Americans use their Social Security Number when reporting and paying income tax. However, business entities, foreigners, and those who do not qualify for a Social Security Number must also have some form of federal identification to use when dealing with the Internal Revenue Service (IRS). The IRS uses Employer Identification Numbers (EIN) and Individual Tax Identification Numbers (ITIN) in order to track the filing and payment of business taxes and foreigners’ taxes. In order to obtain an EIN or ITIN, you must submit an application and provide the required documentation. If you need to obtain an identification number, Koontz & Parkin, CPAs can guide you through the process and ensure that all requirements are satisfied and that your EIN or ITIN is obtained as quickly as possible.
An EIN is the business equivalent of a Social Security Number; it allows the IRS to track a company’s tax filing and payments to ensure that all employee withholding taxes are being paid, including income and payroll taxes. If you meet any of the following conditions, you are required to have an EIN:
In addition, if the ownership or structure of a business changes, the owner may be required to apply for a new EIN. Whether you are starting a new business or you think your current business may need a new EIN, Koontz & Parkin, CPAs can help you apply for a number. Doing so can help you avoid future legal and tax issues resulting from unintentional mistakes.
Resident and non-resident aliens may be required to file for an Individual Tax Identification Number (ITIN) in order to ensure compliance with Internal Revenue Code (IRC). Those who should apply for an ITIN include:
Keep in mind that those with an ITIN are not eligible for Social Security or Earned Income Tax Credit, although if they later become eligible, Social Security benefits from payments made with an ITIN may be retroactively applied. Individuals may use an ITIN to open a bank account, but it may not be used to as proof of legal residence or right to work in the U.S.
An applicant must submit a W-7 and original documents such as passports and birth certificates or certified copies of these documents. Applicants may also submit their documents to a Certifying Acceptance Agent whose job it is to review and certify the validity of documents. Many applicants find it helpful to work with a tax attorney or CPA because applying for an ITIN requires specific documentation and working with an experienced CPA can often speed up and take the stress out of the process.
Jo Ann M. Koontz and Marina Parkin offer a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing tax clients. To schedule a consultation, call the Sarasota office of Koontz & Parkin, CPAs at 941.328.3993.