EIN Holders Required to Provide Updated Information to IRS
Internal Revenue Service (“IRS”) final regulations, published in the March 14, 2013 Federal Register, require taxpayers possessing an employer identification number (“EIN”), also known as Federal Employer Identification Numbers or FEIN, beginning January 1, 2014, to provide updated information to the IRS with respect to their EIN.
BACKGROUND
The EIN is a unique nine-digit number assigned by the IRS to taxpayers primarily for identification purposes. The EIN takes the form of XX-XXXXXXX. EINs are issued to employers, sole proprietors, partnerships, S and C corporations, tax-exempt organizations, estates, trusts, governmental agencies and other certain business entities. An EIN is the corporate equivalent of an individual social security number.
The IRS has determined that many EINs are issued to nominees that act on the behalf of the applicant but, subsequent to the application process, are no longer authorized to represent the applicant. Commonly, entities use nominees on their applications as responsible parties which prevents the IRS from gathering the appropriate information on an entity’s ownership. Nominees are generally authorized individuals who act on behalf of entities during the formation process on a temporary basis. By listing the appropriate responsible party, a taxpayer’s income and assets becomes much more transparent.
Form SS-4, Applicant for Employer Identification Number, requires the disclosure of the EIN applicant’s responsible party’s name and identifying number. According to the instructions to Form SS-4, a “Responsible Party” is, for entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner, or (d) a grantor, owner, or trustor, if a trust. For all other entities, a “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets.
The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.
REPORTING
Under the final regulations issued, any taxpayer issued an EIN is required to provide the IRS with updated information including name and taxpayer identification number of the taxpayer’s responsible party through the filing of a Form 8822-B.
The Form must be filed within 60 days of the date of the change. In the event a taxpayer changed the identity of its responsible party prior to January 1, 2014, Form 8822-B can be used to report the most recent change but must be filed before March 1, 2014.
CONCLUSION
The regulations are effective January 1, 2014 and apply to all persons already possessing an EIN and those taxpayers who apply for one on or after January 1, 2014.
A copy of IRS Form SS-4 and Form 8822-B, with their associated instructions, can be accessed at the healthcare services section of our firm’s website.
For more information on the topics discussed or services we can provide, please contact:
Scott Mariani, JD, Partner
Practice Leader
973.898.9494 ? [email protected]
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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
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