Getting a Foreign EIN

1. Overview

EINs are used by employers, sole proprietors, corporations, partnerships, non-profit associations, PUBLIC trusts, PUBLIC estates of decedents, government agencies, certain individuals, and other business entities. If your entity is an estate or trust, it files Form 1040NR as a nonresident alien if it is PRIVATE.  That means it is not required to be enumerated if it is not engaged in the “trade or business” franchise per 26 C.F.R. §301.6109-1(b).  It need not have an EIN to file tax returns, and shouldn’t need one to open a bank account, but financial institutions may balk at opening an unenumerated nonresident alien (NRA) account unless the following form is used to educate yourself and them during the application process:

W-8SUB, Form #04.231
https://sedm.org/Forms/04-Tax/2-Withholding/W-8SUB.pdf

2. Authorities and References

Employer Identification Numbers are issued under the authority of:

  1. 26 U.S.C. §6109
  2. 26 C.F.R. §301.6109-1
  3. IRS Publication 1635: Employer Identification Number, Understanding Your Ein
    https://www.irs.gov/pub/irs-pdf/p1635.pdf

3. EIN Prefixes

  1. Internationally Foreign EINs: Prefix is 98. See:
    How to Get a Foreign EIN with 98 Prefix, FTSIG
    https://ftsig.org/how-to-getting-a-foreign-ein-with-98-prefix/
  2. Internet Issued EINs: All have the prefix 20, 26, 27, 45, 46, 47, 81, 82, 83, 84, 85, 86, 87, 88, 92, 93, 99. See:
    https://www.irs.gov/businesses/small-businesses-self-employed/online-ein-frequently-asked-questions#:~:text=A.%20Yes.,number%20issued%20via%20the%20internet

4. Applying for EIN

IRS Form SS-4 is used to apply for the EIN available at:

About Form SS-4, Application for Employer Identification Number (EIN), IRS
https://www.irs.gov/forms-pubs/about-form-ss-4

The account applicant may be a Nonresident alien but the business is typically not.  The business may be a nonresident alien if it is a trust or estate, in which case it submits a Form W-8 to open the bank account.

The application for the EIN may be submitted on paper or online. Online applications are ALWAYS more restrictive than paper applications but more convenient and fast, mainly because it FORCES the applicant to provide an SSN or TIN of its own before the EIN will be issued.

All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the “responsible party,” controls, manages, or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity. If there is more than one responsible party, the entity may list whichever party the entity wants the IRS to recognize as the responsible party. Additionally, entities must report any changes to the responsible party to the IRS within 60 days by using Form 8822-B, Change of Address or Responsible Party – Business.

According to the Instructions for the current revision of the application, the “responsible party” is defined as follows:

For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, “responsible party” is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, the general requirement that the responsible party be an individual applies to these entities. For example, (c) if a corporation is the general partner of a publicly traded partnership for which Form SS-4 is filed, then the responsible party of the partnership is the principal officer of the corporation.  or (d) a grantor, owner, or trustor if a trust.

For all other entities, “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.

If the entity documentation FORBIDS the use of an EIN or TIN for itself or any officer, it would be an interference with the right to contract of the entity founders for the IRS to force them to violate the entity contract or bylaws by disclosing an SSN or TIN of the responsible party. This provides a good legal justification for NOT providing an SSN or TIN of the responsible party during the SS-4 application process.

Online application for an EIN may be made at:

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

5. Completing the SS-4 to reflect foreign status

To apply as an entirely FOREIGN and therefore PRIVATE entity:

  1. The entity formed should be a private trust and never a statutory entity.
  2. The entity should file as a nonresident alien using the Form 1040NR.
  3. The entity should complete the SS-4 application in such a way that it is a FOREIGN entity per section 7.3.4.
  4. The entity should attach our W-8SUB, Form #04.231 to the SS-4 application to document its foreign status and the fact that it is not engaged in a trade or business.
  5. Block 8c was the LLC organized in the United States should be checked “No”.
  6. Block 9a Type of Entity should check “Other” and say “See EIN Application Attachment, Form #06.023”
  7. Block 10:  reason for applying should check “Banking purpose” and “Other”.  And then reference: “See EIN Application Attachment, Form #06.023”
  8. Block 13 should indicate ZERO.  You NEVER want to be either a STATUTORY “employer” or have STATUTORY “employees”

Members applying for an Employer Identification Number (EIN) are strongly encouraged to use the following attachment:

Employer Identification Number Application Attachment, Form #06.023
https://sedm.org/product/employer-identification-number-attachment-form-06-023/

6. Updating a previously DOMESTIC SS-4 record to FOREIGN

  1. Partnerships: After applying for a default domestic EIN, changing it to foreign by filing a 1065 election using the following:
    How to Get a FOREIGN EIN as a Partnership Residing in a Constitutional State, FTSIG
    https://ftsig.org/how-to-get-a-foreign-ein-as-a-partnership-residing-in-a-constitutional-state/
  2. 501(c)(3) Foundation: File 1120-F return
  3. C-Corp: File 1120-F return
  4. Estates and Trusts: File the 1040-NR and check “Trust” in the upper right corner.
  5. S-Corp: Always domestic
  6. Any entity that has an EIN will retain that EIN even if its federal tax classification changes under Regulations section 26 C.F.R. 301.7701-3 using Form 8832, Entity Classification Election.

Members may amend a previous SS-4 DOMESTIC Ein application using the following form:

Employer Identification Number (EIN) Application Permanent Amendment Notice, Form #06.022
https://sedm.org/Forms/06-AvoidingFranch/EIN-ApplAddendum.pdf