Carrying on Business III: Obtaining a Federal Tax ID Number for a Foreign-owned U.S. Business

Once the Responsible Party has been established, Form SS-4 will ask for an identification number for the responsible party which can be:

• Social Security Number
• Individual Tax Identification Number
• Employment Identification Number (if the Responsible Party is an entity)

This is where the process gets much more complicated for businesses that are wholly or majority owned by foreign residents or foreign entities with no U.S. tax identification number. Most of these types of businesses do not have a U.S. individual or entity that qualifies as a Responsible Party, and as foreign residents they will not have a SSN themselves.

That leaves either the ITIN or EIN. Applying for an ITIN number by filing Form W-7 with the IRS can take up to two months to get approved which is not a viable option for most businesses because they want to open as soon as possible.

Therefore, for an entity that does not have a Responsible Party with either an ITIN or SSN, the most efficient and fastest way for the entity to obtain an EIN is to file the SS-4.

Form SS-4 Filing Steps:

1) Fill out and submit the SS-4 by Fax to the IRS

2) In Box 7B be sure to put “Foreign” or “N/A” where it asks for the applicable tax number

3) Wait 4-5 Business Days to have the EIN number faxed back to you

Since it is more complicated for the IRS to process a form without a current SSN, ITIN, or EIN on file for the Responsible Person, it is important to follow-up by phone with the IRS after 4-5 business days have elapsed. Otherwise if the form was not approved, the IRS will mail you a response which can take weeks to receive and respond to.

There are also reporting requirements for when the Responsible Party of a business changes. This, along with designating a proper, qualifying Responsible Party can be complicated areas that a Business Attorney can assist a foreign-owned U.S. business with.