The Internal Revenue Service has set May 13, 2019 for a change to business tax-ID applications: an entity will no longer be able to supply its own Employer Identification Number as the responsible party’s tax number when requesting another EIN. In its March 27 announcement, the IRS said the individual named must have a Social Security number or individual taxpayer identification number. The change covers paper Form SS-4 and online applications. Tax professionals can still apply for clients; government exceptions and a special case in the existing instructions limit how broadly the announcement can be read. [S1][S2]

The responsible party is the person who ultimately owns or controls the entity, or exercises ultimate effective control, according to the IRS. If more than one person qualifies, the entity can choose which individual to name. That natural-person requirement predates the announcement: the December 2017 Form SS-4 instructions already require an individual rather than another entity, except for government applicants. Businesses need to identify the person who meets that definition, not simply find someone available to submit the form. [S1][S2]

The person doing the paperwork has a separate role. The March announcement leaves tax professionals’ ability to act as third-party designees unchanged. Under the December 2017 instructions, that designation allows someone to answer questions about Form SS-4 and receive the new EIN. A completed signature area is required for the authorization to be valid, and the authority ends when the number is assigned and released to the designee. Hiring help with the application therefore does not, by itself, make that adviser the responsible party. [S1][S2]

There are limits to the announcement’s broad wording. It exempts federal, state, local and tribal governmental entities, as well as the military, including state national guards. The December 2017 instructions also say to leave line 7b blank when the responsible party has no Social Security number or individual taxpayer identification number and is ineligible to obtain one. The March release does not explain how that special case fits its new wording. It is not enough, on its own, to settle a no-tax-number application. [S1][S2]

The IRS says it announced the change ahead of May 13 so entities and their representatives could identify the proper responsible official. If the responsible party later changes, the entity must report the change on Form 8822-B within 60 days. [S1]

Source documents

  1. IRS revises EIN application process; seeks to enhance securityhttps://content.govdelivery.com/accounts/USIRS/bulletins/239ddc0
  2. Instructions for Form SS-4 (Rev. December 2017)https://www.irs.gov/pub/irs-prior/iss4--2017.pdf