Change in Application for Employer Identification Number
Some applicants for Employer Identification Numbers (“EINs”) have listed nominee individuals, rather than the true responsible party, during the application process. The Internal Revenue Service does not authorize the use of nominees to obtain EINs, as discussed in Use of Nominees in the EIN Application Process. In order to identify the correct individuals and entities applying for the EINs, the wording on the application for an EIN has changed effective January of 2010. Instead of requesting that the applicant identify the “principal officer, general partner, grantor, owner, or trustor”, the application now asks for the identity of the “responsible party”.
According to the Instructions for the current revision of the application, the “responsible party” is defined as follows:
For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, “responsible party” is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner (disregarded entities owned by a corporation enter the corporation’s name and EIN), or (d) a grantor, owner, or trustor if a trust.
For all other entities, “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.
Entities which used a nominee on their applications for an EIN should refer to Updating Business Entity Information for instructions on how to update incorrect information.
