What Happens If I Put the Wrong EIN on My Tax Return?
Navigate the complexities of an incorrect Employer Identification Number on your tax return. Understand its implications and find actionable steps for resolution.
An Employer Identification Number (EIN) is a unique nine-digit identifier assigned by the Internal Revenue Service (IRS) to businesses, similar to a Social Security number for individuals. Accuracy is paramount when preparing and submitting tax returns. An incorrect EIN on a tax return can cause processing delays and potential penalties, disrupting a business’s tax compliance. This article explores the implications of an EIN error and provides guidance on how to rectify such a mistake to maintain good standing with tax authorities.
The Importance of Correct EINs
The Employer Identification Number serves as the primary identifier for businesses interacting with the IRS. It is crucial for various tax-related activities, including filing federal tax returns, establishing business bank accounts, and managing payroll. The IRS relies on the EIN to accurately process tax filings, match reported income with payments, and ensure proper tax administration.
An accurate EIN allows the IRS to correctly link a business’s tax payments, reported income, and other financial activities to the appropriate entity. This identification system is fundamental for the agency to track compliance and verify information on tax documents. Without a correct EIN, the IRS cannot properly reconcile a business’s tax obligations, leading to discrepancies that can flag a return for further scrutiny.
Initial Consequences of an EIN Error
Submitting a tax return with an incorrect EIN can lead to immediate repercussions. The IRS cross-references EINs to ensure a return belongs to the correct business entity; if the number is invalid or associated with another taxpayer, the return may be rejected. This means the return is not processed, and the business remains non-compliant until the error is resolved.
Even if a return with an incorrect EIN is initially accepted, it can create reporting mismatches and processing delays. For example, if estimated tax payments were made using the correct EIN but the return was filed with an erroneous one, the IRS may not properly credit those payments, potentially leading to underpayment notices or penalties. Similarly, an incorrect EIN on information returns (e.g., Forms 1099 or W-2) can trigger IRS inquiries, preventing reconciliation of third-party filings with the business’s tax return. These discrepancies can cause the IRS to flag the return for additional review, shifting it from standard electronic processing to a more time-intensive manual examination.
How to Correct an EIN Mistake
Correcting an EIN error on a previously filed tax return requires submitting an amended return. First, identify the correct EIN, which can be found on the original IRS confirmation letter or prior tax returns. If the EIN cannot be located, contact the IRS Business and Specialty Tax Line for verification.
Once the correct EIN is confirmed, determine the appropriate amended tax form based on the original return type. Corporations generally use Form 1120-X, partnerships use Form 1065-X, and for employment tax forms like Form 941, employers use Form 941-X. The chosen amended form should clearly indicate the correction being made, specifically noting the change to the EIN.
After accurately completing the amended return, including any supporting schedules affected by the change, the form must be submitted to the IRS. While some individual amended returns (Form 1040-X) can now be e-filed, many business amended returns, particularly for EIN corrections, still require paper submission. The mailing address for the amended return will depend on the specific form being filed and the location of the business, which can be found in the instructions for the respective form. It is advisable to send the amended return via certified mail with a return receipt to have proof of submission.
After Submitting Your Correction
After submitting an amended tax return to correct an EIN, anticipate the processing timeframe. The IRS advises that amended returns can take 8 to 12 weeks to process, though some cases may extend up to 16 weeks or more. This processing time can be longer during peak filing seasons or if the return requires manual review due to complexity.
For individual amended returns filed on Form 1040-X, taxpayers can track the status using the IRS “Where’s My Amended Return?” online tool, typically three weeks after submission. This tool allows taxpayers to monitor if the return has been received, adjusted, or completed. However, this online tool does not provide status updates for business amended returns. For business returns, taxpayers may need to wait for correspondence from the IRS, which could include a confirmation of receipt, a notice of adjustment, or requests for additional information if further clarification is needed. If there are concerns or no communication after a prolonged period, contacting the IRS directly through their business tax line may be necessary, but only after allowing sufficient processing time.