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Tax News IRS Updates Employer Identification Number Application

The Internal Revenue Service (IRS) revised Form SS-4, Application for Employer Identification Number (EIN), to clearly identify the responsible party rather than nominee individuals. Effective January 2010, all mail, fax, phone, and electronic EIN applications must disclose the name and taxpayer identification number of the true responsible party for the entity requesting an EIN. Other key points to consider are:

  • For an EIN applicant that is publically traded or is registered with the Securities and Exchange Commission, the responsible party is the principal officer, general partner, grantor, owner of a disregarded entity, owner, or trustor, depending on the business entity of the applicant.

  • For all other entities, the responsible party is the person who can control, manage, or direct the entity and the disposition of the entity’s funds and assets.

  • A nominee is an entity with delegated authority to act in name only and can never be the responsible party for the Form SS-4 application.

  • The SS-4 must be signed by an individual with the authority to legally bind the entity; therefore, it cannot be signed by a nominee.

  • Entities that used nominees on their applications in the past should consider updating the information shown on the original application. No form is available for updating information on previous applications; instead the entity should send a letter to the IRS. Information on how to do this is included in the at the IRS’ website Updating Incorrect Business Entity Information.

  • Third party designees filing online applications must retain a complete copy of the paper Form SS-4, signed by the responsible party, and a signed authorization statement, for each EIN application filed with the IRS.

  • Using nominees in the EIN application process prevents the IRS from gathering appropriate information on entity ownership. It may also facilitate tax non-compliance by entities and their owners. Clearly identifying an entity’s true owner makes it difficult for taxpayers to conceal their income and assets.

 You can find additional information at the links below:

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