You can STILL get an EIN for your LLC without having an ITIN or SSN
In May 2019, The Internal Revenue Service (IRS), has brought some updates to the EIN Application which affects all the entity types. We will particularly clarify how this affects the LLC owners by what is mentioned below:
- Limited Liability Company owned by an American citizen.
- LLC owned by a foreign company
- LLC owned by a US company, owned by foreigners
- LLC owned by a US company, owned Americans
- LLC owned by a non-resident of U.S. or non-citizen of U.S.
The IRS issued a new release with the title “IRS revises EIN application process; seeks to enhance security.” (IR -2019-58)
This does not mean that the IRS went through big changes. It is an enforcement of the regulations set by the IRS in December 2017.
The EIN application regulations are as follows:
EINs and Responsible Parties
The EIN Responsible Party can’t be a company. It must be a regular person not a legal person.
According to the previous regulation, an EIN Responsible Party could be a company or a person. However, with the new regulation, EIN applications where an EIN is used for the Responsible Party are not accepted by the IRS.
** Reminder: The EIN Responsible Party can be a company if it is a government entity such as federal, state, local and tribal or the military.
EIN Responsible Party Definition by the IRS
According to the IRS, an EIN Responsible Party Definition is as follow:
“The “responsible party” is the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The person identified as the responsible party should have a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the person, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.”
You can STILL get an EIN for your LLC without having ITIN or SSN
On May 13th, 2019, the IRS stated a new regulation and people have started to be confused. Especially these sentences have made people worried.
“As part of its ongoing security review, the Internal Revenue Service announced today that starting May 13  only individuals with tax identification numbers may request an Employer Identification Number (EIN) as the ‘responsible party’ on the application.”
This explanation followed the second one:
“Individuals named as [the] responsible party must have either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).”
The Update of the IRS is “Partially True”
The explanation of IRS about the update to EIN applications does not provide any comments on non-US citizens and US citizens who do not own SSN or ITIN. Therefore, it is a very confusing language for the people who do not have an SSN or ITIN.
So, we can say that it is a partially true update.
The fact that you can’t list an entity on a new EIN application is totally correct and clarified by the IRS.
Our professional US Tax Id Specialists clarified this confusion and verified the information by making phone calls with the IRS.
If you are a non-US residents or citizen that have formed an LLC in the US, you can still get an EIN for your LLC.
In addition, you can still get your EIN for your LLC, if you established an LLC and you do not have an SSN or ITIN. Filling out the Form SS-4 is enough.
You should keep in mind that you must write “Foreign” on the line 7b.
Who should be the EIN Responsible Party for an LLC
LLC owned by American citizen(s)
As they have a Social Security Number (SSN), they will use it. The rule is in order to get an EIN is that one of the LLC members must be the EIN Responsible Party.
LLC owned by a non-US resident or citizen
Same as the above, one of the LLC members must be the EIN Responsible Party in order to get an EIN for an LLC based in the US and owned by a non-US resident or citizen.
As we have mentioned above, you must write “Foreign” on the line 7b if you do not have an SSN or ITIN as an LLC member.
LLC owned by a U.S. company that is owned by Americans
You can’t use the principal (parent) company’s EIN anymore as the Responsible Party if you obtain an EIN for a US LLC which is owned by another US company (owned by Americans).
The IRS requires the parent company’s owner to be listed as the EIN Responsible Party using their SSN or ITIN.
LLC owned by foreigners who has a US company
The regulations are the same as an LLC owned by a non-US resident or citizen:
One of the LLC members must be the EIN Responsible Party in order to get an EIN for an LLC based in the US and owned by a non-US resident or citizen.
As we have mentioned above, you must write “Foreign” on the line 7b if you do not have a SSN or ITIN as a LLC member.
These updates to the EIN set by the IRS does not mean that you are not allowed to form a US LLCs and open a bank account. It is just a new regulation about national security.
What do we mean by saying national security?
By setting these rules, the US government is strengthening national security to combat money laundering, the evasion of sanctions, fraud and tax evasion.
We will share the some of the new rules set by the IRS with you:
“EINs and responsible parties”
“Beginning May 13, only individuals with tax identification numbers – either a Social Security number (SSN) or an individual taxpayer identification number (ITIN) – may request an employer identification number. This new requirement, which was first announced by the IRS in March, will provide greater security to the EIN process by requiring an individual to be the responsible party and will also improve transparency.”
“Individuals are not the only ones who need to protect their identities. Businesses and other organizations, especially trusts, estates and partnerships, can also be victims of identity theft. For example, criminals may file Forms 1120 (corporations), 1120S (S corporations) or Schedules K-1 in their names. Last year, 2,450 businesses reported that they were victims of tax-related identity theft, a 10-percent increase over 2017.”
The change prohibits entities from using their own EINs to obtain additional EINs. The new requirement applies to both the paper Form SS-4, Application for Employer Identification Number (PDF), and online EIN applications.
If we simply explain and sum up:
There is nothing that has changed for the owner of US LLCs who is non-US residents or non-US citizens and wants to obtain an EIN.
However, please note that if a company owns another one, it cannot use the existing EIN on the new EIN application anymore. Besides, as an EIN Responsible Party, the parent entity cannot be listed.
A “person” is required by the IRS in order to be listed as the EIN Responsible Party.
Briefly, the regulations set by the US government is not about preventing foreign investment to be made in the US. The only thing that the US government wants to achieve is to avoid financial crimes.
EIN APPLICATION FORM: