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EIN Application Process Revised

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Employer Identification Numbers (EINs) are nine-digit tax identification numbers that are assigned to certain entities, including corporations, trusts, and estates for tax filing purposes. Recently, in an effort to improve the security of taxpayer information, the IRS revised the process of applying for an EIN. Determining how and to whom the new rules apply can be difficult, so if you believe that you qualify for an EIN, it is important to consult with an experienced Florida tax and IRS attorney who can advise you.

What are EINs? 

EINs are tax identification numbers that are assigned to certain entities for tax filing and reporting purposes, including:

  • Sole proprietors;
  • Corporations;
  • Partnerships;
  • Estates;
  • Employee retirement plans; and
  • Trusts.

New changes instituted by the IRS will place further limits on who can apply for an EIN.

Who Can Apply for an EIN? 

Recently, the IRS announced an important change to the process of applying for Employer Identification Numbers. According to this announcement, only individuals with individual tax identification numbers (ITINs) or Social Security Numbers (SSNs) will be permitted to request an EIN, if named as the responsible party on the application. This means that entities are now prohibited from using their own EINs to obtain additional Employer Identification Numbers, a change that applies to both online EIN applications and paper Form SS-4 applications.

Who is the Responsible Party on an EIN Application? 

The responsible party, for EIN application purposes, is the individual who owns, controls, or exercises effective control over the entity for which the EIN is being requested. Generally, the responsible party must have a level of control over, or entitlement to the assets or funds in the entity that enables him or her, whether directly or indirectly, to control, direct, or manage the entity. Responsible parties almost always have to be an individual, or a natural person. In the event that more than a single person meets this definition, the entity can decide who should be labeled as the responsible party.

The new changes apply to all EIN applicants, except governmental entities, including federal, state, local, and tribal governments, and the military, all of which are exempt from the responsible party requirement. Finally, tax professionals acting as third-party designees are still permitted to complete these applications on behalf of their clients.

Can the Responsible Party Designation be Changed? 

If an entity decides to change its responsible party official designation, it is permitted to do so by completing Form 8822-B. However, these designations will only be considered officially amended if the form is completed within 60 days of the change. Otherwise, any change in designation as a responsible party for an entity will be considered invalid.

Discuss Your Case with an Experienced Tax Law Attorney  

Failing to comply with the new EIN application rules can have dire consequences for a business, estate, or trust, so if you qualify for an EIN and have questions about the application process or designating a responsible party, please contact dedicated Florida tax law attorney Ronald Cutler, P.A. today. You can reach a member of our legal team at 386-490-9949 or via online message.

Resource:

irs.gov/newsroom/irs-revises-ein-application-process-seeks-to-enhance-security

https://www.hotlineforhelp.com/what-are-my-options-if-i-cannot-pay-my-taxes-in-full/