Starting May 13, 2019, only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the “responsible party” on the application. An EIN is a nine-digit tax identification number assigned to sole proprietors, corporations, partnerships, estates, trusts, employee retirement plans and other entities for tax filing and reporting purposes.
The change prohibits entities from using their own EINs to obtain additional EINs. Individuals named as the responsible party must have either a Social Security number (SSN) or an individual taxpayer identification number (ITIN). The requirement applies to both the paper Form SS-4, Application for Employer Identification Number, and online EIN application.
A detailed explanation of who should be the responsible party for various types of entities is provided on the Form SS-4 Instructions, but generally, the responsible party is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. In cases where more than one person meets that definition, the entity may decide which individual should be the responsible party.
Certain Entities Exempt
Governmental entities (federal, state, local and tribal) are exempt from the responsible party requirement as well as the military, including state national guards.
No Change for Tax Professionals
There is no change for tax professionals who may act as third-party designees for entities and complete the paper or online applications on behalf of clients.
The new requirement will provide greater security to the EIN process by requiring an individual to be the responsible party and improve transparency. If there are changes to the responsible party, the entity can change the responsible official designation by completing Form 8822-B, Change of Address or Responsible Party. A Form 8822-B must be filed within 60 days of a change.