A Federal Employer Identification Number (EIN) is a nine-digit number assigned by the Internal Revenue Service (IRS) in the following format: XX-XXXXXXX. EINs for employee plans are formatted slightly different using a letter (for example M) or the plan number (for example 002) following the EIN. An EIN is also often referred to as a Federal Tax Identification Number (TIN).
An EIN is used by the IRS to identify taxpayers who are required to file various business-related tax forms. EINs are required for employers with employees, certain employers without employees, sole proprietors, corporations, partnerships, nonprofit organizations, government agencies, trusts, estates of decedents, other business entities and individuals and anyone who has a Keogh plan or needs to file the following tax returns: employment, excise, or alcohol, tobacco and firearms.
The EIN should be used on all items sent to the IRS and the Social Security Administration. Only one EIN is necessary for the same business entity. However, if your business changes ownership or its business structure, you may require a new EIN. Check with the IRS to determine if this requirement is applicable to your situation.
An EIN is specifically used for business-related activities only and should not be used in place of your Social Security Number (SSN). If you do not have an EIN in time to file a tax return or other forms, do not use your SSN. Instead, write “Applied for” and the date of the application in lieu of the number.
How to Apply
An EIN can be immediately obtained online from the IRS website. The required form (SS-4) is provided as a free service in an online interview-style format. Once the application is completed and validated, an EIN is issued to the applicant. An EIN may also be immediately obtained via telephone by calling the IRS Business and Specialty Tax line, which is a toll-free service. Other options for obtaining an EIN include fax, which will take approximately four business days as long as the taxpayer provides a fax number; or mail, which takes approximately four weeks.
EINs cannot be canceled by the IRS. Once an EIN is assigned to an entity, it becomes a permanent Federal TIN for that taxpayer and is never reassigned regardless of whether it is ever used to file a tax return. However, the IRS can close your business account. You must submit a written request along with the reason for the closure. The EIN will still belong to your business entity and may be reused in the future if needed.
- tax time image by Gale Distler from Fotolia.com