Employer Identification Number Overview
Employer Identification Number Overview, these numbers must be not used for any other function and are used for tax management. For example, EIN should not be used in tax lien auction or sales, lotteries, etc.
Other names for EIN Numbers
When the number is used for identification rather than employment tax reporting, it’s typically known as a Taxpayer Identification Number (TIN) / Tax ID Number, and when used for the purposes of reporting employment taxes, it’s normally referred to as an EIN.
EIN Numbers compared to Social Security numbers
Similar in purpose to the Social Security number assigned to individuals, EINs are used by companies, sole proprietors, corporations, partnerships, non-profit organizations, trusts and estates, government agencies, certain people and other business things. The IRS uses this number to identify. People who are companies may select to either get an EIN or use their Social Security number with the aim of reporting taxes withheld on behalf of their employees.
Credit issuers and contrary to some misconceptions, credit bureaus can tell the difference between SSN and EIN numbers. SSN numbers can be validated as to state and origin /year of issuance. Issuers and the credit bureaus are highly trained in fraud detection, and refined algorithms and protections are used. This is why the EIN is not considered sensitive information, and is freely distributed by many companies by way of publications and the net.
IRS EIN Number Format
Reg. 9946 . The authority for EIN’s is derived from 26 USC 6011(b), requiring citizen identification for the purpose of payment of employment taxes. The provision was first enacted as part of the revision of the Tax Code in 1954. This ability was extended in 1961 by 26 USC 6109. An EIN is normally written in the form 00-0000000 whereas a Social Security Number is normally written in the form 000-00-0000 in order to distinguish between them both. There are EIN Decoders on the internet that can identify in what state the company registered the EIN.
An EIN is needed by a business in order to pay employees and to file business tax returns. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc. a business must obtain an EIN. Those company that don’t are considered proprietorships and the Owner / Operator SSN is used on any tax records. Additionally, financial institutions including brokerage houses, credit unions, and banks Won’t start an account for a corporation without an EIN.
Since all corporations – including ones with no income – must file at least a federal income tax return, a corporation incorporated in America or managing ordinarily must get an EIN anyhow either before or after being issued its charter.
Prior to 2001, the first two digits of an EIN (the EIN Prefix) indicated the business was found in a particular geographic area. At three of the IRS campuses, EIN allocation was centralized in 2001, although all 10 campuses can assign an EIN, if essential.