the partnership or add other locations
  • • A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B)
  • • 50 percent or more of the ownership of the partnership changes hands within a twelve-month period).

 

Limited Liability Companies:

Will need a new EIN if:

  • • A new LLC with more than one owner is formed under state law
  • • A new LLC with one owner is formed under state law and chooses to be taxed as a corporation or an S corporation
  • • A new LLC with one owner is formed under state law, and has an excise tax filing requirement for tax periods beginning on or after Jan 1st, 2008 or an employment tax filing requirement for wages page on or after Jan 1st, 2009

Will not need a new EIN if:

  • • You report income tax as a branch or division of a corporation or other entity, and the LLC has no employees or excise tax liability
  • • An existing partnership converts to an LLC classified as a partnership
  • • The LLC name or location changes
  • • An LLC that already has an EIN chooses to be taxed as a corporation or as an S corporation
  • • A new LLC with one owner is formed under state law, does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability.

 

Estates:

Will need a new EIN if:

  • • A trust is created with funds from the estate (not simply a continuation of the estate).
  • • You represent an estate that operates a business after the owner’s death

Will not need a new EIN if:

  • • The administrator, personal representative, or executor changes his/her name or address

 

Trusts:

Will need a new EIN if:

  • • One person is the grantor/maker of many trusts
  • • A trust changes to an estate
  • • A living or intervivos trust changes to a testamentary trust
  • • A living trust terminates by distributing its property to a residual trust

Will not need a new EIN if:

  • • The trustee changes
  • • The grantor or beneficiary changes his/her name or address


Need advice?
Revised: Aug. 22, 2018, 12:27 p.m.
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