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Does a Foreign Entity Need a U.S. Identification Number?

Published on: Published in: Taxes

Article Highlights:

  • Foreign Entities Conducting Business in the U.S.
  • U.S. Address
  • Applying for an EIN
  • By Telephone
  • EIN Online
  • By Fax or Mail
  • Updating EIN Information

It is mandatory for foreign entities that are conducting business in the United States to have an Employer Identification Number (EIN). It is needed for tax and payroll reporting and U.S. banks will require one to establish accounts. To qualify for an EIN, a foreign entity must have a business or trade in the United States or be planning to start one soon. An EIN is also needed for filing Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.

In addition, foreign entities that are not individuals (i.e., foreign corporations, etc.) are required to have an EIN to claim an exemption from withholding because of a tax treaty provision (claimed on Form W-8BEN).

Foreign entities don’t need a physical address in the U.S. to get an EIN, but having one makes it much easier to get a bank account in the U.S. 

An EIN can be obtained in several ways using IRS Form SS-4, including online, by mail, by FAX, and by telephone. Here is an overview of the options:

  • By Telephone – This option is available to international applicants only. If the applicant has no legal residence, principal place of business, or principal office or agency in the U.S. or U.S. possessions, the applicant may call 267-941-1099 (not a toll-free number), 6:00 a.m. to 11:00 p.m. (Eastern time), Monday through Friday, to obtain an EIN.

However, the person making the call must be authorized to receive the EIN and answer questions concerning Form SS-4. Complete the Third-Party Designee section only to authorize the named individual to receive the entity’s EIN and answer questions about the completion of Form SS-4. The designee’s authority terminates at the time the EIN is assigned and released to the designee.

Note – Complete Form SS-4 before calling the IRS to make sure all the information needed is available at the time of the call. An IRS representative will use the information from Form SS-4 to establish the entity’s account and assign an EIN. The person making the call to the IRS should write the number given by the IRS assister on the upper right corner of the form and sign and date it. This copy should be kept by the applicant for their records.

  • By EIN Online – The application can be submitted online. It would be wise for the individual submitting the application to manually complete the SS-4 in advance to ensure they have all the necessary information. The online application must be completed in a single visit; the information cannot be saved and completed later.  In addition, a session will timeout after 15 minutes of inactivity, and the applicant will need to start over. The EIN is immediately available.

The principal officer, general partner, or owner of the business must have a valid taxpayer identification number (SSN, EIN, or ITIN) in order to use the online application.

Note also that if there is NO legal residence, principal place of business, or principal office or agency in the U.S. or U.S. possessions, the online application cannot be used to obtain an EIN.  

  • By Mail or FAX – Visit the IRS website for current addresses and FAX numbers. When faxing, the EIN will generally be available within 4 business days. By mail it will take approximately 4 weeks.

Once the EIN number is obtained, it’s important to keep the IRS updated on changes to the business. Specifically, this means changes to the business’s mailing address, business location, or the identity of the responsible party. Changes to the responsible party must be submitted within 60 days.

Notification of these changes can be submitted to the IRS using Form 8822-B, which is available on the IRS website. Check the Form 8822-B instructions for where to file the form. There are different filing addresses listed by state. 

If you have questions or need assistance in applying for an EIN, please give this office a call.