Apply for an EIN Online

Apply for an EIN Online—Finally!

By Alan J. Straus

The Internal Revenue Service recently eliminated a major source of frustration in the CPA’s daily practice.

Several months ago, with little fanfare, the IRS established a website to issue Employer Identification Numbers (EIN) online.
As members of the New York State Society of CPAs’ Relations with the IRS Committee know, the question of obtaining an EIN, sometimes called a tax ID number, has been a perennial focus at meetings with IRS representatives. Members have been quite vocal about their difficulties with this process and the inconveniences they’ve faced as a result of delays in obtaining the ID number.

Several years ago, the committee suggested the addition of an authorization box on the EIN application (Form SS-4) so that the IRS could disclose the ID number directly to the representative instead of only to the client, thus removing one dilatory part of the process. Committee members were pleased that IRS eventually enacted the suggestion.

The Internet-based EIN system further expedites the process. The IRS no longer requires CPAs to submit paper forms or client signatures to obtain a tax ID for a client. CPAs with authorization to apply for an EIN online on behalf of the client simply may do so. However, the IRS still requires the CPA to retain a completed and signed paper SS-4, which also can serve as proof of client authorization since there is no official form for this purpose at this time. It is suggested that CPAs add a sentence in the margin on the bottom of form SS-4 stating they have permission to obtain an EIN online, and have the client sign that statement as well.

To obtain an EIN online, go to www.irs.gov/businesses/small and follow the links. There are still some quirks in the system. For instance, as of this writing, you cannot use punctuation when entering data. For example, “ABC, Inc.” should be entered as “ABC Inc” and “123 Main St.” should be “123 Main St”.

In addition, certain forms of trusts and LLCs might present some problems for the system. All ID numbers begin with the prefix “20-” and are deemed “provisional.” If, after issuing the number online, a problem is determined to exist with the application, you will receive notice within a week or so invalidating the number and asking for additional data before a correction can be made. The most typical reason for a rejection is an incorrect Social Security number provided for the entity’s responsible officer.

After using the system several times, the author can attest to the fact that this truly is a time-saving tool for tax professionals everywhere. Thanks to the IRS for hearing our pleas!

Alan J. Straus, LL.M., CPA, whose practice is located in New York City, is a member of the Society’s Relations with the IRS Committee.