An employer identification number, often abbreviated EIN, is a unique nine-digit code businesses and organizations use to file income taxes on a yearly basis. Companies, organizations, and some individuals are encouraged to apply for EIN, even if the organization does not have employees. For the most part, an EIN is permanent, so there will be no need to renew or apply for an EIN after receiving the initial number from the Internal Revenue Service (IRS). However, there will be extraordinary circumstances in which the IRS will require an entity to renew its EIN annually.
When to Apply for a New EIN
The EIN filing process is mandatory for business and nonprofit entities, and without a number, it is not possible for such entities to hire employees, file taxes, or open a business bank account. If the IRS required every business and nonprofit entity to change numbers each year, it would make the tax collection process far more difficult. It would also be far more difficult for organizations to engage in everyday business transactions. For this reason, organizations are allowed to keep a single EIN indefinitely.
There are exceptions to the rule, however, and if any of the following applies to a business or organization, it may need to apply for a new EIN:
- There is a change in the ownership or structure.
- The organization intends to declare bankruptcy.
- The organization becomes part of an estate, and funds from the organization are used to create a trust.
- The organization is a part of a trust that changes to an estate.
The situations listed above are rare, but if they occur, an entity will need to obtain a new EIN.
Get the Help You Need
If you need help from a reliable and knowledgeable EIN filing service, you may want to contact Gov Doc Filing. We strive to help employers master the filing process and simplify the EIN application process. Go to https://www.govdocfiling.com/ to learn more.