The IRS has announced (IR-2019-58) that applications for an employer identification number (EIN) must include a responsible party with a US Social Security number (SSN) or individual taxpayer identification number (ITIN), beginning May 13, 2019. After that date, applications listing a responsible party with an EIN will not be accepted.

Background

Corporations, partnerships, estates, trusts, and other entities use EINs for tax filing and reporting purposes. To obtain an EIN, these entities must complete Form SS-4, Application for Employer Identification Number. Form SS-4 currently requires entities to identify a responsible party (i.e., the individual who "ultimately owns or controls the entity") and list the responsible party's SSN, ITIN, or EIN. Historically, the responsible party did not have to be an individual, so taxpayers could list companies with EINs or omit an identifying number if the company was foreign and had no EIN.

Revisions to EIN application process

Beginning May 13, 2019, EIN applicants must list an individual with a US SSN or ITIN as the responsible party on Form SS-4. They may no longer use a responsible party's EIN to obtain their own EIN. The new requirement applies to both paper and online EIN applications.

Entities that must designate a new responsible party as a result of this requirement should complete Form 8822-B, Change of Address or Responsible Party, within 60 days of the designation.

Implications

The new IRS policy, once implemented, will adversely affect the ability of entities to obtain new EINs if there is no responsible party with a US SSN or ITIN. In addition, applicants will need to consider who is the appropriate responsible party going forward and advise that individual that his or her US SSN or ITIN must be listed on the Form SS-4 going forward in order to obtain a new EIN.

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