What Is Publication 1635 and How Does It Help Employers?

The IRS provides resources to help businesses comply with tax regulations, and Publication 1635 is one such guide. It explains how to obtain an Employer Identification Number (EIN) and outlines key responsibilities after receiving one. Understanding this publication helps prevent errors and ensures compliance with federal tax requirements.

Applying for an EIN requires meeting eligibility criteria, submitting accurate documentation, and following specific steps. Mistakes in the application process can cause delays, so attention to detail is essential. Once approved, businesses must maintain accurate records and update information as needed.

How to Confirm EIN Eligibility

Before applying, businesses must determine if they meet IRS requirements. An EIN is issued to entities that hire employees, operate as corporations or partnerships, withhold taxes for non-resident aliens, or file specific tax returns such as employment or excise tax forms. Sole proprietors without employees or tax withholding obligations can typically use their Social Security Number (SSN) instead.

A business’s legal structure affects EIN requirements. Corporations, limited liability companies (LLCs), and partnerships must obtain an EIN, even if they have no employees. Nonprofits, trusts, estates, and certain government agencies also need one. Foreign businesses operating in the U.S. may require an EIN if they have tax reporting obligations, such as filing Form 1120-F for foreign corporations.

A new EIN is necessary when a business undergoes structural changes, such as converting from a sole proprietorship to a corporation or merging with another company. However, minor changes, like updating a business name, do not require a new EIN.

Documentation Needed for Filing

To apply for an EIN, businesses must provide accurate details to the IRS. The application requires the entity’s legal name, trade name (if applicable), and the responsible party’s Taxpayer Identification Number (TIN), which can be an SSN, Individual Taxpayer Identification Number (ITIN), or existing EIN. The responsible party is the individual who controls the business’s financial and tax matters.

Applicants must specify their business structure—corporation, partnership, trust, etc.—as this classification determines tax obligations and filing requirements. Selecting the wrong category can lead to filing errors and penalties.

Certain businesses may need additional documentation. Foreign entities without an SSN or ITIN must submit Form SS-4 by mail or fax, as the online application is only available to U.S.-based responsible parties. Businesses making special tax elections, such as S corporations filing Form 2553, should have all necessary documents ready before applying.

Steps to Submit Applications

The IRS offers multiple ways to apply for an EIN, with the fastest being the online application. This method provides an EIN immediately upon successful submission. The system operates from 7 a.m. to 10 p.m. Eastern Time, Monday through Friday, and is available only to businesses with a principal location in the U.S. or U.S. territories. The application must be completed in one session, as progress cannot be saved.

For those unable to apply online, alternatives include fax, mail, or telephone (for international applicants). Faxed applications are processed within four business days if all information is correct. Mailed applications take longer, typically four to five weeks. International applicants without a U.S. taxpayer identification number can apply by calling the IRS at +1-267-941-1099, though wait times can be lengthy. Regardless of the method used, Form SS-4 must be completed accurately to avoid delays.

Common Mistakes That Delay Approval

Errors in business details often cause processing delays. The IRS verifies information against existing records, and discrepancies in the legal name, business structure, or responsible party’s identification can lead to rejections or requests for additional verification. If the business name on Form SS-4 does not match the name registered with the Secretary of State, the application may be delayed. Ensuring consistency across all official documents helps prevent these issues.

Selecting the wrong reason for applying can also cause problems. The IRS requires applicants to specify why they need an EIN, such as starting a business, hiring employees, or meeting banking requirements. If the stated reason does not align with the entity’s tax obligations, the IRS may request clarification, delaying approval.

Responsibilities After Approval

Once an EIN is issued, businesses must comply with tax and reporting requirements. The EIN serves as the entity’s permanent federal tax identification number and is used for filing tax returns, opening business bank accounts, and handling payroll. Employers must meet all federal, state, and local tax obligations based on their business structure. Corporations and partnerships must file annual returns, while employers with payroll must submit employment tax forms such as Form 941 for quarterly federal tax deposits.

Maintaining accurate records is essential. Businesses should keep tax filings, payroll records, and financial transactions for at least three years, though some records may need to be retained longer. Poor record-keeping can lead to compliance issues, audits, or penalties. If a business undergoes significant changes, such as a merger or restructuring, it may need to update its EIN records with the IRS.

Correcting EIN-Related Errors

Errors in EIN records can create complications when filing tax returns or applying for financial services. If incorrect information was provided during the application process, the IRS must be notified to update records. The type of correction depends on the mistake, whether it involves the business name, address, or responsible party details.

To update business information, entities must submit a written request to the IRS, including the EIN, incorrect details, and corrected information. Corporations can indicate name changes on their annual tax return, while sole proprietors and partnerships must send a formal request. Address changes require filing Form 8822-B. If an EIN was obtained in error or is no longer needed, businesses should close their IRS account by sending a cancellation request with a copy of the EIN confirmation letter.