The Internal Revenue Service announced that starting May 13
only individuals with tax identification numbers may request an Employer
Identification Number (EIN) as the "responsible party" on the
application.
An EIN is a nine-digit tax identification number assigned to
sole proprietors, corporations, partnerships, estates, trusts, employee
retirement plans and other entities for tax filing and reporting purposes.
The change will prohibit entities from using their own EINs
to obtain additional EINs. The requirement will apply to both the paper Form SS-4, Application for Employer Identification Number,
and online EIN application.
Individuals named as responsible party must have either a
Social Security number (SSN) or an individual taxpayer identification number
(ITIN). By making the announcement weeks in advance, entities and their
representatives will have time to identify the proper responsible official and
comply with the new policy.
The Form SS-4 Instructions provide a detailed explanation of
who should be the responsible party for various types of entities. Generally,
the responsible party is the person who ultimately owns or controls the entity
or who exercises ultimate effective control over the entity. In cases where
more than one person meets that definition, the entity may decide which
individual should be the responsible party.
If there are changes to the responsible party, the entity
can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form
8822-B must be filed within 60 days of a change.
Only governmental entities (federal, state, local and
tribal) are exempt from the responsible party requirement as well as the
military, including state national guards.
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