Yes, in almost every case subsidiaries have their own EIN. The IRS lists “a corporation’s subsidiary” as a trigger for getting a new Employer Identification Number, and any subsidiary that files its own tax return, hires employees, or owes certain excise taxes must have a separate number.1Internal Revenue Service. When to Get a New EIN The one meaningful exception is a single-member LLC treated as a disregarded entity, and even that exception has limits.
Corporate and Partnership Subsidiaries Always Need One
A subsidiary set up as its own corporation is a distinct legal taxpayer. It files its own Form 1120 each year under its own identification number. There is no mechanism for combining a corporate subsidiary’s income with the parent’s return as though the subsidiary did not exist.
A subsidiary organized as a partnership, including a multi-member LLC with two or more owners, also needs its own EIN. Partnerships file Form 1065 to report income, deductions, and each partner’s share of the results, and that filing requires an EIN for the partnership itself, separate from the EINs of its partners or parent companies.2Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income
The Single-Member LLC Exception
Under the federal default classification rules, a domestic entity with a single owner is disregarded as separate from that owner for income tax purposes.3eCFR. 26 CFR 301.7701-3 – Classification of Certain Business Entities When a corporation wholly owns a single-member LLC, the subsidiary’s financial activity flows onto the parent corporation’s Form 1120 as though it were an internal division. The subsidiary files no separate income tax return and uses the parent’s EIN for income tax reporting.4Internal Revenue Service. Single Member Limited Liability Companies
Schedule C does not come into play here. That form is for individual sole proprietors reporting on personal returns, not for corporate-owned subsidiaries.
When a Disregarded Subsidiary Still Needs Its Own EIN
Disregarded status only covers federal income tax. The IRS states this directly: if you own a single-member LLC that has to file excise or employment taxes, you need a new EIN.1Internal Revenue Service. When to Get a New EIN Three situations force a separate number.
If the subsidiary hires its own employees, it must use its own name and EIN to report and deposit employment taxes. That means quarterly Form 941 returns, annual Form 940 returns, and W-2 statements issued under the subsidiary’s number. The rule applies to wages paid after January 1, 2009, and treats the disregarded entity as a separate employer for the entire employment tax system.4Internal Revenue Service. Single Member Limited Liability Companies
Excise tax activities work the same way. A disregarded subsidiary must use its own name and EIN to register, to pay and report on Forms 720, 730, 2290, and 11-C, and to claim refunds on Form 8849.4Internal Revenue Service. Single Member Limited Liability Companies
A disregarded entity can also elect to be taxed as a corporation by filing Form 8832.5Internal Revenue Service. About Form 8832, Entity Classification Election Once that election takes effect, the subsidiary becomes a separate taxable entity, files its own Form 1120, and needs its own EIN for every purpose.
The QSub Election for S-Corporation Parents
An S-Corporation parent that wholly owns a corporate subsidiary can elect to treat that subsidiary as a qualified subchapter S subsidiary, or QSub. Under the election, the subsidiary stops being treated as a separate corporation for federal tax purposes, and its assets, liabilities, income, and deductions roll up into the parent S-Corp’s return, similar to a disregarded single-member LLC.6Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
The parent must be a valid S-Corporation and own 100% of the subsidiary’s stock. The subsidiary must be a domestic corporation that would otherwise qualify for S-Corp status. Foreign corporations, REITs, and regulated investment companies cannot be QSubs, and an LLC that has not elected to be treated as a corporation does not qualify because the statute requires a corporation in the technical sense.6Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined A single-member LLC owned by an S-Corp is already disregarded under the classification rules and does not need a QSub election.
Consolidated Returns Do Not Eliminate the EIN Requirement
A C-Corporation parent and its corporate subsidiaries can elect to file a single consolidated income tax return. That election changes how the group’s tax is calculated, but every subsidiary still keeps its own EIN. Each entity uses that number for identification within the group’s filings and for obligations outside income tax, including employment and excise taxes.
