Are you required to obtain a Tax Identification Number (EIN)?
The Federal Employer Identification Number (EIN or FEIN) is a unique nine-digit federal tax identification number assigned by the Internal Revenue Service (IRS) to business entities in the United States. Foreign-owned U.S. business entities must comply with specific rules to obtain an EIN.
Obtaining an EIN
Foreign owners do not need a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to apply for an EIN. Since foreign owners cannot apply online without a Taxpayer Identification Number, they must submit Form SS-4 by fax or mail to the IRS.
- Fax: +1 855-215-1627 (faster processing, typically within 4-5 business days)
- Mail: Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999, USA (may take 4-6 weeks)
Steps to Follow
- Complete Form SS-4: Write “Foreign” at the top of the form to indicate the application is from outside the U.S., which helps avoid processing delays.
- Waiting for Confirmation: After submitting the form, wait for the EIN Assignment Letter (CP 575), which will be faxed or mailed back.
Importance of EIN
An EIN is necessary to open a U.S. business bank account, separate personal and business finances, and protect liability. It is required for hiring employees, paying taxes, and obtaining necessary licenses.
Additional Obligations for Foreign-Owned Entities
Foreign-owned Single-Member Disregarded LLCs must file Form 5472 and Form 1120, and obtain an EIN to comply with U.S. tax regulations. Trusts that change to an estate, terminate by distributing their property to a residual trust, or are grantor-owned trusts with multiple trusts must obtain a new EIN.
Businesses need to obtain a new EIN when their ownership or structure has changed. Simple business name or address changes do not require a new EIN. Partnerships that are taken over by one partner and operated as a sole proprietorship, partnerships that declare bankruptcy, and corporations that become subsidiaries of a corporation must also obtain a new EIN.
Only certain sole proprietors and single-member LLC's do not need to get an EIN, they can use Social Security Numbers instead. All corporations (C corps and S corps) must have an EIN, and an LLC with more than one member is taxed, by default, as a partnership and needs an EIN. Corporations will not require a new EIN if they are divisions of a corporation.
Obtaining an EIN is a straightforward process, you can apply online, by fax, phone or mail by filling in a one-page Form SS-4. The EIN is crucial for legal compliance and managing business finances in the United States.
- A foreign owner, who cannot apply for an EIN online due to not having a Taxpayer Identification Number, may apply for one by faxing or mailing Form SS-4 to the Internal Revenue Service.
- Once a foreign-owned U.S. business entity has obtained an EIN, it becomes necessary to open a bank account, separate personal and business finances, and comply with various U.S. tax regulations.
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