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EIN now requires SSN, responsible party — IRS policy change
As part of its 2019 National Small Business Week program to inform small business taxpayers and the self-employed, the IRS issues a reminder about the change to who can apply for an employer identification number, or EIN. The change goes into effect on May 13, 2019.
What is an EIN?
An EIN is a nine-digit identifying number assigned to sole proprietors, partnerships, corporations, estates, trusts, retirement plans, and other entities for tax- reporting.
What is changing?
Under the new policy, only individuals who already have a Social Security number or an individual taxpayer identification number (ITIN) may apply for an EIN.
⇒ This individual becomes the responsible party for the entity.
⇒ An individual may not use an existing EIN to apply for a new one.
Why is the policy changing?
The IRS is making the change because concerns about identity theft are on the rise.
Identity theft has increased for businesses as it has for individuals, rising 10% in the past year.
The IRS provides the following informational pieces on data security for taxpayers:
Who needs an EIN?
The most common example of when an individual needs to apply for an EIN is when hiring an employee for the first time. Payroll taxes such as Social Security (FICA) and Medicare must be filed with an EIN and cannot be filed with the employer’s personal Social Security number. Business owners setting up a Section 105 1-employee HRA often have to do this when formalizing an employer-employee relationship with their spouse for health insurance benefits.
Where can I learn more?
More information on the new EIN policy is available from the IRS:
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