Question: When Do I Need a New Tax ID (EIN)? When Do I NOT Need a New EIN?
The tax identifier for a business is termed an Employer ID Number (EIN) by the Internal Revenue Service. Almost all businesses must have an employer ID for the business. You may apply for an EIN on the IRS website. If you make changes to your business, you may need to get a new EIN:
Answer:
When You Must Get a New EIN
Some common business events that require a new EIN:
- If your business is subject to a bankruptcy proceeding
- If you change your type of business entity; for example, if you change from a sole proprietorship to a corporation. If a sole proprietorship takes in partners and begins to operate as a partnership, it must obtain a new EIN.
- If you buy a business that has been owned by someone else or if your business merges with another business.
- If you end an old partnership and begin a new one.
- If you (as a sole proprietor) purchase a new business, if your corporation becomes a subsidiary of another corporation, or if your partnership is taken over by one of the partners and operated as a sole proprietorship.
For more complete information on all the circumstances requiring a new EIN, see the IRS website for a listing.
When NOT to Apply for a New EIN
The IRS says you should NOT apply for a new EIN if:
- You change only the name of your business
- A partnership or corporation declares bankruptcy
- A corporation chooses to be taxed as an S corporation
- You elected on Form 8832 Entity Classification Election, to change the way the entity is taxed, or
- You change the location or add locations (use Form 8822 - Change of Address)
- You elect to be taxed as an S corporation.
