If you own a business, you know that keeping up with your tax information is of the utmost importance. And one task that should be a top priority is obtaining a federal tax ID number. Also known as an employer identification number, your federal tax ID allows the United States government to identify your business. Here is everything else you need to know about the number, from how to get one to who exactly needs one:
Do I Need a Federal Tax ID Number?
If you don’t already have a federal tax ID number, you may be wondering if you need one. The quick answer is that if you own a business, you probably do. If you meet any one of the following requirements, you most likely need to apply for a number with the IRS as soon as possible if you haven’t already:
You have employees You own a corporation or partnership You file employment tax returns You file excise tax returns You fille alcohol, tobacco and firearms tax returns You withhold taxes on You have a Keogh plan You’re involved with trusts, estates, real estate mortgage investment conduits, farmers co-ops, plan administrators or nonprofit organizations
How Do You Apply for a Federal Tax ID Number?
If you have discovered that you need a federal tax ID number, you can apply for one via phone, fax, mail or online, though the IRS prefers you to do it online via its Internet application. If you do it this way, you receive your number instantly if your information is found to be valid within a few seconds of submission.To use the online application, you must have a valid taxpayer ID or social security number. If you fax your application, you’ll receive your federal tax ID number back via fax within four business days. For mail applications, it typically take around four weeks for the IRS to verify and provide your number. Phone applications are only accepted from international applicants.
How are Federal Tax ID Numbers Assigned?
Here is something to keep in mind if you need to apply for multiple federal tax ID numbers: You may only receive one each day per person. So, if you have several businesses, you’ll have to submit an application for one per day. This rule applies to all applications, including online submissions. Before 2001, the first two numbers of your ID indicated where your business was located, but if you received it after that or receive one in the future, those two numbers only indicate which IRS campus (Atlanta, Andover, Fresno, Austin, Brookhaven, Cincinnati, Ogden, Memphis, Kansas City, Philadelphia, Small Business Administration or online) assigned the number.
What if You’ve Lost Your Federal Tax ID Number?
If you’ve lost your federal tax ID number, it’s fairly easy to retrieve it. If you still have the confirmation from when you submitted your application, it should be printed on that piece of paper. If you don’t, it may be listed on any information you used to open a bank account for your business. You’ll also find it on old tax returns. However, if you don’t have access to any of those items, you can call the IRS’s business and specialty tax hotline at 800-829-4933, from 7am to 7pm local time on weekdays. You’ll need to provide some identifying information to ensure you are authorized to access the federal tax ID number.
Can You Cancel Your Federal Tax ID Number?
If you already have a federal tax ID number, there may come a time when you wonder if you can or even need to cancel it. The short answer is that once you receive that number, it sticks with your business forever, even after it shuts down. The IRS will never recycle an ID number. The only exception is if you applied for a federal tax ID number but you never actually used it for the business in question. To let the IRS know this information, you’ll need to send a letter explaining this to the IRS campus in Cincinnati, along with the name and address of the business, the federal tax ID number and if you have it, the confirmation you received when you filled out your application.