Are you planning on starting a business or changing entity types and needing an Employment Identification Number (EIN)? The process is being changed by the IRS and taking effect May 13, 2019.

An EIN is a nine-digit tax identification numbers assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans, and other entities for tax filing and reporting purposes.

With the implementation of the new process, the IRS will accept employer identification number (EIN) applications only from individual taxpayers who have either a Social Security number or an individual taxpayer identification number as the responsible party on the EIN application.

What does this change mean? It will prohibit entities from using their own EINs to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number (PDF), and online EIN application.

Generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party.

The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.

If you have questions or need assistance in this area, we are here to help! Contact us at 310-534-5577 or contact@abandp.com.

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