EIN- Responsible Party USA LLC
Moderator: Mark T Serbinski CA CPA
EIN- Responsible Party USA LLC
Registered, New Single Member USA LLc (only member is foreign corp(not Canada)), for a client, can I apply for EIN for client and sign as Responsible Party on EIN application for client, I am Canadian, Business Consultant, helping client to buy real estate in USA
Re: EIN- Responsible Party USA LLC
See REG-135491-10 when IRS became aware that nominee individuals are being listed as principal officers, general partners, grantors, owners, and trustors in applying for an Employer Identification Number
(EIN). IRS announced that this practice fosters noncompliance and isn't authorized. It says
that taxpayers that have used a nominee for the EIN application process must correct this
information.
It has come to IRS's attention that nominee individuals are being listed as principal officers,
general partners, grantors, owners, and trustors in the EIN application process. A “nominee” is
someone who is given limited authority to act on behalf of an entity, usually for a limited period
of time, and usually during the formation of the entity. The “principal officer, general partner,”
etc., as defined by IRS, is the true “responsible party” for the entity, instead of a nominee. The
responsible party is the individual or entity that controls, manages, or directs the entity and the
disposition of the entity's funds and assets, unlike a nominee, who is given little or no authority
over the entity's assets. If there is more than one responsible party, the entity may list
whichever party the entity wants IRS to recognize as the responsible party.
IRS doesn't authorize the use of nominees to obtain EINs. It says all EIN applications (mail, fax,
phone, electronic) must disclose the name and Taxpayer Identification Number (Social Security
Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification
Number (ITIN)) of the true principal officer, general partner, grantor, owner or trustor. The use
of nominees in the EIN application process prevents IRS from gathering appropriate information
on entity ownership, and has been found by IRS to facilitate tax non-compliance by entities and
their owners.
No use of nominees. IRS says that any entity that applied for an EIN listing a nominee as the
“principal officer,” etc., and listing the nominee's TIN as that of the principal officer, needs to
provide IRS with the name and TIN of the true responsible party.
Properly submitted SS-4s. To properly submit a Form SS-4 (Application for Employer
Identification Number), the form and authorization should include the name, TIN and signature
of the responsible party. IRS reminds third party designees filing online applications of their
obligation to retain a complete signed copy of the paper Form SS-4 and signed authorization
statement for each entity application filed with IRS. Nominees don't have the authority to
authorize third party designees to file Forms SS-4, and shouldn't be listed on the Form SS-4.
If a nominee is used in the state formation process and the true responsible party hasn't yet
been identified, the entity must identify that individual before applying for an EIN. IRS will
continue to pursue enforcement actions to prevent the misuse of EIN applications, and says that
if a taxpayer used a nominee for the EIN application process, it should correct that information.
Apparently, many EINs were issued to nominees that act on the applicant’s behalf, but then are no longer authorized to represent the applicant. To address this problem, the IRS revised Form SS-4, Application for Employer Identification Number, to require the disclosure of the applicant’s “responsible party” and that person’s Social Security number, individual taxpayer identification number, or EIN. The definition of responsible party depends on the type of entity applying for the EIN and is listed in the instructions to Form SS-4.
(EIN). IRS announced that this practice fosters noncompliance and isn't authorized. It says
that taxpayers that have used a nominee for the EIN application process must correct this
information.
It has come to IRS's attention that nominee individuals are being listed as principal officers,
general partners, grantors, owners, and trustors in the EIN application process. A “nominee” is
someone who is given limited authority to act on behalf of an entity, usually for a limited period
of time, and usually during the formation of the entity. The “principal officer, general partner,”
etc., as defined by IRS, is the true “responsible party” for the entity, instead of a nominee. The
responsible party is the individual or entity that controls, manages, or directs the entity and the
disposition of the entity's funds and assets, unlike a nominee, who is given little or no authority
over the entity's assets. If there is more than one responsible party, the entity may list
whichever party the entity wants IRS to recognize as the responsible party.
IRS doesn't authorize the use of nominees to obtain EINs. It says all EIN applications (mail, fax,
phone, electronic) must disclose the name and Taxpayer Identification Number (Social Security
Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification
Number (ITIN)) of the true principal officer, general partner, grantor, owner or trustor. The use
of nominees in the EIN application process prevents IRS from gathering appropriate information
on entity ownership, and has been found by IRS to facilitate tax non-compliance by entities and
their owners.
No use of nominees. IRS says that any entity that applied for an EIN listing a nominee as the
“principal officer,” etc., and listing the nominee's TIN as that of the principal officer, needs to
provide IRS with the name and TIN of the true responsible party.
Properly submitted SS-4s. To properly submit a Form SS-4 (Application for Employer
Identification Number), the form and authorization should include the name, TIN and signature
of the responsible party. IRS reminds third party designees filing online applications of their
obligation to retain a complete signed copy of the paper Form SS-4 and signed authorization
statement for each entity application filed with IRS. Nominees don't have the authority to
authorize third party designees to file Forms SS-4, and shouldn't be listed on the Form SS-4.
If a nominee is used in the state formation process and the true responsible party hasn't yet
been identified, the entity must identify that individual before applying for an EIN. IRS will
continue to pursue enforcement actions to prevent the misuse of EIN applications, and says that
if a taxpayer used a nominee for the EIN application process, it should correct that information.
Apparently, many EINs were issued to nominees that act on the applicant’s behalf, but then are no longer authorized to represent the applicant. To address this problem, the IRS revised Form SS-4, Application for Employer Identification Number, to require the disclosure of the applicant’s “responsible party” and that person’s Social Security number, individual taxpayer identification number, or EIN. The definition of responsible party depends on the type of entity applying for the EIN and is listed in the instructions to Form SS-4.