Tuesday, November 12, 2013

IRS releases final EIN regulations

New regulations regarding employer identification numbers (EINs) from the IRS will be affecting businesses across America come January 1, 2014. The government agency has said that its final regulations regarding EINs are intended to make collecting and maintaining accurate information easier.
The regulations, which concern updating application information, are not expected to result in excessive consumption of time or money, according to the IRS.

"The current Form SS-4, Application for Employer Identification Number, requires entities to disclose the name of the EIN applicant's 'responsible party' and the responsible party's Social Security Number, Individual Taxpayer Identification Number (TIN), or EIN," the final regulations state. "Employers are required to know the identity of their responsible party. The amount of time necessary to submit the updated information required in these regulations, therefore, should be minimal for these entities."
Despite these assurances, the IRS received three comments regarding the proposed regulations, two of which objected to them on the basis of increased burdens for entities, saying that the government agency was underestimating how much time it will take entity to comply. A third commenter objected on the grounds of monetary burden, saying that the related costs could reach over $100 million.
While the IRS said it considered these objections, the final regulations were ultimately adopted without change.
The new regulations are partly attributed to EIN applicants listing nominees, those individuals who were temporarily authorized to act on behalf of EIN applicants, as principal officers, general partners, grantors, owners and trustors. Not only will the new regulations make it easier for the IRS to determine the true responsible parties for EIN applicants, it will also help the government agency cut down on tax abuse through the use of nominees, which can help the actual responsible parties hide assets and income, according to the regulations.
As any organization required complying with tax information reporting needs an EIN, these regulations will have a far-reaching effect.

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