What Happens If You Have Two EIN Numbers for the Same Business?
Unravel the administrative complexities when a single business entity unexpectedly holds multiple federal tax IDs. Learn to ensure proper IRS identification.
An Employer Identification Number (EIN) is a unique federal tax identification number for businesses, similar to a Social Security Number for individuals. The IRS assigns this nine-digit number to identify a business for tax purposes, including filing federal tax returns, opening bank accounts, and hiring employees. A single legal business entity should only possess one EIN to ensure accurate tax reporting and compliance.
Implications of Duplicate EINs
Multiple EINs for a business can lead to confusion and administrative burdens. Discrepancies may arise in IRS records, making it difficult to accurately track tax obligations and filings. Businesses might inadvertently file tax returns or other documents using the incorrect EIN, causing processing delays or notices of non-compliance. This can also complicate interactions with financial institutions or other government agencies that rely on accurate EIN data.
How Duplicate EINs Occur
Duplicate EINs often arise from misunderstandings during business changes. For instance, a sole proprietor who obtains an EIN and then forms an LLC or corporation might mistakenly apply for a new EIN, believing it is required for the new legal structure. While some structural changes necessitate a new EIN, many do not, leading to an unnecessary duplicate. Clerical errors during the application process or confusion when acquiring an existing business can also result in multiple EINs.
Resolving Multiple EINs
To resolve multiple EINs, a business owner must identify the correct EIN to retain, typically the one consistently used for the primary business and its tax filings. The IRS does not “cancel” an EIN; rather, they deactivate unused or incorrectly obtained ones.
Contact the IRS Business & Specialty Tax Line at 800-829-4933 to begin the resolution process. This line operates Monday through Friday, generally from 7 a.m. to 7 p.m. local time (Alaska and Hawaii follow Pacific time). When calling, be prepared to provide both EINs, the full legal name and address of the business, the reason for the duplicate, and any affected dates or tax periods.
The IRS will guide you on which EIN to continue using and may provide instructions for adjustments to past filings. If a letter is required to close an unused EIN account, it should include the full legal name of the entity, the EIN, the business address, and an explanation for closing. Mail this letter to the Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Expect confirmation from the IRS within approximately 45 days.