TSCPA News

Procedure for Obtaining EINs to Change May 13

March 27, 2019

As part of its efforts to provide greater security to the employer identification number (EIN) application process, the IRS recently announced that starting May 13 only individual taxpayers with either a Social Security or individual taxpayer identification number will be able to obtain EINs as the “responsible party” on the application.

An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes. The procedure change means that entities will not be able to use their own EIN to obtain additional EINs, and the requirement will apply to both the paper and online EIN applications.

The Form SS-4 Instructions outline who should be listed as the responsible party for various types of entities. The IRS explains that the responsible party is generally the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. When more than one person meets that definition, the entity may decide which individual should be the responsible party.

Only government entities and the military are exempt from the responsible party requirement. There is no change for tax professionals acting as third-party designees who complete EIN applications on behalf of their clients.

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.