Can a Business Be Denied an EIN Number?

An Employer Identification Number (EIN) is a nine-digit number the Internal Revenue Service (IRS) assigns to businesses for tax filing and reporting. While most applications are approved, an EIN application can be denied. A denial is not a final rejection but signals an error or inconsistency in the application that needs to be corrected.

Common Reasons for EIN Application Denial

A frequent cause for denial stems from issues with the designated “Responsible Party,” the individual who has ultimate control over the entity. If the name and Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) of the Responsible Party do not match IRS records, the application will be denied.

Another reason for denial is a conflict with the business name. If the legal name of the business is too similar to an existing business name in the IRS’s database, the application may be rejected. This issue is often identified by Reference Number 101 in the online application system.

A business is permitted to have only one EIN. If a previous application was submitted and approved, whether by the current owner or a prior one, any subsequent applications for the same legal entity will be denied. It is important to check company records or contact the IRS to retrieve a lost EIN rather than applying for a new one.

The legal name of the business on the EIN application must exactly match the name registered with the state authorities. Any discrepancy, including misspellings or the omission of a corporate suffix like “LLC” or “Inc.”, can lead to rejection. Leaving required fields blank or providing conflicting information can also trigger a denial.

An application may also be denied if it is submitted prematurely. A business entity, such as a Limited Liability Company (LLC) or a corporation, must be legally formed and registered with the appropriate state agency before an EIN application is filed. The IRS verifies the entity’s existence with the state.

Finally, the IRS’s online application system can generate errors that prevent the issuance of an EIN. These technical issues can result from system timeouts or other validation problems, leading to error codes like 109, 112, or 113. In these instances, the denial is not due to an error by the applicant but a system limitation.

Information and Requirements for a Successful Application

To ensure a smooth application process, gather all necessary information beforehand. This includes the precise legal name of the entity as registered with the state, the business’s physical mailing address, and the date the business was started or acquired.

The details of the Responsible Party are a component of the application. You must have the full legal name and a valid SSN or ITIN for this individual. This information must be accurate and match what the IRS has on file to avoid a validation error.

Correctly identifying the business structure is another requirement for a successful application. You must select the appropriate entity type, such as a sole proprietorship, partnership, LLC, corporation, trust, or estate. The reason for applying must also be clearly stated, whether it is for starting a new business, hiring employees, or another qualifying reason.

All of this information is compiled on Form SS-4, Application for Employer Identification Number. The official, most current version of this form can be downloaded directly from the IRS website. The details you gather correspond to specific lines on Form SS-4, making preparation key to accurate completion.

Correcting a Denied Application

When an online EIN application is denied, the IRS system typically provides a reference number that indicates the nature of the problem. For example, Reference Number 101 indicates a conflict with the business name. Identifying this number is the first step in understanding what needs to be fixed.

Once the issue is identified, the correction process can begin. If the denial was due to a simple data entry error, such as a misspelled name or an incorrect SSN, the applicant can often correct the information and resubmit the application online.

For more complex issues, such as a business name conflict, or for system-generated errors that direct the applicant to apply differently, the solution is to complete a paper Form SS-4 with the corrected information and submit it to the IRS via mail or fax.

If you receive a confusing error message or are unable to resolve the issue through reapplication, it may be necessary to contact the IRS directly. The Business & Specialty Tax Line is the appropriate helpline for these situations. When calling, it is useful to have all your application information and the reference number you received on hand to help the representative diagnose and resolve the problem.