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Workforce Management

What is a Taxpayer ID Number?

Just as the need to file taxes is universal, all individuals and most

businesses are required to have identification numbers in order to file

those taxes. Known as an Employer Identification Number or EIN, a

taxpayer ID number is used to identify a business for tax purposes, and

is similar to a Social Security number.

However, not all businesses are required to have taxpayer ID numbers.

For example, sole proprietorships represent one type of business that

can go without obtaining one. But other formal and informal

organizations–such as homes with non-resident household employees,

owners of Keogh

plans and

even nonprofit organizations–do require a unique tax identification

number.

Who is required to have a Taxpayer ID number?

You need to apply for a taxpayer ID number if you answer “Yes” to any of

the following questions:

* Do you have employees?

* Do you operate your business as a corporation or a partnership?

* Do you file any of these tax returns: Employment, Excise, or Alcohol,

Tobacco and Firearms?

* Do you withhold taxes on income, other than wages, paid to a

non-resident alien?

* Do you have a Keogh plan?

* Are you involved with any type of trust organizations, except certain

grantor-owned revocable trusts, IRAs, Exempt Organization Business

Income Tax Returns?

* Are you involved with any type of Estates?

* Are you involved with any type of Real Estate Mortgage Investment

Conduit?

* Are you involved with any type of Non-profit organization?

* Are you involved with any type of Farmers’ Cooperative?

* Are you involved as any type of a Plan Administrator?

How do I apply for a Taxpayer ID?

The IRS page How to Apply for an

EIN

identifies four means of applying for an EIN. Be aware that some

Internet businesses offer taxpayer ID or EINs for a small charge.

However, please note that these ID numbers are provided to applicants

free of charge by the IRS through a simple process.

Online

The online taxpayer ID number

application is

simple to complete and an EIN is issued during the session as soon as

the application information is validated. Online application is intended

for businesses or entities with principal operation or residence in the

U.S .or U.S territories. According to the IRS, the principal officer,

owner, trustor, general partner, grantor, etc. must have a valid

Taxpayer Identification Number (Social Security Number, Employer

Identification Number, or Individual Taxpayer Identification Number) to

be able to use the online application. (Special note: As of May 21,

2012, taxpayer ID numbers have been limited to one application per day

per responsible party through all application channels.)

By telephone

Tax ID numbers can be obtained by calling the Business and Specialty Tax

Line at 800.829.4933, Monday through Friday, from 7 a.m. to 7 p.m. local

time. As with the online application, the EIN is issued during the

telephone contact.

By fax

Taxpayers can fax completed Form

SS-4 applications

to the appropriate fax number of their state branch (see Where to File:

Business Forms and Filing

Addresses),

after making sure all of the required information is filled out in Form

SS-4. If the entity is determined to require a new EIN, one will be

assigned. If the taxpayer’s fax number is provided, a fax will be sent

back with the EIN within four business days.

By mail

If you’re sending your completed EIN application by mail, expect

processing to take about four weeks. Make sure the Form

SS-4 contains all

of the required information. To locate the mailing address for your Form

SS-4, go to Where to File Your Taxes for Form

SS-4.

Many of the new entities now required to obtain a taxpayer ID number

also will be required to file new forms specific to their functions.

Moreover, even businesses familiar with the EIN system will need to know

the requirements for when a new taxpayer ID number is required.

If you and your business need guidance on how to obtain a taxpayer ID

number, consider reaching out to a payroll and tax service. Paycor helps

businesses both large and small with everyday tax issues, from obtaining

a taxpayer ID number to helping business with quarterly and annual tax

filing. Contact us today for more

information.