Employer Identification Number (EIN) Definition
When you apply for an Employee Identification Number (EIN) at the federal level, it may not appear on your tax return, since EIN numbers are not considered a record of employment. But when you apply for an EIN number with your employer, the information appears on your tax return. If you need to apply for an EIN number for your business, the steps to apply for an EIN number are the same as those for an individual. The first thing you need to do is to prepare and submit a federal tax return. Then, you can apply for an EIN number with your employer.
To apply for an EIN number with your employer, one of the following three ways can be used: as tax payment in kind, as an in-kind contribution, or as an out-of-pocket contribution. If the taxpayer prepares and submits the correct form(s), he must be treated as the responsible party for the appropriate taxes due. One such form is the IRS EIN application.
EIN application is electronically prepared and can be downloaded from the IRS website. One of the EIN application instructions given on the IRS website is that if the taxpayer doesn't have an electronic Social Security number, he must send a SSS number or a driver's license and the appropriate amount of tax remittance to the responsible party. An EIN application can be downloaded from the IRS website.
In the EIN application, you should include personal information, employment history, ownership of business and residence, etc. According to IRS guidance, if the responsible party cannot verify the facts mentioned in the EIN application, he must refuse to grant EIN. An EIN application cannot be used by a disqualified person to avoid U.S. tax obligations. According to IRS guidance, this includes any non-U.S. citizen who owns, directly or indirectly, a deal with a foreign individual without complying with the requirements of sections 860 and 860A of the Internal Revenue Code. Any other U.S. citizen can apply for EIN but cannot use it as a means to avoid U.S. tax.
Employer Identification Number
If a foreign individual without a Social Security Number (SSN) wants to apply for an EIN, he/she has to give the Employer Identification Number (EIN) together with supporting documents. These documents are called the "statement of facts". An EIN application cannot be filed electronically. It can be faxed only if the concerned address or fax number is given in an electronic format. The supporting documentation must also be faxed along with the application form.
To apply for an EIN, a foreign entity needs to furnish the Social Security Number of its owner/beneficiary. He/she must also give the address of the authorized agent. A foreign entity may apply for an EIN online. However, if the foreign entity cannot provide the details of its owner/beneficiary or cannot furnish the address of the agent, it needs to apply for it by visiting the nearest tax department in the country where it got its EIN.
Before a person can apply for an EIN, he/she must prepare the necessary documents. Two types of EIN applications are available: the" Statements of Information" and "financial statements". The second type of application is called the "statement of facts". Both these forms are used to obtain an EIN. These forms can be obtained from a U.S. tax agency or through a designated channel.
After preparing the necessary documents, an individual taxpayer identification number application is sent to the IRS for processing. In general, the application process takes about two to three weeks. Once the application has been received, it is required to be processed and approved before it can be completed. There are EINs that are issued immediately but there are also others that take longer.
The EIN issued to the foreign supplier is not considered a taxable sale. Hence, there are no Federal tax payments made on the sale. However, if the Foreign supplier does not comply with the terms mentioned in the agreement, penalties will be imposed on the owner/beneficiary of the EIN. The penalties will differ from case to case.