Key Takeaways:

  • EINs (Employer Identification Numbers) do not expire, but businesses must ensure they comply with IRS requirements when their EIN is no longer needed.
  • Certain business changes, such as restructuring or ownership transfer, may require a new EIN.
  • Even if a business closes, the EIN remains associated with the entity and cannot be reused by another business.
  • Compliance with IRS procedures for deactivating or maintaining an EIN is essential.
  • EINs provide privacy by reducing reliance on Social Security Numbers.

Does an EIN expire? No, EINs — Employer Identification Numbers — don't expire. However, certain situations may cause you to have to obtain a new one.

What Is an EIN?

EINs, like Social Security Numbers, are nine digits long, but they're formatted differently than SSNs. An EIN's format is xx-xxxxxxx. All companies that file business tax returns or pay employees must have an EIN. You can obtain an EIN from the IRS. This number is also known as a TIN, or taxpayer identification number, but it's not the same thing as an Individual Taxpayer Identification Number (ITIN).

The Need for an EIN

The only businesses that don't need an EIN are sole proprietorships or single-owner LLCs with no employees that file no pension or excise tax returns. A sole proprietor may simply use his or her SSN as the taxpayer ID identification number.

However, sole proprietors who meet the following conditions do need EINs:

  • They employ one or more people and pay wages.
  • They file excise or pension tax returns.

If your LLC has more than one owner, or member, or has employees, you'll need an EIN.

Where Confusion Came in Regarding EIN Expiration

In 2014, the Internal Revenue Service stated that, starting immediately, Individual Taxpayer Identification Numbers (ITINs) would expire if no one used them on a federal income tax return for five years in a row. This created some confusion among individuals.

Some people wondered if this included SSNs and EINs. The answer to SSNs and EINs expiring is that they don't. Once you have one of those, it's yours forever. You don't have to reapply for one at a later date. Only people who have ITINs have to meet certain conditions to keep these numbers.

Anyone who's a U.S. citizen, permanent resident, or temporary alien resident with authorization to work in the U.S. must have an SSN.

In 2014, the IRS reported that only about 25 percent of ITINs had ever been used on tax returns. An ITIN is for people who are ineligible for SSNs, such as nonresident aliens or foreign nationals. The IRS issues an ITIN for them as a tax processing number so they can file certain federal tax or information returns.

No one should have an SSN as well as an ITIN. For instance, someone with a pending SSN application will not be issued an ITIN even if the individual submits a Form W-7.

Using an EIN

When you start a business, one of the important steps you'll take is applying for an EIN. You use this number instead of your SSN when filing business taxes.

EINs give business owners a measure of privacy. If you disclose your SSN to clients, you run the risk of personal identity theft. Using an EIN instead reduces the chances of you being an identity theft victim.

If you misplaced or lost your EIN, find a previous tax return for your business. The number should be on the return. If you used an EIN to open a bank account or apply for some type of state or local license, you can contact the bank or agency to find your EIN. If you're still having trouble finding it, contact the Business and Specialty Tax Line at the IRS.

Deactivating an EIN: What You Should Know

While an EIN does not expire, businesses may find themselves in situations where they no longer need their EIN. For example, if a business closes, the IRS allows the entity to deactivate the EIN. Deactivation ensures that no further tax filing obligations are tied to the number. However, it’s important to note that the EIN will remain associated with the business in the IRS records and cannot be reassigned.

To deactivate your EIN, write a letter to the IRS including:

  • The legal name of the business.
  • The EIN itself.
  • The business address.
  • The reason for the closure or deactivation.

Mail this letter to the address provided in IRS guidelines. Keep in mind, deactivating an EIN does not cancel any unpaid tax liabilities.

Changing an EIN

If you have an EIN already but your business changes ownership or organizational structure, you may have to apply for a new number. The following circumstances will require someone to obtain a new EIN:

  • An existing business is inherited or purchased by someone who plans to run it as a sole proprietorship.
  • A sole proprietorship becomes a corporation or partnership.
  • A corporation becomes a sole proprietorship or partnership.
  • A partnership becomes a corporation or sole proprietorship.
  • An individual owner dies, and his or her estate takes control of the business.

You may or may not need an EIN, depending on the type of business you operate. However, even sole small business owners often find it beneficial to have an EIN because they can use it instead of their Social Security Number. This provides some protection and privacy in these days of identify theft dangers.

Understanding When You Might Need a New EIN

Although EINs are permanent identifiers, certain changes to your business structure may necessitate applying for a new EIN. These include:

  • Conversion of a sole proprietorship to a corporation or partnership.
  • A partnership incorporating or becoming a sole proprietorship.
  • Business inheritance, where the inheritor continues operations under a new entity.

If you’re unsure whether your specific business change requires a new EIN, consult the IRS guidelines or seek professional legal advice.

Frequently Asked Questions:

1. Does an EIN expire if my business is inactive?No, an EIN does not expire even if the associated business becomes inactive. However, you should inform the IRS to deactivate the EIN if it's no longer needed.

2. Can I use the same EIN if I start a new business?No, an EIN is permanently tied to the entity it was issued to and cannot be reused for a different business.

3. How do I find my EIN if I lose it?Check previous tax filings, contact your bank or licensing agency, or call the IRS Business and Specialty Tax Line for assistance.

4. Is it mandatory to deactivate an EIN if I close my business?While not mandatory, deactivating an EIN helps avoid unnecessary correspondence or confusion with the IRS.

5. Can I have multiple EINs for the same business?Typically, one EIN per business entity is sufficient, but specific circumstances like subsidiaries might require additional EINs.

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