Publication 1635 - Understanding Your Employer Identification Numbers Page 5
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32I.
What is an EIN?
An Employer Identification Number (EIN) is a nine-digit number that IRS assigns in the
following format: XX-XXXXXXXX. However, for employee plans, an alpha (for example,
P) or the plan number (e.g. 003) may follow the EIN. The IRS uses the number to identify
taxpayers that are required to file various business tax returns. EINs are used by employers,
sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates of
decedents, government agencies, certain individuals, and other business entities.
Warning: Please be advised that it is against the law to use an EIN for anything other than
business use. An EIN cannot be used as a Social Security Number.
II. Special Rules Regarding Entity
Classification Elections
There are special rules and procedures for classification elections made on Form 8832,
Entity Classification Election. Those rules and procedures are not reflected in this publication.
The results explained in this publication may be different when an entity classification
election is involved. For further information regarding entity classification elections and
EINs see Income Tax Regulation Sections 301.7701-1,-2,-3, as well as
Form 8832, Entity
Classification Election.
III. Information by Type of Business Entity
This section contains the following information:
• Definitions of various entity types.
• Which forms each entity type may file.
• When you need a new EIN.
• When you don’t need a new EIN.
1.
Sole Proprietor
Definition:
• An individual operating a business.
• The business does not exist separately from the owner.
• The individual accepts the risks of business to the extent of all their assets,
whether used in the business or used personally.
• A Sole Proprietor is an individual, husband or wife co-owner who owns a
business.
• The business may or may not have employees.
• This type of entity will report its business income on Schedule C of the sole
proprietor’s individual tax return.
NOTE : An individual who pays wages to a household (domestic) employee must request an EIN
as a sole proprietor.
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Parent category: Financial