When is a NEW EIN needed?

15 March 2012 / Uncategorized / Comments Off on When is a NEW EIN needed?

Do You Need a New EIN?

Generally, businesses need a new EIN when their ownership or structure has changed, but the rules can be a bit confusing.  The information below provides guidance about when you would need to change your EIN.  If, after reading the information below, you find that your situation requires a new EIN, please give Widget a call.  We can typically get you your new EIN within a few hours!

 

Sole Proprietors

You will be required to obtain a new EIN in the following situations:

•             You are subject to a bankruptcy proceeding.

•             You incorporate.

•             You obtain one or more partners and operate as a partnership.

•             You purchase or inherit an existing business that you continue to operate.

 

You will not be required to obtain a new EIN in the following situations:

•             You change the name of your business.

•             You change your location and/or add other locations.

•             You operate multiple businesses.

 

Corporations

You will be required to obtain a new EIN in the following situations:

•             A corporation receives a new charter from the secretary of state.

•             You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.

•             You change to a partnership or a sole proprietorship.

•             A new corporation is created after a statutory merger.

 

You will not be required to obtain a new EIN in the following situations:

•             You are a division of a corporation.

•             The surviving corporation uses the existing EIN after a corporate merger.

•             A corporation declares bankruptcy.

•             The corporate name or location changes.

•             A corporation chooses to be taxed as an S corporation.

•             Reorganization of a corporation changes only the identity or place.

•             Conversion at the state level with business structure remaining unchanged.

 

Partnerships

You will be required to obtain a new EIN in the following situations:

•             You incorporate.

•             Your partnership is taken over by one of the partners and is operated as a sole proprietorship.

•             You end an old partnership and begin a new one.

 

You will not be required to obtain a new EIN in the following situations:

•             The partnership declares bankruptcy.

•             The partnership name changes.

•             You change the location of the partnership or add other locations.

•             A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).

•             50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).

 

Limited Liability Companies (LLCs)

An LLC is an entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or disregarded as an entity separate from its owner, referred to as a “disregarded entity.” An LLC is always classified by the IRS as one of these types of taxable entities. If a “disregarded entity” is owned by an individual, it is treated as a sole proprietor. If the “disregarded entity” is owned any other entity, it is treated as a branch or division of its owner.

 

You will be required to obtain a new EIN in the following situations:

•             A new LLC with more than one owner (Multi-member LLC) is formed under state law.

•             A new LLC with one owner (Single Member LLC) is formed under state law and chooses to be taxed as a corporation or an S corporation.

•             A new LLC with one owner (Single Member LLC) is formed under state law, and has an excise tax filing requirement or an employment tax filing requirement.

 

You will not be required to obtain a new EIN in the following situations:

•             You report income tax as a branch or division of a corporation or other entity, and the LLC has no employees or excise tax liability.

•             An existing partnership converts to an LLC classified as a partnership.

•             The LLC name or location changes.

•             An LLC that already has an EIN chooses to be taxed as a corporation or as an S corporation.

•             A new LLC with one owner (single member LLC) is formed under state law, does not choose to be taxed as a corporation or S corporation, and has no employees or excise tax liability. NOTE: You may request an EIN for banking or state tax purposes, but an EIN is not required for federal tax purposes.

 

Estates

You will be required to obtain a new EIN in the following situations:

•             A trust is created with funds from the estate (not simply a continuation of the estate).

•             You represent an estate that operates a business after the owner's death.

You will not be required to obtain a new EIN if the administrator, personal representative, or executor changes his/her name or address.

 

Trusts

You will be required to obtain a new EIN in the following situations:

•             One person is the grantor/maker of many trusts.

•             A trust changes to an estate.

•             A living or intervivos trust changes to a testamentary trust.

•             A living trust terminates by distributing its property to a residual trust.

 

You will not be required to obtain a new EIN if any of the following statements are true.

•             The trustee changes.

•             The grantor or beneficiary changes his/her name or address.

 

We at Widget know that these issues can be confusing and we are here to help!  If you have questions or need assistance with these, or any other matters, please feel free to give us a call!

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