Federal Tax ID: Everything You Need to Know
A federal tax ID number is a nine-digit, unique identifier for a business, similar to a Social Security number (SSN) for an individual.5 min read
What Is a Federal Tax ID?
A federal tax ID number is a nine-digit, unique identifier for a business, similar to a Social Security number (SSN) for an individual. It's also sometimes called an Employer Identification Number (EIN). This number is assigned by the federal government through the Internal Revenue Service (IRS), who gives one to businesses within the United States and its territories, though not every type of business needs an EIN.
The EIN has several uses. It is used to:
- File tax returns and other business documents
- Tie employees to the employer when the employer sends in the taxes withheld from paychecks
- Open bank accounts and lines of credit
- Apply for a business license or permit
- Make electronic payments
- File electronic tax returns
Facts About EIN Filing Service, a Third-Party Designee
You can apply for your EIN online through a third-party vendor, EIN Filing Service, by visiting https://irs-tax-id.com. This group is not affiliated with any department of the federal government; they simply offer the service to their clients for a fee. This is a secure way to apply in which someone else takes care of all the paperwork, saving you time. The online portal gathers the relevant information for accuracy. You get your number via email, and it's ready to use right away. A paper copy comes in the mail later.
Down the road, if you need to make changes to your business information, EIN Filing Service can help with that too at no charge. It's easy and fast, and it's ideal for people and businesses that don't like completing paperwork.
Requirements for a Federal Tax ID Application
Sole proprietorships don't have to get an EIN, but they can if they prefer to do business that way instead of using the owner's Social Security number. There are pros and cons to using a personal SSN for business purposes.
For some categories of businesses, getting an EIN is legally required as opposed to optional. If your business has any of the following characteristics, you must apply for an EIN.
- Has employees and withholds taxes to submit to the IRS
- Is a corporation or a business partnership
- Files an employment, excise, alcohol, tobacco, or firearms tax return
- Withholds taxes on one or more non-resident aliens (besides wages)
- Has a Keogh plan
- Is involved with real estate, mortgage investments, or estates or trusts (other than a few specific exclusions)
- Is a nonprofit organization, farmers' cooperative, or plan administrator
- Offers goods or services that are taxed in any way
- Is required to collect and remit sales taxes
Once you've established that you need an EIN, the next step is choosing the right kind for your type of business. Some possibilities are sole proprietorship, corporation, LLC, partnership, nonprofit, or estate.
You also need to state why you are applying at this time. This could be a new business, or maybe you've been operating under your SSN and want to set up an EIN to avoid that. Your request might also be related to hiring new employees or setting up a pension plan. Finally, you'll need to fill in what field you're in and what products or services you offer and give your name and SSN to complete the form.
Once an EIN is assigned, it's never canceled so that a historical record is maintained. Even if a business closes, the account is closed, but the number stays available for future reference.
How to Apply for a Federal Tax ID Number
There are several ways to get an EIN assigned to your business. No matter which you choose, the IRS gathers some standard information during the application process. They use this information to classify businesses, but it's also a security measure to make sure you are the person who has the authority to apply for the EIN.
When you begin the process, you must give some basic information about your business, including the structure, contact information, and the services and/or products available. If you're not applying for yourself, you will need to choose a "responsible party" to serve as the contact for the application. Whoever the primary applicant is, he/she must give their personal details, such as Social Security number (SSN).
Once you know that you need an EIN, you can apply for one with the IRS in one of four ways: online, by fax, in the mail, or by phone. The application form is the Form SS-4 if you're looking for it on the IRS website.
1. Online is the fastest and easiest way if you are applying from inside the United States. The person completing the application should be the person or people who are responsible for the business. The number is available immediately, and you get a downloadable form that you can save and print if you need it later.
2. The application is short, requiring only about 20 minutes. However, you must finish it in a single session, or the system will log you out if you're inactive for 15 minutes or more. Just go to IRS.gov and find the Employee Identification Number Assistant page to get started. The link is at the bottom. This method is available to all legally recognized business forms in the United States and its territories.
3. Only international applicants can apply by phone. The toll-free number to the IRS for this process is 800-829-4933, and the hours of availability are 7 a.m. to 10 p.m. local time for the business. An IRS staff person will take the relevant information and give the EIN at the end of the call.
4. Another way to apply is to send an application by fax using Form SS-4. The fax number to use depends on the state where the business is; you can find them at IRS.gov. If the applicant puts a return fax number on the form, the IRS will send the EIN in four business days.
5. You can also apply for an EIN via regular mail. This takes up to four weeks, so it's the slowest of the four options. The IRS returns your EIN to you in the mail.
Is a New Tax ID Number Needed When a Business Is Already Operating?
Sometimes you need to replace your tax ID number.
- If you've lost your EIN as opposed to applying for a new one, you can call the Business & Specialty unit of the Internal Revenue Service at 800-829-4933 for help.
- If the structure of your business changes, you may need a new EIN.
- In the case of a bankruptcy filing, it's best to get a new EIN.
What Is the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR)?
If you're searching for the EIN of a publicly traded company or a nonprofit organization, there are free directories that can help. You can search by business name, ZIP code, tax ID, and other data. You can try searching for just the first few letters of the business name because the name that the organization is commonly called may not be the legal name.
Try EDGAR, the Electronic Data Gathering, Analysis, and Retrieval system, for publicly traded companies. It's maintained by the Securities and Exchange Commission (SEC). The EIN is also listed on 8-K, 10K, or 10-Q reports. If you're looking for the EIN of a nonprofit organization, try Melissa Data, and search by ZIP code of the corporate office and not a local site.
If you must call the business to ask for the EIN, try the Accounting Department or Human Resources as they are the ones most likely to have that on file.
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