I recently have received several inquiries about whether a foreign company or its owners need an ITIN (Individual Taxpayer Identification Number) when they bring their business to the US. The answer is, “No.” The rest of this post explains why that is the case.
When a company wants to do business in the US, it needs an EIN (Employer Identification Number).
For a foreign or foreign-owned company, obtaining an EIN can be intimidating. This is especially true if the principal officer lacks a US social security number. (The EIN cannot be obtained quickly and easily online.)
The company’s representative might mistakenly think that an ITIN will be necessary or helpful. (The ITIN is designed for individuals who have tax reporting requirements but are not eligible to receive social security numbers.) That is not the case, however.
- An ITIN cannot take the place of a principal officer’s SSN to help the company obtain an EIN online.
- Even if it could, the process of obtaining an ITIN – if successful – takes six weeks.
The right way for a foreign or foreign-owned entity to obtain an EIN is described in Foreign Company Alert: Obtaining an EIN may be your Biggest Challenge in the U.S. Here is a brief summary of the procedure described in that post (which was updated because of a January 6, 2014 change to Internal Revenue Service procedures).
- Retain a lawyer, or another qualified individual, to act as the third party designee.
- The designee should prepare Form SS-4 for the company to sign and return.
- The designee faxes the signed Form SS-4 to the Internal Revenue Service.
- Approximately one week later, the IRS faxes an EIN confirmation to the designee.
In summary, an ITIN is not necessary for a company coming to the US to obtain an EIN – so long as it retains appropriate professional assistance.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.