To qualify, the parent must directly own at least 80% of the total voting power and at least 80% of the total value of at least one subsidiary, with the same threshold met for every other member of the chain.7Office of the Law Revision Counsel. 26 USC 1504 – Definitions The first time a subsidiary joins the group, it authorizes its inclusion by filing Form 1122 with the common parent.8Internal Revenue Service. About Form 1122, Authorization and Consent of Subsidiary Corporation to be Included in a Consolidated Income Tax Return
Foreign Parent Companies
When a foreign parent forms a U.S. subsidiary, the online EIN application often will not work. The tool is only available if the entity’s principal place of business is in the United States and the responsible party has a Social Security Number or Individual Taxpayer Identification Number.9Internal Revenue Service. Get an Employer Identification Number If the responsible party is a foreign individual without either number, the subsidiary must apply by phone (267-941-1099, Monday through Friday, 6 a.m. to 11 p.m. Eastern), by fax, or by mail using Form SS-4. On line 7b, where the form asks for the responsible party’s SSN or ITIN, the applicant writes “Foreign” or “N/A,” and the IRS still assigns a regular EIN. A foreign individual does not need an ITIN first to receive an EIN for the subsidiary.10Internal Revenue Service. IRM Procedural Update
Foreign-owned single-member LLCs treated as disregarded entities have an extra filing obligation. The entity must file a pro-forma Form 1120 each year with Form 5472 attached, reporting transactions between the U.S. entity and its foreign owner.11Internal Revenue Service. Instructions for Form 5472 That filing requires the subsidiary to have its own EIN, even though it is disregarded for income tax.
Applying for the Subsidiary’s EIN
The fastest route is the IRS online application, which issues the number immediately. The tool runs Monday through Friday from 6 a.m. to 1 a.m. the next day, Saturday from 6 a.m. to 9 p.m., and Sunday from 6 p.m. to midnight, all Eastern time. Only one EIN can be issued per responsible party per day, so setting up several subsidiaries at once will span several days.9Internal Revenue Service. Get an Employer Identification Number
The alternative is Form SS-4 by fax or mail. Fax applications typically produce an EIN within four business days. Mailed applications take roughly four weeks.12Taxpayer Advocate Service. Getting an EIN
The application asks for the legal name and existing EIN of the parent, the legal name and address of the new subsidiary, and the reason for applying. The parent names a responsible party, meaning the individual who controls the subsidiary’s assets and finances, usually an officer of the parent. The IRS uses that person’s SSN or ITIN for verification. For a new formation, “Started a new business” is the standard selection.13Internal Revenue Service. Instructions for Form SS-4
What Goes Wrong If You Use the Parent’s EIN
Running a subsidiary’s activity through the parent’s EIN when it should have its own creates mismatches in IRS records. Income the subsidiary should be reporting on its own return either goes unreported or lands on the wrong return. The IRS treats this as negligence or disregard of the rules, and the accuracy-related penalty is 20% of the resulting underpayment.14Internal Revenue Service. Accuracy-Related Penalty
For corporations, a substantial understatement triggers the same 20% penalty. The threshold is the lesser of 10% of the tax that should have been shown on the return (or $10,000, whichever is greater) and $10 million.14Internal Revenue Service. Accuracy-Related Penalty Mismatched EINs also cascade into employment tax deposit problems, W-2 issues, and state registration errors that compound the longer they go uncorrected.
Banking and Contracts Usually Require a Separate EIN Anyway
Even where the IRS allows a subsidiary to use the parent’s number, the business world often does not. Banks generally require a unique EIN to open a checking or savings account in the subsidiary’s name, keeping its cash flow distinct from the parent’s accounts. That separation also matters for legal liability. If a subsidiary’s finances are too intertwined with the parent’s, a court may pierce the corporate veil and hold the parent responsible for the subsidiary’s debts.
A subsidiary’s EIN also appears on contracts, leases, and licenses the subsidiary signs on its own. Using its own number on those documents reinforces its status as a separate legal entity. If the parent’s EIN shows up instead, the question of which entity actually owes the obligation gets murkier, and that is the kind of ambiguity that produces expensive litigation.