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ITIN NEWS BLOG

News & Tips from an ITIN Acceptance Agent

Employer Identification Number (EIN)


An Employer Identification Number (EIN) is also known as a Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number and is a nine digit number issued to business entities operating in the United States by the Internal Revenue Service (IRS).

Does a foreign company / foreign entity need an EIN?

If you have US source income and are a non-resident alien or foreign entity, then yes. The IRS is in the process of enforcing compliance on tax withholding on U.S. source income payments to foreign persons.

Your clients may request you obtain a U.S. withholding certificate with a U.S. TIN to claim an exemption from, or reduction in, U.S. tax withholding. A U.S. TIN is also required for information reporting on a 1042-S unless an exception applies (per the form instructions).

How do I apply for an EIN?

By completing form SS-4. International applicants may call 267-941-1099 (not a toll-free number) 6:00 a.m. to 11:00 p.m. (Eastern Time) Monday through Friday to obtain their EIN. The person calling must be authorised to receive the EIN as well as be able to answer any questions on the SS-4 application. You can choose to use a Third Party Designee if you wish for them to answer any questions and obtain the EIN for you. The Third Party Designee's authority ends once the EIN is released. A signature must appear for the Third Party Designee for the form SS-4 to be valid for processing.

How long does it take to receive the EIN?

Once the call is made and there are no issues or missing items on form SS-4, the number is issued over the phone immediately. A paper confirmation is sent and received within a few weeks for international applicants.

We need to open a U.S. Bank account to receive U.S. payments but we do not have an office or employees in the U.S. They are asking for an Employer Identification Number (EIN) - do we need one?

Yes as you have U.S. source income you will need to apply for an EIN using form SS-4. You will be taxed at a reduced withholding rate of 30% or if there is a tax treaty with your home country and the U.S. you may be taxed less.

Do we need to open a U.S. bank account to receive income from our U.S. clients?

Not necessarily. Most banks offer USD accounts, so try and open one with your current bank or look around. Obviously there are bank charges but these may outweigh the headache of trying to open a U.S. bank account state side. The other option is Paypal or credit card payments.

How do we prove that we are a foreign company?

Complete a W-8-BEN-E and provide this to the payer as evidence.

Do we have a U.S. tax return filing obligation?

A TIN is required to file a U.S. tax return, where one is required. No tax return is required from foreign persons whose only income is fixed or determinable annual or periodic (FDAP) if the correct amount of tax was withheld (including tax treaty exemptions).

A tax return is required if the income was effectively connected to the conduct of U.S. trade or business (ECI) even if exempt by treaty. There is an exception for non-resident aliens whose only income is wages and they do not exceed the personal exemption amount.

Contact Us:

www.justbreve.com

info@justbreve.com

Don't live in the U.K? No problem, we can assist by phone, email and Skype. Please feel free to get in touch.

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