Be in The Know: Taxpayer Identification Numbers (TIN)

In today’s global market where business entities are hiring internationally - deducting, reporting and, remitting taxes to the appropriate tax agency may present some complications.

In order for the appropriate agencies to be able to credit the correct account with the deducted, reported and, remitted amount, a tax identification number is required.

The following information, mostly culled from the IRS website, is being shared with the hope that it may assist a business owner in avoiding complications when it comes to using or hiring labor outside of the USA and, the issue of tax identification number need to be resolved.

What is a Tax Identification Number?

A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.

Types of Taxpayer Identification Numbers (listed are only those commonly used):

·       Social Security Number "SSN"

·       Employer Identification Number "EIN"

·       Individual Taxpayer Identification Number "ITIN"

Note: The temporary IRS Numbers previously assigned are no longer valid.

Do I Need One?

A TIN must be furnished on returns, statements, and other tax related documents. For example a number must be furnished:

·       When filing your tax returns. (Applies to both Business & Personal Tax Returns)

How Do I Get A TIN?

1)     Social Security Number (SSN):

You will need to complete Form SS-5, Application for a Social Security Card (PDF). You also must submit evidence of your identity, age, and U.S. citizenship or lawful alien status. For more information please visit the Social Security web site.  

Form SS-5 can also be obtained by calling 1-800-772-1213 or visiting your local Social Security office. These services are free.

2)     Employer Identification Number (EIN):

An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to identify a business entity. It is also used by estates and trusts which have income which is required to be reported. Call IRS @ 1-800 829-4933 or visit their website @ www.irs.gov for more information

3)     Individual Taxpayer Identification Number (ITIN):

An ITIN, or Individual Taxpayer Identification Number, is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). It is a 9-digit number, beginning with the number "9", formatted like an SSN (NNN-NN-NNNN).

To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number (PDF)  The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual. You may either mail the documentation, along with the Form W-7, to the address shown in the Form W-7 Instructions, or present it at IRS walk-in offices.

NOTE: You cannot claim the earned income credit using an ITIN.

Foreign persons who are individuals should apply for a social security number (SSN, if qualified) on Form SS-5 with the Social Security Administration, or should apply for an Individual Taxpayer Identification Number (ITIN) on Form W-7. Effective immediately, each ITIN applicant must now:

·       Apply using the revised Form W-7, Application for IRS Individual Taxpayer Identification Number; and

·       Attach a federal income tax return to the Form W-7.

Call IRS @ 1-800 829-4933 or visit their website @ www.irs.gov for more information