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Federal Tax ID

Learn how to apply for a federal tax ID number.

The IRS uses federal tax ID numbers to identify individuals and businesses. [©Jupiter Images, 2009]
©Jupiter Images, 2009
The IRS uses federal tax ID numbers to identify individuals and businesses.

The Internal Revenue Service (IRS) uses federal tax ID numbers to identify taxpayers. The numbering system ensures each person and business is treated as a unique entity. This prevents accountability mistakes, such as when two people or businesses share the same name. According to the IRS, there are several types of federal tax ID numbers, officially called Taxpayer Identification Numbers (TIN). Taxpaying individuals need either a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), while businesses may need an Employer Identification Number (EIN), less commonly called a Federal Employer Identification Number (FEIN).

Any person or business subject to United States tax law needs a TIN for tax returns, statements and other documentation related to taxes. In addition, some entities such as banks and credit unions require TIN numbers to open an account.

Federal Tax ID for Individuals

Many taxpayers already have an SSN. Those who do not may obtain an online SS-5 Application or request one from a local Social Security office. Documentation verifying age, identity, U.S. citizenship and, in some cases, immigration status is required. For a complete list of acceptable documents, visit the Evidence Requirements page of the U.S. Social Security Web site.

According to the Social Security Administration, first-time applicants over the age of 11 are required to submit the completed SS-5 application in person at a local Social Security card center. Residents of New York City, Las Vegas, Orlando, Fla., and Phoenix also may need to apply in person.

Some resident and nonresident aliens (or their dependents) may be ineligible for an SSN. These individuals should request an ITIN through Application Form W-7, available online or through any IRS branch office. A valid passport is the only verification necessary to apply for an ITIN. In the absence of a passport, supporting documentation regarding identity and foreign status is required. A complete list of acceptable documents can be found in the instructions of Application Form W-7.

Federal Tax ID for Businesses

Whether or not a business requires an EIN is determined by its organizational structure. Some small businesses may use an SSN as a TIN if they file taxes as a sole proprietorship. According to the IRS, some of the criteria requiring a business to obtain an EIN include:

• Any business with employees (excluding the owner)
• Businesses that are legally classified as partnerships or corporations
• The filing of an Alcohol, Tobacco and Firearms, Excise or Employment tax return
• Withholding income taxes for a nonresident alien
• Utilizing a Keogh plan
• Recent change in ownership or legal structure

Most businesses can obtain an EIN online within minutes through the interactive EIN Assistant on the IRS Web site. Those who prefer to apply by mail may do so with Application Form SS-4. Businesses incorporated outside the United States and taxpayers using ITIN numbers should also apply for EIN numbers using Application Form SS-4.

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