Similarly, for our clients who participate in joint ventures, whereas previously the “responsible party” would often be the entity constituting the majority member of the JV, now the JV must name an individual as the “responsible party.” This will be of particular note to our clients who rely on holding companies to form and own multiple subsidiaries, where the parent company has historically served as the “responsible party” on the EIN applications of its subsidiaries. The new requirement specifies that for purposes of applying for an EIN, the responsible party must be an individual with his or her own tax ID number entities can no longer serve as responsible parties.
![engagex ein number engagex ein number](https://www.mysolo401k.net/wp-content/uploads/2018/09/10.jpg)
The new requirements will impact all of our clients engaged in forming new entities, in particular, clients who utilize holding company structures and those who participate in joint ventures.įor any EIN application, whether completed through the IRS online EIN application or in hard copy on a Form SS-4, the applying entity has to name a “responsible party.” Previously, under the old requirements, the responsible party could be either an individual or another entity. This new requirement impacts the process by which any new entity (including sole proprietorships, partnerships, limited liability companies, trusts, and corporations) can apply for an Employer Identification Number (EIN), the 9-digit identification number assigned to entities for tax filing and reporting purposes.
![engagex ein number engagex ein number](https://www.excelcapmanagement.com/wp-content/uploads/2018/10/IRS.gov-EIN-Confirmation-Letter-1.jpg)
As we have all been scrambling to get our taxes completed this month, a new IRS requirement may have been overlooked that goes into effect on May 13, 2019.