The IRS has revised Form SS-4, Application for Employer Identification Number (EIN), to clearly identify the applicant’s true owner. Effective January 2010, all mail, fax, phone, and electronic EIN applications must disclose the name and taxpayer identification number of the true “responsible party” for the entity requesting an EIN.
For an EIN applicant that is publicly traded or is registered with the Securities and Exchange Commission, the “responsible party” is the principal officer, general partner, grantor, owner of a disregarded entity, owner, or trustor, depending on the business entity of the applicant. For all other entities, the “responsible party” is the person who can control, manage, or direct the entity and the disposition of the entity’s funds and assets.
A nominee is an entity with delegated authority to act in name only and can never be the “responsible party” for the Form SS-4 application. The IRS does not accept the use of nominees to obtain EINs. The SS-4 must be signed by an individual with the authority to legally bind the entity; therefore, it cannot be signed by a nominee.
Prior to the SS-4 revision, taxpayers obtained EINs using nominee individuals for the EIN application process. Entities that used nominees on their applications should consider updating the information shown on the original application. Third party designees filing online applications must retain a complete copy of the paper Form SS-4, signed by the responsible party, and a signed authorization statement, for each EIN application filed with the IRS.
Using nominees in the EIN application process prevents the IRS from gathering appropriate information on entity ownership. It may also facilitate tax non-compliance by entities and their owners. Clearly identifying an entity’s true owner makes it difficult for taxpayers to conceal their income and assets. The IRS will pursue penalties, injunctions, or other enforcement action to prevent the misuse of EIN applications. (SSA/IRS Reporter, Fall 2010.)
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