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EIN Application: New IRS Rules

Next week, a new IRS rule goes into effect for applying for an employer identification number (EIN). In the past, you may have used a business EIN to secure another EIN; for example, you may have done this if you have set up a “drop-down” LLC (that is, an LLC that is 100% owned by another LLC or corporation).

Starting May 13, 2019, this will no longer be allowed. Whether applying online, by fax or by mail, any EIN application will be required to be applied for by an individual “responsible party” with either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN). Generally, the “responsible party” is the person who owns or controls the entity for which an EIN is being sought.

The IRS believes this change will provide greater security to the EIN process by requiring an individual to be the responsible party and will also improve transparency.

If your online application is being rejected, be sure that you are using a SSN or TIN for the application.

Lisa Berden