A business TIN is a taxpayer identification number the IRS uses to match tax filings to your company, and for almost every business that number is an Employer Identification Number (EIN). It’s a free nine-digit number the IRS issues in the format 12-3456789, and you can apply for it online and receive it the same session. Think of it as a Social Security number for your business.
The Three Kinds of Taxpayer ID a Business Might Use
Federal law under 26 U.S.C. § 6109 requires anyone filing a return or other tax document to include an identifying number.1Office of the Law Revision Counsel. 26 USC 6109 – Identifying Numbers For a business, that number will be one of three things:
- An EIN, the standard business identifier, issued to corporations, partnerships, LLCs, trusts, estates, and nonprofits.2eCFR. 26 CFR 301.6109-1 – Identifying Numbers
- An SSN, which a sole proprietor with no employees can use instead of an EIN.
- An ITIN, for individuals who must file U.S. taxes but aren’t eligible for an SSN. An ITIN doesn’t authorize employment or qualify anyone for Social Security benefits.3Internal Revenue Service. Individual Taxpayer Identification Number (ITIN)
When someone asks about a business TIN, they almost always mean the EIN. The rest of this article focuses on that.
Who Needs an EIN
The IRS requires an EIN if your business does any of the following:
- Has employees
- Operates as a partnership, corporation, or multi-member LLC
- Files employment, excise, or alcohol, tobacco, and firearms tax returns
- Withholds taxes on income paid to a nonresident alien
- Operates as a tax-exempt organization, estate, trust, retirement plan, or farmers’ cooperative
If you run a one-person business with no employees and don’t file excise tax returns, the IRS does not require you to get one. You can report business income on your personal return using your SSN. Many sole proprietors still get an EIN anyway. Putting your SSN on every W-9 and vendor form creates identity theft risk, and most banks ask for an EIN when you open a business checking account.5U.S. Small Business Administration. Open a Business Bank Account The application is free and quick, so there’s little reason not to.
What to Have Ready Before You Apply
Every EIN application, whether online, by fax, or by mail, is built on Form SS-4. Gather these first:
- Legal name of the entity and any trade or “doing business as” name
- Entity type (sole proprietorship, partnership, LLC, corporation, trust, and so on)
- Reason for applying (new business, hiring employees, banking, and so on)
- Date the business started or was acquired
- Principal business address and mailing address
- Responsible party’s name and taxpayer ID (SSN, ITIN, or EIN for entities)
- Expected number of employees over the next 12 months
The responsible party is the individual who ultimately owns, controls, or manages the entity and its funds. The IRS requires this person’s name and taxpayer ID on every application, and nominees or agents cannot be listed in place of the actual responsible party.6Internal Revenue Service. Responsible Parties and Nominees
If the responsible party doesn’t have an SSN or ITIN, the online tool won’t work. International applicants with a principal place of business outside the United States apply by phone, fax, or mail; the IRS international line is 267-941-1099.4Internal Revenue Service. Employer Identification Number
How to Apply
Applying for an EIN is free. The IRS charges nothing, and you never need to pay a third party. The FTC has warned that some companies charge hundreds of dollars for a service the IRS provides at no cost.7Federal Trade Commission. Don’t Pay to Get Your Employer Identification Number (EIN) Go directly to IRS.gov.
Online
The fastest route is the IRS online EIN assistant, an interview-style form that issues your EIN as soon as you finish. The portal is open Monday through Friday from 6 a.m. to 1 a.m. (next day), Saturday from 6 a.m. to 9 p.m., and Sunday from 6 p.m. to midnight, all Eastern time.8Internal Revenue Service. Get an Employer Identification Number
Two limits catch applicants off guard. The session times out after 15 minutes of inactivity and can’t be saved, so gather your information first.9Taxpayer Advocate Service. When Taxpayers Struggle to Obtain an EIN, Everyone Loses And the IRS caps applications at one EIN per responsible party per business day, so multiple entities take multiple days.8Internal Revenue Service. Get an Employer Identification Number
Fax or Mail
You can also send a completed Form SS-4 by fax or mail. Faxed applications typically get a response within four business days if you include a return fax number. Mailed applications can take four to five weeks.9Taxpayer Advocate Service. When Taxpayers Struggle to Obtain an EIN, Everyone Loses Unless you’re an international applicant or have no internet access, the online route is faster.
When You Need a New EIN
An EIN, once assigned, is permanent. The IRS can’t cancel it. But some structural changes to your business require a new one. The general rule: changes to ownership or entity structure usually trigger a new EIN, while changes to name or address do not.10Internal Revenue Service. When to Get a New EIN
A sole proprietor needs a new EIN when incorporating, forming a partnership, or filing bankruptcy. A corporation needs one when it receives a new state charter, converts to a partnership or sole proprietorship, or merges to form a new corporation. A partnership needs one when it incorporates, dissolves and starts fresh, or when one partner takes over as sole proprietor. An LLC needs one if it terminates and forms a new corporation or partnership, or if a single-member LLC has to start filing employment or excise taxes.10Internal Revenue Service. When to Get a New EIN
You keep your existing EIN if you change your business name or location, elect S corporation status, survive a corporate merger, declare bankruptcy (for corporations and partnerships), or convert a partnership to an LLC still taxed as a partnership. The IRS page on this topic lists every scenario by entity type.10Internal Revenue Service. When to Get a New EIN
Keeping IRS Records Current
If your business changes its responsible party, you must report the change within 60 days on Form 8822-B. This is mandatory.11Internal Revenue Service. About Form 8822-B, Change of Address or Responsible Party – Business The same form handles address changes. Skipping an address update isn’t itself penalized, but you may miss a notice of deficiency or demand for payment and end up with penalties and interest accruing on a debt you didn’t know about.
If your business closes permanently, the EIN can’t be deleted, but it can be deactivated. File any outstanding returns, pay what’s owed, and send a letter to the IRS with your EIN, legal name, address, and the reason for closing. Mail it to the IRS at Kansas City, MO 64108 (MS 6055) or Ogden, UT 84201 (MS 6273).12Internal Revenue Service. If You No Longer Need Your EIN
How to Find an EIN You’ve Lost
The IRS issues Notice CP 575 to confirm your EIN, and it sends that notice only once. Keep it. If it’s gone, your EIN also appears on previously filed tax returns, bank account opening documents, and any old IRS correspondence.
If none of that turns up, call the IRS Business and Specialty Tax Line at 800-829-4933, Monday through Friday, 7 a.m. to 7 p.m. local time. The agent will verify your identity before releasing the number.13Internal Revenue Service. Telephone Assistance Contacts for Business Customers You can also request Letter 147C, an official replacement confirmation the agent can fax on the spot or mail in four to six weeks.4Internal Revenue Service. Employer Identification Number Only the business owner, a corporate officer, a trustee, or someone with power of attorney on file can make the request.
What Goes Wrong Without a Valid TIN
Operating without a correct TIN, or giving payers the wrong one, has real financial consequences. If you fail to give a correct TIN to someone paying you, that payer must withhold 24 percent of the payment and send it to the IRS as backup withholding.14Internal Revenue Service. Backup Withholding You get the money back as a credit when you file, but the cash flow hit is immediate.
On the filing side, information returns (such as 1099s) submitted with missing or incorrect TINs draw per-return penalties that grow the longer the error goes uncorrected, with higher amounts for intentional disregard.15Internal Revenue Service. Information Return Penalties For a business filing many 1099s, those add up quickly under 26 U.S.C. § 6721.16Office of the Law Revision Counsel. 26 USC 6721 – Failure to File Correct Information Returns