In the complex landscape of business dealings in the United States, foreign entities play a significant role. For these entities, acquiring an Employer Identification Number (EIN) is not just a requirement; it is a crucial step that opens doors to various financial activities. This article sheds light on the significance of EIN for foreign entities, the process of obtaining one, and the subsequent responsibilities.
Understanding the Importance of EIN for Foreign Entities
Foreign entities engaged in business activities within the United States find themselves obligated to obtain an EIN. This unique identifier is indispensable for tax and payroll reporting, and U.S. banks demand it for the establishment of accounts. Moreover, an EIN is a prerequisite for filing Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
Notably, foreign entities that are not individuals, such as foreign corporations, must possess an EIN to claim an exemption from withholding based on a tax treaty provision, a claim made on Form W-8BEN.
Navigating the EIN Acquisition Process
One key aspect for foreign entities is the absence of a requirement for a physical address in the U.S. to obtain an EIN. However, having one significantly streamlines the process of securing a U.S. bank account.
The EIN acquisition process offers various channels, and understanding them is vital for efficient navigation:
1. By Telephone (International Applicants Only):
- International applicants with no legal residence or principal place of business in the U.S. can call 267-941-1099 to obtain an EIN.
- Authorization is crucial, and the Third-Party Designee section on Form SS-4 should be completed to empower an individual to receive the EIN on behalf of the entity.
- It is imperative to complete Form SS-4 before calling the IRS, ensuring all necessary information is readily available.
2. By EIN Online:
- The online application is a convenient option but requires completion in a single visit, with no option to save progress.
- A valid taxpayer identification number (SSN, EIN, or ITIN) of the principal officer, general partner, or owner is necessary for online application.
- No legal residence, principal place of business, or principal office or agency in the U.S. or U.S. possessions means the online application cannot be used.
3. By Mail or FAX:
- Visit the IRS website for current addresses and FAX numbers for mail or FAX applications.
- FAX applications generally provide an EIN within 4 business days, while mail applications take approximately 4 weeks.
Post-EIN Acquisition Responsibilities
Securing the EIN is just the beginning; foreign entities must proactively update the IRS on any changes to their business. This includes alterations to the business’s mailing address, business location, or the identity of the responsible party. Changes to the responsible party must be submitted within 60 days.
The submission of changes can be accomplished through Form 8822-B, available on the IRS website. Ensure compliance with the Form 8822-B instructions for filing locations, which vary by state.
Conclusion: Empowering Foreign Entities in U.S. Business
In conclusion, obtaining an EIN is not merely a regulatory requirement for foreign entities but a strategic move that facilitates their engagement in various financial activities within the United States. By understanding the diverse avenues for EIN acquisition and adhering to post-acquisition responsibilities, foreign entities can navigate the U.S. business landscape with confidence.
For any queries or assistance regarding EIN acquisition, feel free to reach out to our office. We are here to guide you through the process and ensure a seamless experience for your business endeavors in the United States.