Is a U.S. Identification Number Necessary for Foreign Entities?

For foreign entities engaging in business activities within the United States, obtaining an Employer Identification Number (EIN) is a mandatory requirement. This unique identifier is essential for tax and payroll reporting, and U.S. banks typically insist on it for establishing accounts. To qualify for an EIN, a foreign entity must either conduct business or have plans to start one in the United States. Additionally, an EIN is a prerequisite for filing Form 5472 - Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.

Foreign entities, excluding individuals (such as foreign corporations), must obtain an EIN to claim withholding exemptions based on tax treaty provisions, a process outlined in Form W-8BEN.

While a physical address in the U.S. is not mandatory for obtaining an EIN, having one significantly facilitates the process of opening a U.S. bank account.

There are several avenues to acquire an EIN using IRS Form SS-4, including online, by mail, by fax, and by telephone. For international applicants without a legal residence, principal place of business, or office in the U.S. or its possessions, obtaining an EIN via telephone is an option. However, the caller must be authorized to receive the EIN and address queries related to Form SS-4. Completing the Third-Party Designee section is necessary to authorize an individual to receive the EIN on behalf of the entity.

Before calling the IRS, it's advisable to complete Form SS-4 to ensure all required information is readily available. The IRS representative will use this information to establish the entity's account and assign an EIN. The assigned number should be noted on the form for the applicant's records.

Alternatively, the online application option allows for immediate EIN availability. The principal officer, general partner, or owner must have a valid taxpayer identification number (SSN, EIN, or ITIN) to use this method. Note that if there is no legal residence, principal place of business, or office in the U.S. or its possessions, the online application cannot be utilized.

For those opting for mail or fax submission, the EIN is typically available within four business days for fax applications and around four weeks for mailed applications. After obtaining the EIN, it's crucial to keep the IRS informed about any changes to the business, including mailing address, business location, or the identity of the responsible party. Changes to the responsible party should be reported within 60 days using Form 8822-B, available on the IRS website.

For any queries or assistance in the EIN application process, feel free to contact our office.