The IRS made changes to Form SS-4 that is used to apply for an employer identification number (EIN).
The revisions to Form SS-4 specifically affect eligible entities requesting an EIN solely for purposes of filing Form 8832, Entity Classification Election, pursuant to the “check-the-box” regulations.
Entities requesting an EIN are required to provide the name of a “responsible party” and generally the responsible person’s tax identification number. The Form SS-4 instructions provide a definition of responsible party as the person who ultimately owns or controls the entity or who exercises ultimate effective control over the entity. The instructions continue by explaining that:
…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.[Emphasis in original]
The instructions continue to explain that if the application for the EIN on Form SS-4 is for a government entity, then the EIN of the responsible party is entered on line 7b. Otherwise, the applicant must enter a social security number (SSN) or taxpayer identification number (TIN) on line 7b (unless the responsible party does not have and is not eligible to obtain an SSN or TIN, and then line 7b is to be left blank).
The prior version of the instructions to Form SS-4 provided that if the only reason for applying for an EIN was to make an entity classification election pursuant to Reg. section 301.7701-3(c) on Form 8832, then there was no requirement to enter an SSN, ITIN, or EIN on line 7b.
The new version of the instructions has removed that exception for supplying an SSN, ITIN, or EIN for the responsible person. Some have observed that this may make it more difficult for entities to obtain EINs and/or slow down the process for making timely check-the-box elections.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.