Employer Identification Numbers
Employer Identification Numbers must be not used for any other purpose and are used for tax administration. For example, EIN should not be used in tax lien auction or sales, lotteries, etc.
Other Names For EIN Numbers
Also referred to as the Federal Employer Identification Numbers (FEIN) or the Federal Tax Identification Number, the EIN Number is an unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification.
Similar in function 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 individuals and other business entities. The IRS uses this number to identify.
Individuals who are employers may select to either use their Social Security number with the aim of reporting taxes withheld on behalf of their employees or obtain an EIN.
Contrary to some misconceptions, credit bureaus and credit issuers can tell the difference between EIN and SSN numbers. SSN numbers can be validated as to state and source /year of issuance. Issuers and the credit bureaus are exceptionally trained in fraud detection, and increasingly refined algorithms and protections are used.
This is the reason many businesses isn’t considered sensitive information, and freely distribute the EIN by way of the net and publications.
EIN Number Format
Reg. 9946 . The power for EIN’s is derived from 26 USC 6011(b), demanding citizen id with the aim of payment of employment taxes. The provision was enacted in 1954 as part of the revision of the Tax Code. This power was extended in 1961 by 26 USC 6109.
An EIN is usually written in the form 00-0000000 whereas a Social Security Number is usually written in the form 000-00-0000 in order to differentiate between them both. There are EIN Decoders on the internet that can identify in what state the company filed the EIN.
An EIN is needed by a company in order to pay employees and to file business tax returns. To be considered a Venture, LLC, Corporation, S Corporation, Nonprofit, etc. a business must obtain an EIN.
Those business that do not are considered proprietorships and the Owner / Operator SSN is used on any tax files. Additionally, financial institutions such as credit unions, banks, and brokerage houses will not start an account for a corporation without an EIN.
Since all corporations – including ones with no income – must file a federal income tax return, a corporation operating or incorporated in the United States normally must get an EIN anyway before or after being issued its charter.
Prior to 2001, the first two digits of an EIN (the EIN Prefix) signified the business was located in a particular geographic area. In 2001, EIN allocation was centralized at three of the IRS campuses, although all 10 campuses can assign an EIN, if essential.